IAC, the New York-based global media and internet giant, is betting that an investment of $1 billion in MGM Resorts International will pay off in online gambling, according to a press release.
The move comes one month after IAC and Match Group, the parent company of dating providers Match, Tinder, OkCupid and PlentyOfFish, announced they separated Match Group from the remaining businesses of IAC.
“With the separation of Match Group … and new IAC emerging with $3.9 billion of cash, no debt, and its opportunistic zeal intact, we are energized and excited to make this investment in MGM,” said Barry Diller, the company’s billionaire chairman and senior executive said in a statement Monday (Aug. 10). “… there is a digital-first opportunity within MGM Resorts’ already impressive offline businesses, and with our experience we hope we can strongly contribute to the growth of online gaming.”
At 12 percent, CEO Joey Levin said IAC will be a minority investor but “a long-term strategic partner.”
In a letter to shareholders, Diller and Levin said while ICA bought shares in a business that has little to do with the internet, MGM, one of the world’s biggest casino operators, provides potential to move online.
“IAC has always been opportunistic with its capital, and if ever there was a time, this moment is unique,” they wrote. “We believe we can generate compelling returns for our shareholders and hope our expertise will be additive to MGM’s opportunities, but even if we never advance our involvement from here, the value was too compelling to ignore.”
Diller and Levin said research revealed MGM’s revenue in online gambling revenue is essentially zero. They want a piece of the $450 billion global industry that today represent less than 10 percent online in the U.S.
“MGM also is an aspirational brand, which could be delivered with daily accessibility and offer gaming consumers (including the 34 million [MGM Rewards] members),” they wrote.
Last month, in The Future Of Digital Gaming, PYMNTS reported many casino patrons who have stayed away from slot machines during the pandemic have opted for digital casinos.
Such activity, the report said, could impact the future of the gambling sector and could lead many more people to consider tapping into digital platforms.
New Jersey’s Division of Gaming Enforcement reported its big bet on online gambling paid off, with revenues skyrocketing to a record $80 million in April, up nearly 119 percent compared to the same month last year, the agency said.
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