IAC Buys MGM Stake For $1 Billion

The digital media giant IAC has built a $1 billion stake in MGM Resorts, causing the casino brand’s shares to jump to 13 percent.

With this news, MGM Resorts shares soared 13 percent on Monday as the $1bn stake injection by IAC is equivalent to around 12 percent of the shares in the casino company.

While calling the investment a “once in a decade” opportunity, IAC highlighted the regulatory mechanisms that restrain online gambling sites to retail properties and give incumbents a huge advantage.

MGM is on board too

Welcoming this once-in-a-decade investment, MGM announced it would invite IAC to join its board. CEO and President of MGM Resorts International, Bill Hornbuckle, said it was a natural fit as the casino entity looked to expand its online sports betting and gaming products.

In addition, the investment news has been equally welcoming for MGM’s JV partner GVC. Both partners recently increased their investment in the JV, promising to spend “whatever it takes” to make BetMGM a leader in the US online sports betting.

Plus, the deal suggests the ever-growing keenness among US investors for online gambling exposure. The tendency has led to the fresh surge in reverse listings from entities like Rush Street Interactive and Golden Nugget.

Who is IAC?

Led by Barry Diller, IAC defines itself as a “builder of online companies.” The digital media company has previously assisted companies like Investopedia, Vimeo, and Daily Beast.

Earlier this year, IAC also developed the online dating giant Match Group.

IAC pledged to offer its experience in e-commerce to MGM as it built out its internet gaming product. It’s yet to see how it would look like. For example, IAC noted that it would love to help MGM optimize its funnel of MLife loyalty clients and draw new digital-first audiences.

Online and offline synergies

In a letter to investors, IAC noted that “MGM pairs a strong and visible presence while branding with talented online operators in a rapidly growing joint venture (Roar Digital) in online gaming.”

While comparing MGM to Disney, IAC said that its physical presence ensured it an advantage over pure-play rivals with different “avenues to monetize the same intellectual property.”

That might be using the same betting odds online and offline, or cross-selling MLife loyalty clients into the online casino.

IAC further said that MGM and its joint venture partner GVC have just begun to deliver the products. The digital media giant said it would never bet the company, adding that it is a large bet for IAC.