Gaming regulator draws criticism after ‘second-guessing’ MGM business decisions
A Nevada gaming regulator took an unusual step in questioning the past and present leadership of MGM Resorts International, saying the casino giant made poor financial decisions and criticized declines in the company’s stock price while he was a shareholder in the business.
Gaming Control Board member George Assad made the remarks during a public hearing in Carson City on Wednesday while the panel was considering an application by MGM to again extend the company’s approval for interactive gaming.
Assad told MGM Resorts attorney Chandler Pohl that he would “love to see MGM flourish and become one of the leaders in the industry again.” However, he questioned the business success of the company’s MGM Springfield in Massachusetts, one of three casino resorts in the state.
“The operation [isn’t] doing so well,” Assad said.
The property recorded its single-highest-ever annual gaming revenue total in 2022.
A spokesman for MGM Resorts said the company declined to comment on Assad’s remarks. Assad did not return a request for comment on Thursday.
Assad is a former Las Vegas judge who was appointed to the control board in January by Gov. Joe Lombardo. The three-person board makes recommendations on licensing and other matters to the five-person Nevada Gaming Commissions.
A spokeswoman for the governor declined to comment.
Several Nevada gaming attorneys, who regularly appear in front of state gaming regulators and requested anonymity in order to speak freely, said Assad’s remarks were highly unusual and couldn’t recall a time when a control board member made similar off-the-cuff statements about a gaming company’s operations that were not relevant to the agenda item.
Former Nevada gaming attorney Tony Cabot, now a distinguished fellow in gaming law at UNLV’s William S. Boyd School of Law, said control board members don’t normally “second-guess” the business decisions of the company.
“Short of an extraordinary event, it really isn't a regulatory concern or shouldn't be a regulatory concern as to the honest business decisions made by a company,” said Cabot, who represented gaming clients in front of the control board for nearly 40 years.
“Regulators shouldn’t be second-guessing the business decisions of a company under their control unless it impacts their ability to effectively go forward by going broke,” Cabot said.
During the 10-minute hearing into extending the company’s application, Assad agreed with board Chairman Kirk Hendrick and board member Brittnie Watkins that MGM’s 13th waiver in delaying its launch of interactive gaming in Nevada seemed excessive.
“As a judge, we used to like the finality of cases,” Assad said, questioning why MGM had delayed starting interactive gaming in Nevada going back to its initial licensing in 2012.
MGM is one of several Nevada casino operators licensed to operate interactive gaming. The companies seek waivers from state gaming regulators on an annual basis because they have not set up operations. Interactive Nevada is poker-only, and gaming companies have said the state is too small for multiple sites.
Nevada legalized online poker in 2013, but there is just one site in operation — World Series of Poker, which is owned by Caesars Entertainment.
“It seems like the company has made some bad decisions,” Assad said, criticizing what he called MGM’s “hesitation” to launch online poker in Nevada. He suggested that MGM CEO Bill Hornbuckle should make a final decision on whether or not to activate the interactive gaming license.
“Decisions like this give me pause in terms of why can't upper management or Mr. Hornbuckle just make a decision after 11 years to either move forward with interactive gaming or not,” Assad said.
The control board unanimously recommended approval of the extension.
MGM Resorts is the 50 percent owner of BetMGM with United Kingdom-based Entain Plc. The company is considered one of the nation’s top four online sports betting operators with business in more than two dozen states.
BetMGM also has online casino activities in New Jersey, Michigan, Pennsylvania and West Virginia, but not Nevada.
Pohl told the board the company “continues to review its opportunities to maximize shareholder profits.”
Assad, however, launched into a critique of MGM's business operations, including the Massachusetts casino, which MGM opened in 2017 at a cost of $960 million.
According to the Massachusetts Gaming Commission, MGM Springfield reported more than $259.1 million in gaming revenue in 2022, second to Wynn Resorts’ Encore Boston Harbor.
Assad also discussed the shares in MGM Resorts that he owned as far back as 2008, long before he became a gaming regulator. That year, MGM CEO Terry Lanni retired and was replaced by Jim Murren.
“The stock price from when [Murren] took over dropped from, like, big time,” Assad said. “Lanni had it up from $7 all the way to $96.40 and then Mr. Murren comes in, the stock price drops into the low teens.”
Assad said he had to sell his shares in the company when was appointed to the control board but didn’t give a date.
“I still keep an eye on it,” Assad said of the stock, which closed Thursday at $42.98 on the New York Stock Exchange.
Hornbuckle was named MGM’s CEO in 2020 when Murren retired.
During The Nevada Independent’s 2021 IndyFest conference, Hornbuckle said Nevada’s gaming industry is “missing a significant opportunity for growth” amid reluctance to legalize online casino gaming.
Hornbuckle said “a whole contingent of folks who own a lot of brick and mortar (casinos) in this state” do not favor legalizing internet casino gaming. “It could be significant not only for the state, but for the industry and nationally, and potentially even on a global basis.”