MGM Is Ahead In The Race For A Mass. Gaming License
MGM Resorts International ( MGM ) is looking to build a $800 million casino in Springfield, Massachusetts. The project includes the creation of world class dining, retail and entertainment center on about 10 acres of land that was heavily damaged by a tornado in 2011. However, MGM is not alone in this race and the decision will depend on the state government and local voters. One of the players, Ameristar Casinos Inc., dropped out of the race earlier in December and now it all boils down to a competition between MGM and Penn National Gaming.
According to a Credit Suisse analyst, the recently concluded pitch from the two companies indicates that MGM may have an advantage due to its good quality proposal and commitment to local communities. MGM is looking to expand as the Las Vegas market saturates. Macau is an obvious place to invest in, but there are regions in the U.S. that can offer good potential for growth of the casino industry.
Massachusetts is the third wealthiest state in the U.S. with per capita income that is $7,000 higher than the U.S. average. As spending in casinos depends on disposable incomes of individuals, the entertainment district will attract gamers and tourists from all parts of Massachusetts. Furthermore, Springfield is the third largest city in Massachusetts and is located in close proximity with Connecticut. The city is well-connected with other major cities of Massachusetts and Connecticut by interstate highways. A space of more than three blocks is available for casinos and hotels in the middle of the city due to the destruction caused by a tornado last year. The proposed casino will be just 200 feet away from Interstate 91, thus eliminating transportation issues.
Our price estimate for MGM Resorts International stands $10.79 , implying a discount of about 5% to the market price.