Internet Giant IAC Buys Big Stake in MGM

Billionaire Barry Diller’s IAC/Interactive has amassed a 12 percent stake in MGM Resorts International in a bid to expand its media and technology empire into online gaming.

The Las Vegas-based casino giant’s stock (NYSE: MGM) jumped 20 percent following announcements filed with the U.S. Securities and Exchange Commission last week that IAC had spent more than $1 billion to acquire 59 million MGM shares in a series of purchases dating back to June.

“IAC’s foundational concept of seeking opportunities to build interactive businesses is our base rationale,” Diller said in a statement. “There is a digital-first opportunity within MGM Resorts’ already impressive offline businesses, and with our experience, we hope we can strongly contribute to the growth of online gaming.”

MGM Chairman Paul Salem responded by welcoming IAC as “a long-term strategic partner” and offering the company a seat on the board of directors.

Diller, 78, the founder of Fox Broadcasting Co. and USA Broadcasting and chairman of online travel giant Expedia, is worth around $3 billion, according to Forbes. New York-based IAC, which he formed in 1995, commands a portfolio that includes Vimeo, Dotdash and Care.com, among others, and holds majority stakes in Match Group parent company of popular dating platforms Tinder, OkCupid and Match.com and ANGI Homeservices, which owns HomeAdvisor, Angie’s List and Handy.

As Salem noted, Diller and IAC Chief Executive Joey Levin “bring vast experience in both entertainment and online commerce, and we will take full advantage of their experience.”

The fact that it is “unusual” for IAC to acquire equity in the public markets is an indication for Deutsche Bank gaming analyst Carlo Santarelli him the company “is clearly, and stated as much in its investor letter, taking a long-term view of the online opportunity within gaming.”

This is not surprising. Since the coronavirus pandemic hit, observers in the U.S. are growing steadily more bullish on the future of remote gambling and betting compared with bricks and mortar casinos.

As Eilers and Krejcik analyst Chris Grove put it to industry newsletter CDC Gaming Reports, “The amount of marketing money that will be sloshing around legal online gambling in the U.S. all but ensures that media companies will explore every viable angle into the market.”

MGM’s BetMGM remote platform, developed in partnership with UK-based internet betting giant GVC Holdings, is live in seven states and plans to be operating in four more by the end of the year.

Analyst James Wheatcroft, who covers GVC for Jefferies in the UK, said, “We anticipate that i-gaming is the next logical step in the legislative process, with casino-oriented MGM well-placed to benefit.”

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