MGM’s Empire City Casino Tour

Morgan Stanley shared its research with Casino Life magazine. Morgan Stanley toured MGM's recently acquired racino with local management. Key takeaways:

1. Confident in MGM achieving $17m savings: Morgan Stanley saw multiple upside drivers, including:

regulatory changes mean tax rate decline will save $3m
better focused marketing can increase property revenues
MGM has proven human capital it can leverage, including in analytics and procurement
improving property layout and casino floor mix by diversifying vendors and products.

2. Cross-selling opportunities: Empire City’s customer database could visit regional MGM properties (Borgata and Springfield) and other MGM properties. Vice versa, MGM could cross-sell Empire City Casino to its existing customer database. Cross-property plays already underway. MGM's rewards program roll-out at the property 4Q19.

3. March was an impressive month: Empire City posted its highest monthly GGR since 2011. Note: Moran Stanley sees this as a positive for its regional coverage in general.

4. Located 15 miles from Times Square: With only half of its 97 acres built on and significant unused space in the existing facility, MGM can easily expand operations at Empire City Casino. Morgan Stanley considers such capex would require a full casino license, which is unlikely pre-2023.