Can MGM Turn Around Borgata’s iGaming Fortunes?

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Thursday, March 2nd, 2017 | Written by Adam Brown

MGM Resorts International now fully owns and operates the Borgata Casino in Atlantic City, but its acquisition of the East Coast gambling venue has many industry insiders wondering whether the company’s new ownership will be able to reinvigorate the struggling casino. As a well-known brand that has managed to translate its knowledge of the industry into success elsewhere, MGM Resorts certainly has the potential to make its gamble on the casino profitable.

Borgata Tops AC iGambling Market

In 2016, Borgata brought in more online gambling revenues than its other New Jersey-based competitors, but a close look at the numbers reveals that things aren’t all as rosy for the operator as it first appears. The company brought in $45.82 million from the virtual tables last year, increasing revenue by only 3 percent compared to 2015. Meanwhile, New Jersey’s online gambling market saw an overall increase in its online gaming revenue of 32.1 percent, with casinos like Golden Nugget, Tropicana and Resorts making major gains in their gross gaming dollars.

In fact, Borgata’s online poker operation seems to have pulled the state’s numbers down, as the casino’s iPoker revenues were down 29.8 percent compared to 2015. Much of the downturn is owed to the entry of PokerStars into the New Jersey market; however, industry analysts say that Borgata did little to try and stop the bleeding as players fled to PokerStars.

Borgata iCasino Faring Better

The picture is a little brighter when you focus on Borgata’s online casino operations only, with revenues having increased by 16.1 percent in 2016. But again, when you put the gains beside those of other competitors in Atlantic City, the growth seems less impressive. Golden Nugget and Caesars, for instance, both enjoyed online casino gross gaming revenue increases of more than 35 percent last year, while Golden Nugget actually brought in $4.4 million more from online casino game revenue than Borgata. By contrast, the previous year, Borgata bested the smaller operator by $1.5 million in the vertical.

MGM Resorts to the Rescue?

MGM Resorts has the opportunity to give Borgata a stronger foothold in the online gambling market, as although Borgata is well known among Atlantic City locals, MGM has a stronger global presence with more name recognition. In other parts of the world, the operator’s M Life Rewards scheme has proven popular amongst online players, and many analysts believe that rolling it out on the Borgata site will help the online operator attract some players away from its competitors. The program makes it possible to redeem rewards points both online and in its brick and mortar casinos.

The Trouble with Non-local Brands

On the other hand, experience has proven that non-local brands do tend to struggle in online gambling markets. The US iGaming Industry Update published by Eilers & Krejcik Gaming, for instance, found that the only non-local branded site that has managed to bring in more than 20 percent of its licenses revenue is Betfair Casino. There is also some worry about the future of GVC Holdings, which will provide the casino platform for Borgata online, as the company was recently purchased by partypoker, a company that was forced to exit the New Jersey market when it proved unsuccessful in appealing to players from the Garden State.

Borgata Slips to 3rd in January

In the meantime, the financial results are now in for the first month of 2017, and the news is not good for Borgata which has now seen its once dominant position in the state’s online gambling market slip to third spot. In total, the Garden State generated $18.8 million in January, up by 28.6% compared to the same month in 2016; from that tally, the online casino vertical saw its revenues soar almost 30% to $16.5m, while poker, too, reported a more moderate improvement of 8.7% to $2.3m.

More worryingly as far the Borgata is concerned is that its $3.77m in revenues placed it behind the Golden Nugget ($4.7m), and Caesars ($4m), and only just ahead of Resorts Digital ($3.1m), and Tropicana ($3m). While its iGaming revenues are fairly flat compared to December’s total, it still comes in around $800k less than the amount that was generated in January of 2016.