#onlinedating | Having Won Big On Dating Sites, Barry Diller’s IAC Is Betting $1 Billion On Online Gaming | #bumble | #tinder | #pof

Barry Diller’s online conglomerate IAC/InterActive announced a $1 billion investment in hospitality and gambling giant MGM on Monday. The investment gives IAC, which recently spun out online dating company Match Group—the owner of Tinder and other hook-up apps—a 12% stake in the global casino operator.

Now might seem like an odd time to invest in casinos as the Covid-19 pandemic has crushed casino operator’s short-term profits—MGM lost $1 billion during Q2 while Sheldon Adelson’s Las Vegas Sands lost $922 million—but Diller says his eye is on online gambling, not in-person table games and slots.

Diller, who is chairman of IAC, wrote in a letter to shareholders with CEO Joey Levin that MGM represents a “once in a decade” opportunity for IAC to own a significant stake in a company that has yet to reach its potential online. MGM’s online gaming business barely contributes to the company’s revenue today, but that’s a good thing because IAC is taking a “very long-term view” for this investment, Diller and Levin wrote.

The pandemic has not been kind to any casino operator. MGM, according to its most recent earnings report, suffered a 91% decrease in net revenues during Q2 compared with the same quarter last year. But one bright spot, the company touts, is BetMGM, its online gaming joint venture with GVC. To date, BetMGM is operating in seven states and it expects to be live in four more by the end of 2020.

Covid-19 has been a boost to BetMGM’s gross gaming revenue in New Jersey, its largest and most mature market. Revenue is up 32% in June, compared to January. The company says BetMGM will generate over $130 million of net revenues by the end of the year, which is about 1% of what MGM made in total revenue last year. In other words, online gaming has nowhere to go but up.

The $1 billion investment news gave MGM’s stock price a 14% boost on Monday while IAC’s stock price dropped 5.5%.

Diller, who is currently worth $3 billion, built IAC into a $30 billion company (market cap) through a dizzying array of acquisitions and spinoffs. IAC has spun off 10 publicly traded companies including dating giant Match Group, online travel companies Expedia and TripAdvisor, and Ticketmaster.

Currently, IAC owns video platform Vimeo and ANGI Homeservices, which owns home improvement sites Handy, Angie’s List and HomeAdvisor. Late last year, IAC acquired Care.com, an online marketplace to find babysitters and adult caretakers.

Before IAC, Diller worked in Hollywood, first in the mail room at William Morris talent agency and eventually he rose to chief executive at Paramount, which produced films like Saturday Night Fever, Grease and Raiders of the Lost Ark under his leadership. In 1985, Diller helped Rupert Murdoch build Fox Broadcasting into the fourth television network.

All of Diller’s prior success doesn’t mean IAC’s $1 billion investment in MGM is a sure bet. According to a recent report written by Macquarie Insights, MGM, the biggest Las Vegas operator with 30% of all gaming revenue on the Strip—whose properties include the Bellagio and New York, New York—lost a staggering $14.4 million per day during the pandemic lockdown. Analysts predict that Vegas and the casino operators will rebound in three to seven years.

As for online gaming, will it overtake in-person casinos? Alex Bumazhny, Fitch’s director of gaming, lodging and leisure, says not to hold your breath.  

“Land based gaming will be the top-line revenue driver for these companies,” Bumazhny says. “Online gaming will not overtake land-based in the foreseeable future.”

Diller has made his mark by championing underdog assets. And with MGM’s online gaming segment, which IAC described in a letter to shareholders as having “a portion of its revenue so small that it rounds down to zero,” Diller has found his newest underdog.


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