MGM CEO: Feds’ Wire Act opinion is perplexing, unenforceable
The chairman and chief executive officer of casino operator MGM Resorts International on Wednesday decried a U.S. Department of Justice opinion that is threatening the viability of online gambling and also blamed the recent partial government shutdown for fewer Las Vegas visitors during the Chinese New Year.
The remarks from Jim Murren came during the company’s earnings call, when the operator reported a fourth-quarter loss of $23.3 million, after reporting a profit in the same period a year earlier. The opinion from the Justice Department that was made public last month could further restrict online gambling.
“This latest missive from the DOJ is perplexing,” Murren said. "... So, it’s just, we think, an absurdly poorly written and unenforceable opinion, and I don’t think anyone in the industry, the gaming industry, the sports betting industry, feels any differently.”
The opinion interprets the federal Wire Act, which prohibits interstate wagering, to apply to any form of gambling that crosses state lines, not just sports betting. The opinion marks a reversal for the department, which under the Obama administration in 2011 said online gambling within states that does not involve sporting events would not violate the federal law.
The 2011 opinion opened the door for cash-strapped states and their lotteries to bring online gambling to their residents, as long as it did not involve interstate sports betting.
The Justice Department delayed implementing its most recent opinion until April to allow businesses to adjust their operations.
MGM said it had a loss of 6 cents per share. Earnings, adjusted for pretax expenses and non-recurring costs, came to 14 cents per share.
The results from the Las Vegas-based company beat Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment Research was for earnings of 13 cents per share.
The casino operator posted revenue of $3.05 billion in the period, which also beat Wall Street forecasts. Five analysts surveyed by Zacks expected $2.95 billion.
For the year, the company reported a profit of $466.8 million, or 81 cents per share. Revenue was reported as $11.76 billion.
As for the current quarter, Murren on Wednesday said he anticipates gambling revenues this Chinese New Year at the company’s Las Vegas properties to be lower than in 2018.
“We had a very high hold percentage last year, and we are not holding to that level right now, number one,” Murren said. “And secondly, there are a few players who just did not come to the United States, partly due to the government shutdown, some other logistical issues. We lost some groups to places like Sydney and London. So, we can thank our total government for that.”
MGM shares have climbed 20 percent since the beginning of the year. In the final minutes of trading on Wednesday, shares hit $29.23, a drop of 12 percent in the last 12 months.
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