MGM Resorts sells Circus Circus for $825 million and the Bellagio for $4.25 billion as it makes its move into the legal sports betting market and also to expand into Japan.
The global casino giant announced on Tuesday they are selling the Circus Circus hotel-casino for $825 million to Phil Ruffin, owner of Treasure Island in Las Vegas.
MGM Resorts International will also sell the Bellagio for $4.25 billion to Blackstone investment group, and the two companies have formed a joint deal to purchase the Bellagio and then lease it back to an MGM subsidiary. MGM will hold a 5% ownership stake in the venture and $4.2 billion in cash, and will continue to run the hotel and casino, which it will rent from Blackstone for $245 million a year.
Both deals are expected to push through by the year's end.
MGM Resorts has been evaluating potential property deals to raise money and pay off debt since its board of directors formed a real-estate committee this January.
MGM Resorts Chairman and CEO Jim Murren said the sale of the two casinos will free up cash, offering MGM the flexibility it needs to operate in new and different ways. He said, "That is a better use of our capital resources than the traditional gaming model. These transactions enhance the company's strategic and operational flexibility and reinforce its commitment to targeted new growth opportunities, including securing and investing in one of the integrated resort licenses in Japan and becoming an industry leader in sports betting in the U.S."
MGM Resorts is aiming to focus on concentrating its position in the legal sports betting market and to expand into Japan.
Japan last year has approved a law, permitting up to three casino-resorts to open in the country, thereby legalizing gambling, making it a juicy venture for global casino operators to pursue licenses there.
Circus Circus opened its doors to the public in 1968 and MGM bought it in 2005.
Casino mogul Steve Wynn opened the Bellagio in 1998, but MGM took the reins in 2000 when Wynn's Mirage Resorts merged with MGM.
MGM Resorts still owns MGM Springfield in Massachusetts, MGM Grand in Las Vegas, 68% stake in MGM Growth Properties, and a 50% stake in CityCenter in Las Vegas.
The shares of MGM went up modestly after-hours. To date, its shares have climbed almost 15%.