It's not often that a company is heavily directly affected by an election, but in the case of Wynn Resorts (NASDAQ:WYNN) and MGM Resorts (NYSE:MGM) Tuesday's election was a nail biter. On the ballot in Massachusetts was a referendum that could have overturned the provision that allowed for a slots parlor and new resorts by Wynn and MGM Resorts in the state.
The vote will allow billions of new investment to go forward and could redefine gambling in the Northeastern U.S.
Wynn's new resort could redefine urban gambling
Steve Wynn recently said that he's never been as excited for a resort as he is about the one he's designed for Everett, Massachusetts, a town just across the river from downtown Boston. The $1.6 billion resort will overlook downtown Boston from the edge of the Mystic River and is Wynn Resorts' first move into the urban gaming market.
Wynn has described his vision for the resort as an entertainment and food and beverage attraction that happens to offer gambling as well. We'll see if the design follows that plan but it's not out of the question given Wynn's history.
Wynn Las Vegas generated nearly 60% of its revenue from nongaming activities and has some of the best performing restaurants and nightclubs in the world. Nightclubs probably won't work as well in Everett as they do in Las Vegas but it shows that Wynn is able to adapt offerings to optimize revenue in each respective marketplace.
Estimates project that Wynn's new resort could generate $800 million in revenue and $200 million to $300 million in EBITDA annually. That's not as strong a return as the company earns in Macau but it's important in expanding the Wynn brand around the world and could be the first of many urban projects.
MGM Resorts' vision for Western
MGM's new resort will be in Springfield, a less attractive location, but it'll be a cheaper project as well. The planned $800 million resort will be built on a 14.5 acre lot and contain 250 hotel rooms, shops open to Main Street, and of course a casino floor.
This will be an urban project from MGM, something it's done before in downtown Detroit. The city of Springfield used annual gaming revenue of $479 million as their base projection and if that comes to pass the project should be a huge success for MGM.
The only caution I have for MGM investors with this resort is that regional gaming has come under fire in recent years and Springfield already has competition in Connecticut, Pennsylvania, and even New York. It isn't like Springfield will be a draw in the Northeast like Atlantic City was in the 1980s. This isn't to say that the project won't be profitable but that it's high risk considering the recent struggles of other resorts in the area.
The biggest winner from Tuesday's referendum
I think Wynn's property near an affluent urban center like Boston is simply lower risk than MGM's property in Springfield. But it'll be a few years before we see if that's true.
In the mean time, Wynn Resorts and MGM Resorts have a new growth opportunity and thousands of people will be put to work building more than $2 billion in new resorts. For these companies that was a big win from Tuesday's referendum.