Two of Las Vegas’ biggest casino players could change hands at the same time now that media mogul Barry Diller has tendered a buyout offer of MGM Resorts.
It has been a fast-and-furious stretch for the Las Vegas casino industry, with the sale of Caesars Entertainment and a takeover offer of MGM Resorts landing within days of each other. After a lacklustre 2025, the quick timing of the two announcements is perhaps an indication that investors are more bullish than ever on the market despite persistent headwinds.
Rumoured for months, the sale and take-private of Caesars by Tilman Fertitta is hardly surprising. Valued at $17.6 billion when factoring in assumed debt, Caesars has sunk to around its lowest levels in five years. But an unsolicited takeover offer from MGM’s largest shareholder, Barry Diller, on Monday was largely unforeseen, although industry insiders had told iGB for years that Diller was waiting for the right opportunity to move on the Strip giant.
Diller’s People Inc, formerly IAC, announced it had offered MGM $48.30 per share for the 74% of shares it doesn’t already own, valuing the business at about $18 billion. MGM quickly confirmed receipt of the offer without committing to any timelines or next steps.
Diller began investing in MGM in 2020 and has grown the stake since because he “believed it represented a rare kind of business: one with real world assets that AI cannot easily replicate or disintermediate exceptional digital growth opportunities,” according to a statement released on Monday.
“We continue to believe the market materially undervalues the power and durability of MGM’s assets,” Diller continued. “We believe MGM’s management team is superb, and that there is a compelling opportunity to support MGM’s next phase of growth and help unlock its full value.”
Takeover talks spur stock jumps
Caesars and MGM share some similarities that Fertitta and now Diller seem to be in positions to capitalise on. Both companies’ share prices had mostly languished over the past year or so, influenced heavily by struggles in Las Vegas.
The speculation surrounding the two deals has pumped both stocks – MGM traded below $40 for nearly two years before the Diller offer, and has settled at $48 as of writing. Caesars, which Fertitta acquired for $31 per share, was below $30 for about a year before the deal rumours raised it back to that level.
Both companies are also wide-ranging in Las Vegas, in that they cater to all price points from value to premium. Luxury and value segments have done well, benefitting companies such as Wynn and Red Rock. However, middle and lower tiers have been up-and-down, proving difficult for Caesars and MGM to manage.
In Q1 this year, MGM posted its first year-over-year gains in Las Vegas since 2024, but that gain was just $4 million on $2.2 billion in revenue, and adjusted EBITDAR fell 8%. Caesars, meanwhile, had flat Las Vegas revenue with a 2% adjusted EBTIDA decline. Notably, both operators missed out on downstate New York casino licences last year, which analysts feel could become the second-biggest US market outside the Strip. MGM voluntarily withdrew upon reaching the final stage and Caesars was denied by its community advisory committee.
Despite the challenges in Las Vegas, there are other appealing segments for both companies. For Caesars, its digital business has long been its biggest growth driver, and its adjusted EBITDA increased 60% YoY in Q1. MGM’s Macau business has been its standout, delivering Q1 revenue of over $1 billion. Its upcoming Japanese resort in Osaka will also drive more traffic for the region.
Headwinds persist but Las Vegas gaming up
The backdrop of both deals is a solid start to 2026 for Las Vegas, at least from a gaming perspective. Three of the first four months of the year have been positive for the Strip, and its running fiscal year total is currently 1.2% ahead of its pace YoY. Clark County as whole, which includes the Strip, downtown and the locals market, is 1.7% ahead of its performance at the same point last year.
The travel and tourism side has been less positive, as visitation has declined YoY in 14 of the last 16 months, including in April. Air traffic to Harry Reid International Airport has declined YoY in each of the first four months of the year, and its running total is 5% behind last year’s pace.
Macquarie gaming analyst Chad Beynon noted the positive gaming figures in April and Q1 but stressed caution for the market. In a research note on the monthly results, Beynon wrote that he is “waiting on more positive data points and perhaps another positive quarter to get more constructive on Vegas”.
Despite these headwinds, Diller and Fertitta have decided that now is a good time to strike, before new construction and a renewed event calendar potentially spark more growth. The market had a record-setting stretch of performance from 2021-2024 before declining slightly in 2025. In future years, the construction of projects such as Hard Rock Las Vegas, Bally’s mixed-use development and the A’s baseball stadium are expected to bring new energy to the Strip, coupled with a steady stream of large-scale events like the Super Bowl, F1, College Football Playoff and March Madness.
MGM to benefit from NBA franchise?
For MGM and Diller specifically, the potential for a Las Vegas NBA franchise is also an interesting consideration. NBA governors voted in March to approve Las Vegas as a potential expansion site and a final decision could come later this year. This short window to establish a foothold there could be an inspiration behind the offer.
MGM and Diller are co-owners of T-Mobile Arena along with Bill Foley, owner of the Golden Knights NHL franchise. The arena is the only facility in the city that could host NBA games, and already hosts the league’s NBA Cup tournament finals. Major renovations could be required before a team moves in, but given the league’s expected timeline of a 2028 debut, it is looking increasingly likely that T-Mobile would be the home court, at least for now.
“T-Mobile is part of that conversation, whether it’s short-term or long-term, all roads lead to it for now … so we’re intimately involved in those conversations,” MGM CEO Bill Hornbuckle said on the Q1 earnings call. MGM has been “asked how we would position T-Mobile for any and all bidders” and there has been “extensive interest”, Hornbuckle said.
Notably, Fertitta already owns an NBA franchise, the Houston Rockets – there has been speculation that the billionaire could pursue a Houston casino complex should Texas legalise the sector. If that occurs, Fertitta’s first casino in the Lone Star State could bear the Caesars brand. The Adelson family, founders of Las Vegas Sands, own the Dallas Mavericks franchise and have pursued a casino there as well.
Analyst reactions ho-hum
In the immediate term, neither deal has been cemented. The Caesars agreement includes a go-shop clause through 11 July and there will be numerous regulatory approvals needed to parse out Caesars’ holdings from Fertitta’s Golden Nugget brand, as well as his stake in Wynn Resorts. Diller’s offer for MGM, conversely, is just that for now.
Despite the bump in share prices for both companies, the initial reactions to both deals appear somewhat muted. Following the Caesars deal, Macquarie’s Beynon cited “modest IRR and limited upside absent a low-probability interloper” and lowered its price target to $31, in line with the offer, while downgrading to a “neutral” rating.
“CZR transitions into a merger-arbitrage profile, with the stock expected to trade modestly below the $31 headline price, driven by timing (closing likely into 2027) and regulatory approvals,” Beynon wrote. “Near-term focus will be on go-shop outcomes, though expectations remain tempered.”
On the MGM side, Seaport’s Vitaly Umansky said the operator totes “a displaced stock with an over-focus on Las Vegas performance” and a low valuation “due to its OpCo/PopCo structure”. Umansky had positive sentiments on MGM China, however, adding that Diller could divest it along with the Japan segment if a deal is struck.
“While we have had a Neutral on MGM due to concerns around Las Vegas and OpCo valuation, the buyout proposal likely is low and could potentially be done at a somewhat higher price,” he wrote.
“We do not expect a deal to close at a materially higher price than the latest trading price, assuming there is a deal to be had (and in fact the current bid may not be acceptable to the independent board members or MGM shareholders), we maintain a Neutral rating on MGM.”
After topping $51 a share on Monday, MGM fell 4% to $48.36.
