MGM Resorts International (MGM:US), the largest owner of casinos on the Las Vegas Strip, was picked by Maryland regulators to build a $925 million resort south of Washington.
The ruling by the Maryland Video Lottery Facility Location Commission today will let MGM build the state’s sixth casino and the one nearest the U.S. capital, a wealthy metropolitan area of more than 5.8 million residents. MGM beat two rival bidders, including Penn National Gaming Inc., owner of a West Virginia casino that stands to lose business to the new resort.
MGM Chief Executive Officer Jim Murren said the casino will be a draw for Washington tourists, as well as residents, and generate about $100 million in non-gambling revenue, such as from concerts and special events.
“This can be the most commercially successful resort outside of Las Vegas, from a profit standpoint,” Murren told reporters in Baltimore.
The casino was authorized in a 2012 referendum approved by Maryland voters, which also allowed the introduction of table games, such as roulette and blackjack, instead of just slot machines. It marked the latest addition to the East Coast’s growing casino industry, which has swelled as elected officials sought ways to raise revenue after the recession.
“This project shows that there’s an increased openness for casino gambling that a generation ago would not have been considered,” David G. Schwartz, director of the Center for Gaming Research at the University of Nevada Las Vegas, said in an interview before the decision was announced. “You had Vegas, casinos on tribal land. Now it’s accepted that you’ll have at least one in most major cities.”
The MGM casino will be at the National Harbor in Prince George’s County, a site favored by local officials. Consultants who reviewed competing proposals ahead of today’s decision estimated Las Vegas-based MGM’s plan would draw more business and create more jobs than competing ones from Penn National and closely held Greenwood Racing Inc.
“It was generally expected that MGM would be the winning bidder, and it would be yet another competitive challenge for Penn,” Jake Fuller, an analyst who follows casino operators for Arlington, Virginia-based FBR & Co., said before the ruling.
The MGM National Harbor plan includes a casino with 3,600 slots, 140 table games and a 300-suite hotel with a luxury spa and rooftop pool. It also calls for shopping, restaurants and a 1,200-seat theater, along with meeting and event space.
The decision caps a costly political fight between MGM and Penn National in Maryland. Each spent more than $40 million campaigning on different sides of the 2012 ballot measure, according to the National Institute on Money in State Politics, a Helena, Montana, group that tracks campaign spending.
MGM supported the measure. Wyomissing, Pennsylvania-based Penn National was opposed. It owns a casino in Charles Town, West Virginia, about 70 miles northwest of the proposed site near Washington. When the measure passed, Penn National proposed Rosecroft Raceway, a horse-racing track it owns in the Washington suburbs, as the site of the newest casino.
The growth in Maryland, which legalized casinos in 2008, underscores the industry’s expansion as states chip away at a business once dominated by Nevada and Atlantic City, New Jersey.
New York voters in November passed a ballot measure allowing as many as seven casinos. Ohio opened its first four last year, while Illinois added slot machines in bars. Nevada, Delaware and New Jersey began taking online bets in 2013. Massachusetts will award three casino licenses next year, while Pennsylvania is expected to award a license in the Philadelphia market, or the 13th for the state.
Casinos contributed $8.6 billion in taxes to states and local governments in 2012, an 8.5 percent increase from the prior year, according the Washington-based American Gaming Association, an industry trade group.
MGM was little changed $22.72 at the close in New York. The shares have almost doubled this year. Penn National Gaming rose 1 percent to $14.26 and is up 28 percent in 2013.
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