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Casino Stock Buybacks Soaring, MGM, Bally's, Penn Leading

Tiffany Burroughs
Updated: 24 June 2023
2 min to read

Casino stocks, such as those of MGM Resorts International (NYSE:MGM) and Penn National Gaming (NASDAQ:PENN), which are led by the two companies, offer an ideal environment for share repurchase programs.

Since the outbreak of the coronavirus pandemic, gaming industry shareholder rewards, including buybacks and dividends, have been put on hold. For the last nine months, however, casino operators and suppliers have been leading the casino industry in terms of share buybacks. According to Edward Engel, an analyst for Roth Capital, more gaming stocks announced buyback plans during this period than any comparable period of the past 10+ years. This includes the likes of MGM’s Mandalay Bay Las Vegas. There have been 12 gaming operators/suppliers who have authorized repurchase plans since last August, and these announcements reached a peak this month. In total, the domestic gaming companies have announced $5.7 billion worth of share repurchase plans. Buybacks have become a preferred method of rewarding investors because it offers corporations flexibility across all industries. (Image: YouTube)

Although a company announces a stock buyback initiative, it does not always have to commit to the entire dollar amount. Furthermore, companies may choose to repurchase their shares at any point, making the process much more flexible than periodic dividend payments. Casino Stock Buyback Binge Still Has Room to Grow.

Casino Stock Buyback Binge Has More in Tank

Since August 2021, 12 gaming operators/suppliers have authorized repurchase plans nearing a total of $5.7bn. MGM Resorts, the largest operator on the Las Vegas Strip, has the highest authorization of $2.24bn. Remaining authorizations, on average, account for 11% of market caps. Other companies with significant remaining authorizations include Light & Wonder (NASDAQ:LNW) with $700 million, Penn National with $600 million, Churchill Downs (NASDAQ:CHDN) with $421 million, and Bally’s (NYSE:BALY) with $335 million. Since last year, MGM Resorts has been an active purchaser of its own shares and other operators and suppliers have similarly begun to follow suit.

Boyd Gaming (NYSE:BYD), Golden Entertainment (NASDAQ:GDEN), and Red Rock Resorts (NASDAQ:RRR) – three operators with significant Las Vegas locals exposure – have a total of $269 million left on buyback programs, according to Roth Capital. Bally’s holds the largest percentage of market capitalization for its remaining repurchase program at an impressive 26%; other casino operators top out at 18%. Casinos stocks appear to prefer buybacks to dividends.

Casino Stock Buybacks Preferred to Dividends

Amid the peak of the COVID-19 pandemic in 2020, gaming operators decided to pull share rewards in a bid to conserve capital. Buybacks have since resumed, but dividends remain shelved. Boyd and Red Rock have thus far been the only companies to revive dividends since then. Meanwhile, MGM reinstated a small dividend following a cut due to the coronavirus, however Las Vegas Sands (NYSE:LVS) and Wynn Resorts (NASDAQ:WYNN) have not yet re-established payouts and have not taken part in the buyback frenzy seen in the industry. During Sands’ first-quarter earnings conference call last month, the company stated they are more likely to recommence dividends than turn to buybacks for repaying investors.

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Updated: 24 June 2023
2 min to read

The professional casino player, author of books and articles about gambling, creator of gaming content. I study this field and am happy to share my knowledge and skills acquired over the years with everyone