Shares in MGM Resorts (MGM 0.35%) have soared 38% year to date, as investors buy into the company's recovery story. Like with all casino operators, the 2020 coronavirus pandemic was a rough ride. But MGM used the crisis as an opportunity to strengthen its business model and create an industry-leading sports betting platform. Let's explore the reasons why it's not too late to bet on the stock. 

Bouncing back

Second-quarter revenue surged 683% year over year to $2.3 billion, and MGM reversed a $936 million loss last year to post net income of $90.3 million in the period. MGM is enjoying easy comps against 2020, but there is still more work to be done. Sales are still down 30% against 2019. But operating margins are essentially the same at 12%, which is impressive considering potential lingering impacts from the pandemic (this could include more sanitation expenditure, COVID testing, and similar costs). 

Las Vegas at night.

Image source: Getty Images.

MGM could also get a much-needed boost from the easing of restrictions in China, where it generated 22% of sales before the pandemic. In August, Macau extended its COVID testing window from 48 hours to 7 days for visitors from the mainland, which could help accelerate the recovery in the gaming hub. 

Management is also boosting its investments in the region by increasing its upscale hotel suite inventory and refreshing the gaming space at MGM Macau. But the investments don't stop with Macau. MGM also plans to build an integrated resort in Japan through a consortium with financial company Orix. The two submitted a proposal for the $9 billion property, which could potentially boost MGM's growth while giving it much-needed diversification in East Asia by mid decade.

Trouncing the competition

MGM's sports betting and online gambling app, BetMGM, has quickly established itself as an industry leader. The platform enjoys a market share of 30% in online gaming, making it No. 1. And it ranks in second place with sports betting and i-gaming combined with a market share of 24% across active jurisdictions in the U.S.

Over the long term, BetMGM expects to enjoy a total addressable market of $32 billion and aims for a share of 20% to 25% in the U.S. MGM generated $194 million in net revenue from BetMGM operations in the second quarter, but the business isn't profitable yet, and the company will split future profits with its joint-venture partner Entain Plc

What is MGM stock worth?

Trading for $43 per share, MGM Resorts is worth more now than it was in late 2019, before the pandemic. But sports betting and online gambling have become completely new revenue opportunities for the company, helping justify the boost in valuation. The return to profitability at the brick-and-mortar casinos is icing on the cake for investors.