How Does MGM Resorts Make Money?

MGM Resorts International generates revenue through casino gambling, hotel rooms, food & beverage, entertainment, and conventions at its portfolio of iconic properties. The company earns approximately $17.2 billion in annual net revenue, making it one of the largest gaming and hospitality companies in the world. MGM operates 31 properties globally, including 18 on the Las Vegas Strip and throughout the U.S., plus MGM Macau and MGM Cotai in China. The Las Vegas Strip alone contributes roughly $8.5 billion — nearly half of total revenue. Beyond physical casinos, MGM also earns from its 56% ownership stake in BetMGM, one of the leading U.S. online sports betting and iGaming platforms.

How Do Casinos Make Money?

Casino economics work on the principle of mathematical house edge — every game is designed to pay back slightly less than what’s wagered over time. Here’s how it breaks down:

  • Slot machines (~70% of casino floor revenue): The simplest profit engine. Slots have a house edge of 5-15%, meaning for every $100 wagered, the casino keeps $5-$15 on average. Modern penny slots are especially profitable because players bet across many lines simultaneously.
  • Table games (~30% of casino floor revenue): Blackjack (house edge ~0.5-2%), roulette (~5.3%), baccarat (~1.1%), craps (~1.4%). While individual edges are smaller, high table minimums ($25-$500+) and high-roller play generate enormous absolute profits.
  • The “hold” percentage: Casinos report “hold” — the percentage of chips purchased that the casino ultimately keeps. Vegas Strip table hold typically runs 15-25%, meaning for every $100 in chips bought, the casino keeps $15-$25.

But here’s the critical insight for MGM specifically: casino gambling is actually less than half of total revenue. The modern Las Vegas business model is about using casinos as traffic drivers for hotel rooms ($300-$1,000+/night), restaurants, nightclubs, shows, and conventions — which collectively carry higher margins than gaming itself.

Who Owns the Bellagio and MGM Grand?

This is complicated — and intentionally so. VICI Properties (a REIT) owns the physical real estate of the Bellagio, MGM Grand, Mandalay Bay, and most MGM Strip properties. MGM Resorts sold its real estate to VICI (and previously to Blackstone) in sale-leaseback transactions totaling $17+ billion over 2019-2023. MGM now leases the buildings back and operates them, paying roughly $3 billion annually in rent. MGM retains the brand, operations, customer relationships, and profits — but does not own the physical buildings.

This “asset-light” pivot was controversial but freed up massive capital for share buybacks, debt reduction, and growth investments like BetMGM and MGM China.

MGM’s major properties include:

  • Las Vegas Strip: Bellagio, MGM Grand, Aria, Vdara, Mandalay Bay, Delano, Park MGM, NoMad, The Mirage (closed 2024 for Hard Rock conversion), Luxor, Excalibur, New York-New York, CityCenter
  • U.S. Regional: MGM National Harbor (Maryland), MGM Springfield (Massachusetts), Borgata (Atlantic City), Beau Rivage (Mississippi), MGM Northfield Park (Ohio)
  • International: MGM Macau, MGM Cotai (both in China’s Macau SAR)

MGM Resorts (MGM) Business Model

MGM operates an integrated resort model combining gaming, hospitality, entertainment, dining, and conventions. The strategy has three pillars:

  1. Las Vegas Strip dominance — MGM controls the most resort rooms of any single operator on the Strip, creating a self-reinforcing ecosystem where conventioneers, tourists, and high-rollers circulate between MGM properties
  2. BetMGM digital growth — The 50/50 JV with Entain provides online sports betting and iGaming in 20+ states, targeting the $30B+ U.S. online gambling market
  3. Macau recovery — MGM China benefits from the post-COVID rebound in Chinese tourism to Macau, the world’s largest gambling market by revenue

The company also operates one of the largest convention spaces in the U.S. (4.6 million sq ft across Las Vegas properties), which fills hotel rooms midweek when leisure travel slows.

MGM Resorts Competitors

  • Las Vegas Sands (LVS) — Venetian (Macau), Marina Bay Sands (Singapore); pure-play Asian gaming
  • Wynn Resorts (WYNN) — Wynn/Encore (Las Vegas, Macau); ultra-luxury positioning
  • Caesars Entertainment (CZR) — Caesars Palace, Harrah’s, Horseshoe; MGM’s closest Las Vegas Strip competitor
  • DraftKings (DKNG) — Online sports betting/iGaming competitor to BetMGM
  • Flutter/FanDuel — Market leader in U.S. online sports betting
  • Hard Rock International (private) — Expanding Las Vegas presence with Mirage conversion

Caesars is MGM’s most direct competitor, operating 8 Strip properties to MGM’s comparable portfolio. In online gambling, BetMGM competes primarily with FanDuel (#1) and DraftKings (#2) for U.S. market share.

Revenue Breakdown

MGM reports across several dimensions:

By Segment:

  • Las Vegas Strip (~50%): Casino, hotel, F&B, entertainment, and convention revenue from Strip properties
  • Regional Operations (~25%): U.S. properties outside Las Vegas
  • MGM China (~18%): MGM Macau and MGM Cotai
  • BetMGM & Other (~7%): Online sports betting, iGaming, management fees

By Revenue Type (company-wide):

  • Casino Revenue (~35%): Slot win, table game win, poker
  • Hotel Revenue (~25%): Room revenue, resort fees ($50+/night at most properties)
  • Food & Beverage (~15%): Restaurants, bars, nightclubs, room service
  • Entertainment & Retail (~10%): Shows (Cirque du Soleil, concerts), retail leases
  • Convention (~5%): Meeting space rental, catering, event services
  • Other (~10%): Parking, spa, pool, management fees

Income Statement Overview

Metric FY 2024
Net Revenue ~$17.2B
Adjusted EBITDAR ~$4.3B
Operating Income ~$2.1B
Operating Margin ~12%
Net Income ~$700M
EPS ~$2.20

Note: Casino companies typically report Adjusted EBITDAR (excluding rent) as their key profitability metric because of the massive lease obligations from sale-leaseback transactions. MGM’s ~$3B in annual rent is the largest single expense item, which is why net income appears modest relative to EBITDAR.

Key Financial Metrics

  • Las Vegas Strip Properties: 18 resorts, ~36,000 hotel rooms
  • Las Vegas Strip RevPAR: ~$230/night (revenue per available room)
  • BetMGM Market Share: ~15% of U.S. online sports betting
  • MGM China GGR Share: ~11% of Macau market
  • Annual Rent Obligation: ~$3B (to VICI Properties and others)
  • Share Buybacks: $4.8B+ repurchased since 2021 (~30% of shares outstanding)
  • Convention Space: 4.6M sq ft (largest private convention operator in U.S.)

Is MGM Resorts Profitable?

Yes, but the picture varies by metric. On an Adjusted EBITDAR basis (~$4.3B), MGM is highly profitable. However, after subtracting ~$3B in rent payments, depreciation, interest, and taxes, net income drops to ~$700M. This is the trade-off of the asset-light model: MGM traded massive one-time real estate sale proceeds for permanently higher operating costs. The company is cash-flow positive and has been aggressively buying back stock (reducing share count by ~30% since 2021), which is a clear signal management believes the business generates more cash than it needs for operations.

Where Does MGM Resorts Spend Its Money?

  • Casino Operations (~20%): Dealer salaries, slot machine maintenance, gaming taxes (Nevada charges ~6.75% of gross gaming revenue)
  • Rent (~17%): Lease payments to VICI Properties and other REITs
  • Hotel Operations (~8%): Housekeeping, front desk, amenities
  • Food & Beverage (~12%): Kitchen staff, ingredients, restaurant operations
  • SGA & Corporate (~15%): Marketing, corporate staff, technology, BetMGM investment
  • Entertainment & Other (~10%): Show production, retail, convention operations
  • Depreciation & Interest (~10%): Property maintenance capex, debt service
  • Capital Expenditure (~$800M-$1B): Property renovations, room upgrades, new attractions

Gaming taxes are a significant and often overlooked expense. Nevada’s gaming tax rate (~6.75%) is low compared to states like Pennsylvania (~54% on slots) and New York (~51%), which is why Las Vegas remains uniquely profitable for casino operators.

What to Watch

  1. Macau recovery trajectory — China’s post-COVID economic weakness has slowed the Macau rebound; watch for visitation trends from mainland China
  2. BetMGM path to profitability — The online gambling venture has been cash-burning; achieving sustained profitability would be a major catalyst
  3. Las Vegas Strip supply — The Fontainebleau opening (2023) and planned Wynn/Las Vegas Sands expansions will add rooms and competition
  4. Share buyback pace — Management has been among the most aggressive repurchasers in the S&P 500; continuation signals confidence
  5. Japan IR opportunity — MGM won the Osaka integrated resort license; a $10B+ resort is planned for late 2020s, representing MGM’s biggest growth bet
  6. Convention & events calendar — Formula 1 Las Vegas Grand Prix, Super Bowl, and major conventions drive huge RevPAR spikes

MGM Resorts (MGM) Financial Summary

MGM Resorts is the largest operator on the Las Vegas Strip with a portfolio of iconic properties from the Bellagio to MGM Grand. The company has transformed into an asset-light operator through $17B+ in real estate sales, using the proceeds for massive share buybacks and growth investments in BetMGM and international expansion. With ~$4.3B in EBITDAR, strong Las Vegas fundamentals, and optionality from online gambling and Japan, MGM offers exposure to the global gaming and entertainment industry. The key risks are Macau geopolitics, rising competition on the Strip, and whether BetMGM can achieve sustainable profitability against FanDuel and DraftKings.