Editor's Note: Below is an excerpt from our Gaming, Lodging and Leisure team research this morning.
Our thoughts are with the people suffering directly and indirectly from this awful event.
As you may know, a Nevada man killed at least 50 people with so many more injured, at an outdoor venue on the Strip in Las Vegas near MGM’s Mandalay Bay. The shooter was positioned on the 32nd floor of that property. Many of you may be out in Las Vegas for G2E and we hope you are safe and sound.
People’s lives and well-being are our chief concern today, but the casino stocks will react to the news today. MGM Resorts (MGM) and Caesar's (CZR) maintain the most exposure to the Las Vegas Strip with 50-60% of their respective EBITDA derived there. Wynn Resorts (WYNN) generates about 25% of its EBITDA on the Strip with Las Vegas Sands (LVS) and Penn National Gaming (PENN) each below 10%.
Visitation to Las Vegas has been resilient to other tragedies (fires, smaller scale shootings, 9/11 over time, etc.) and we expect the same here, although there could be a near to intermediate term impact. The McCarran airport was briefly closed due to the incident and there is limited flight activity this morning (follow their twitter handle here).
Meanwhile, MGM Resorts via Mandalay Bay tweeted this morning that law enforcement wanted “its hotels in the vicinity on lockdown to ensure guest safety”.
Given the large number of people on the Strip at any one time, Las Vegas was a potential target for terrorism, although it appears that this was a lone wolf situation. Security measures are always in place but obviously not for something like this. There are no metal detectors to screen casino and hotel guests so it was relatively easy for the shooter to check into his room at the Mandalay Bay with concealed weapons.
MGM, which owns Mandalay Bay, will likely face lawsuits addressing negligence – whether anything was foreseeable, a fact-based inquiry: did MGM have any knowledge of the shooter, security cameras picked up something but were ignored, security officials or housekeeping reported anything, etc. Unless something comes up during that inquiry, MGM will likely not be found liable. We do not believe MGM or any other casino company was affiliated with the concert promoter or venue, other than MGM’s hotels being promoted on the concert website, which would’ve opened up another level of legal exposure.
It’s unclear if any new security measures will be required by government officials or instituted voluntarily by the casino hotels. One possibility would be metal detectors. We’ve seen that in other jurisdictions such as in Manila, a frequent target of terrorism. First hand, as a visitor to those properties, it can be a hassle to go through airport type detectors which can cause lines and disruption. Moreover, enhanced security can be costly.
We have no doubt that security will be a much discussed topic in Nevada in the coming months.
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UPDATE: While MGM is not affiliated with the concert promoter, they do own the venue where the concert was held. 3901 South Las Vegas Boulevard is known as “Village at The Lot” and is a common venue for concerts. This may open up MGM to additional legal liability.
