Earlier this week, MGM Resorts International (NYSE: MGM) announced that its LeoVegas unit is acquiring the US iGaming and sportsbook operations of Tipico Group. This move is receiving positive feedback from analysts, with Gimme Credit analyst Kim Noland stating that the purchase is a crucial part of MGM’s digital strategy. While the acquisition is more focused on enhancing technological capabilities rather than expanding market share, it is expected to contribute to MGM’s digital efforts.
The acquisition of Tipico is seen as a step towards MGM’s international digital expansion. When MGM purchased LeoVegas in 2022 for over $600 million, it signaled the company’s intention to grow its digital presence beyond the U.S. The technology obtained through the Tipico acquisition could help MGM scale its digital gaming segment across various jurisdictions, especially in regions where the BetMGM joint venture with Entain does not hold exclusivity.
In addition to the Tipico acquisition, MGM recently entered into a partnership with Playtech to provide live casino content streamed from Bellagio and MGM Grand in Las Vegas to international regulated markets, with potential entry into the U.S. market in the future. While there may be regulatory challenges with the Playtech venture, overall, MGM’s iGaming unit is showing growth potential.
Analysts are optimistic about MGM’s bonds, particularly those maturing in 2027. Noland rates these bonds as “outperform” with a yield-to-worst of approximately 6%. The strong free cash flow generation and robust fundamentals of the gaming company support this positive outlook for the bonds. MGM’s significant stock repurchases and remaining authorization for more repurchases further contribute to the bullish sentiment surrounding the bonds.
In conclusion, MGM’s recent acquisition of Tipico’s U.S. iGaming and sportsbook operations, along with its partnerships in the digital gaming sector, are seen as strategic moves to drive growth and enhance its presence in international markets. The company’s focus on expanding its digital offerings and leveraging technological advancements could position it well for future success in the rapidly evolving online gaming industry. Investors and analysts are closely monitoring MGM’s digital initiatives as they continue to evolve and contribute to the company’s overall growth trajectory.
