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Best of Howard Stutz

Gaming Guru

Howard Stutz

MGM Resorts has inside track for newly approved sixth Maryland casino

16 August 2012

LAS VEGAS -- If Maryland's planned gaming expansion debate were the Olympics, MGM Resorts International has clearly won the gold medal.

Lawmakers signed off on a bill late Tuesday night that gives the state a sixth casino. The measure, voted on during a special legislative session, also reduced the percentage of gaming taxes paid by existing casinos and allows the facilities to add table games.

Maryland Gov. Martin O'Malley - an avid supporter of gaming expansion - signed the bill Wednesday.

The sixth casino would be located in Prince George's County. MGM Resorts appears to have the inside track for the license, and proposes a $700 million complex in National Harbor, a development along the Potomac River, about 10 miles from Washington, D.C. The Peterson Cos., which developed National Harbor, is a partner in the project.

"Given the front-runner position in Prince George's County, this would certainly bode well for MGM, a company seeking other regional gaming opportunities and willing to invest into the market," Macquarie Securities gaming analyst Chad Beynon told investors.

Shares of MGM Resorts rose 25 cents, or 2.51 percent, on the news to close at $10.21 on the New York Stock Exchange.

Maryland voters will need to approve the changes through a ballot measure in November. Voters in Prince George's County also must approve the location.

"We believe voter support is high for gaming expansion," Credit Suisse gaming analyst Joel Simkins told investors.

In a statement, MGM Resorts Chairman Jim Murren said the company would back the planned ballot measure.

"MGM Resorts wants to be a part of this community. We are fully prepared to compete for that opportunity," Murren said. "As we enter this referendum phase, we look forward to meeting more Marylanders to detail our company's vision for a destination resort at National Harbor. We're confident after residents carefully weigh the issue they will vote in November to bring new investment, new jobs and new revenues to the state."

Some analysts believe that if Maryland builds all six casinos, the state could rival Pennsylvania for gaming concentration.

Caesars Entertainment Corp. was awarded a license in July for the $300 million Harrah's Baltimore near Oriole Park at Camden Yards and M&T Bank Stadium, home of the Baltimore Ravens.

The casino was being planned for 3,750 slot machine-like video lottery terminals, but Caesars Chairman Gary Loveman said earlier this month the company would welcome the ability to add table games.

Beynon said the changes could mean Caesars is taking business away from Atlantic City, where it operates one-third of the gaming market.

"Caesars had plans to build in Baltimore regardless of the outcome," Beynon said. "However, this would allow them to operate in a lower tax environment and with table games as an amenity. We believe these factors increase the return on investment potential."

In a statement, Caesars spokesman Gary Thompson said the company was supportive of the referendum.

"We're pleased that Maryland's leadership has given the state's residents the opportunity to voice their opinion on this important issue," Thompson said. "Passage of this legislation brings Maryland one step closer to a critical economic development milestone."

Among the changes in the measure was lowering Maryland's gaming tax rate from an industry-high 67 percent to varying degrees for the state's casinos, partly to offset added competition from a new casino in Prince George's County and also to divest the state from purchasing expensive slot machines.

The rate for the planned Caesars casino would drop 7 percentage points. The tax rate for Maryland Live! in Anne Arundel County would be lowered by 8 percentage points.

Maryland casinos also would get an additional tax rate cut, if they agree to take over ownership of slot machines. Maryland Live! would get a further tax rate reduction of 8 percentage points for buying the machines. Other casinos would get a 6 percentage-point rate cut.
MGM Resorts has inside track for newly approved sixth Maryland casino is republished from