LAS VEGAS (KLAS) — High-end baccarat players can make or break the bottom line for Las Vegas casinos, and for MGM Resorts International in the third quarter, it was break.
MGM’s top resorts on the Strip have six or seven customers that can swing the fortunes so much — to the tune of $80 million — that investors come to the table with a unique question: “What did it look like if you take baccarat out of the equation?” And MGM executives had those answers on Wednesday.
“It’s clear our table game drop was down year-over-year pretty significantly. And this was due almost entirely to our high-end bacc business,” MGM CFO and Treasurer Jonathan Halkyard said.
“And, you know, this is the way this business is,” he said.
MGM President and CEO Bill Hornbuckle weighed in: “Our gross profit on the balance — take baccarat out of the equation — on the balance of our database and all of our programs and programming, and I think for the quarter it was up 12%,” he said.
“You take out the top six or seven players, where there was a substantive swing … between hold and not showing up, it accounts for a great deal of the miss,” Hornbuckle said. Baccarat normally accounts for about 30% of MGM’s table game drop.
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It was just about the opposite of the fourth quarter of 2023, when baccarat brought in $70 million, a number Halkyard gave investors.
“We look fondly on that quarter,” he said. “If memory serves, we did $860-$870 million or so of EBITDAR (earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs). I think the simple math is that probably benefited us by about $70 million during the quarter.”
Hornbuckle said seven of MGM’s 10 Las Vegas properties had higher revenues in the third quarter. He didn’t name them, but he said baccarat was the problem at the three resorts where revenues were down. Bellagio, Aria, MGM Grand and Cosmopolitan Las Vegas are among the likely suspects.
And there were other factors that weighed on the quarter. In July, a stretch of eight days that reached into high temperatures around 120 degrees didn’t help, and then a truck fire on Interstate 15 shut down traffic between Las Vegas and Los Angeles for nearly 48 hours — just in time to kill the last weekend in July.
And then things got better. By October, MGM recorded 97% occupancy in Las Vegas.
Through it all, executives pointed to the positives. The company has nearly doubled earnings in Las Vegas since 2019, Halkyard said. And the company was able to charge record hotel rates in the quarter. The business, he said, is in the strongest-ever position.