steady roll-up

A safe bet

MGM Mirage can and will  acquire Mandalay Resort Group (at least as far as the boards of the two companies are concerned). That leaves only antitrust approval for the largest gaming merger ever to take place, at around $8 billion in total assets. The acquisition will catapult MGM Mirage from being the #2 gaming company in the world to #1, beating out current leader Caesars Entertainment (formerly Park Place).

The two hotel/casino chains dominate Las Vegas's strip. MGM Mirage owns the MGM Grand, the Mirage, the Bellagio, Treasure Island, New York New York and Boardwalk. Mandalay Bay Group owns the Mandalay Bay, Luxor, Excalibur, and Circus Circus. The two together jointly own the Monte Carlo.

The new company would own over half of the 72,000 hotel rooms in the resort, and many of the most top tier hotels, especially the Bellagio and the Mandalay Bay. In addition it would own casino properties in Nevada, New Jersey, Illinois, Mississippi, and Australia. The merger comes as Las Vegas is seeing a major revival of its fortunes, in spite of the more widespread availability of gambling across the US.

This is only the biggest event in a steady roll-up in the highly profitable casino industry. MGM Grand, for example, bought the  Mirage Group only four years ago. The concentration at the top of the industry causes its own acceleration, as the bigger companies get enormous advantages in terms of promotion, convention business, supplier discounts, and streamlining back office operations. Next step for MGM Mirage, if this deal goes through, is more international expansion.  [Oligopoly Watch]

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