Happy Indigenous Peoples Day, especially to our tribal readers. We’re spending it nursing a nasty case of strep throat and distantly following Global Gaming Expo, which convenes today at the newly expanded Las Vegas Convention Center. This year’s G2E, like last year’s and every one before it will be smoke-free … that is, no discussion of smoking in casinos whatsover. Rest assured that Americans for Nonsmokers Rights will show up and make a fuss over what seems an unconscionable oversight. Now to the main business of the day …
In another triumph for the Marty Small (D) administration, the first anniversary for groundbreaking of Atlantic City‘s subsidized ShopRite has come and gone without a shovelful of sand being turned. The megamarket was proposed three years ago and seems no closer to happening now than then. Mind you, ShopRite is not only juiced in for annual rent of $1, it gets a yearly subsidy of $500,000. At least that would have been the sleazy deal had the Casino Reinvestment & Development Authority signed off on it. Fortunately, wiser heads at the CRDA prevailed. It’s not clear why Atlantic City needs subsidized supermarkets anyway, as it already has two Acme marts (one near the Marina District) and a Save A Lot. But the Small administration never saw a bad deal it didn’t want to make.
Last weekend, three casinos in Atlantic City—Bally’s Atlantic City, Borgata and Golden Nugget—were all reported as being “crowded” or “very crowded.” Bally’s business was driven by a $100 gift-card giveaway, it seems, while Golden Nugget was stimulated by a U.S. Navy ball being held on-property. (Borgata was presumably crowded because … well, it’s Borgata.) Nugget players also checked out the new, dealer-less table games that Tilman Fertitta has deployed, another doleful sign of the times (above and below). Slots were removed to make way for the innovation, which will be interesting to follow, as slot revenue is Atlantic City’s meat and drink.
It was a very different scene at the Nugget on Saturday. Our East Coast correspondent writes, “we first thought there was a power failure, but it was only the newest machines at the rear of the casino that went dark. The old machines were still on. Another person mentioned the same thing happened the night before at [the Nugget], and someone else added that on another occasion, the ‘outage’ lasted five hours.” It sounds like Tilman needs to invest in some preventive maintenance, stat. Or is this (like the dealer-free table games) a preview of what we can expect from his Las Vegas Strip megaresort?
Our scribe also got over to Ocean Casino Resort, which he gives big ups for having the best breakfast spot on the Boardwalk: Caffecino, which boasts an expansive (for Atlantic City) 20 tables. Comparable spots at Borgata (eight to 10 people, tops), Golden Nugget (15 people) and Bally’s (ditto) evidently don’t compare. And there’s more. Ocean’s is the only one in the hotel lobby AND: “As a bonus, they are the only one to have Pork Roll, Egg & Cheese in addition to the usual Bacon, Egg, & Cheese or Sausage, Egg & Cheese. Pork Roll is a New Jersey ‘thing’ as you can’t get the same in Pennsylvania or Delaware.” Seen above is the view from Ocean’s Dolce Mare restaurant when the surf is high and the rain is heavy.
Getting back to the subject of capex, Penn Entertainment announced a slew of upgrades to its portfolio of casinos. In Illinois—finally—Empress Joliet and Hollywood Aurora will move their casinos ashore (a privilege for which Penn will pay $100 million). It’s a bit late to stave off American Place in Waukegan but maybe Penn CEO Jay Snowden got tired of Dan Lee‘s jibes at his outdated casinos in quarterly conference calls. That’s not all. A second hotel tower is in the works for M Resort, as well as one for Hollywood Columbus in Ohio. Snowden will pay for this by restructuring his lease with Gaming & Leisure Properties, which will kick in at least $225 million for the Illinois upgrades, plus another $350 million toward the total capital cost of $850 million. No word yet on how Penn will fund the remainder (although it’s getting a $50 million subsidy from the City of Aurora) but the markets may be skeptical, seeing as Penn stock is down 41% year to date.
The new Aurora casino will cost $310 million post-subsidy, offer 50 tables and 900 slots, and begin construction in about a year. Joliet’s project will be a mere $185 million but will boast 800 slots and 45 tables. The construction timeline is the same. Hollywood Columbus’ hotel will cost $100 million and add 180 rooms. No construction timeline is available for the M Resort hotel addition, which will add 384 rooms at a $206 million price tag.
Deutsche Bank analyst Carlo Santarelli gave the news a mixed review, writing that “we view both the NV and OH hotel tower projects as front footed and growth oriented, as both properties have experienced strong demand and are well positioned within their geographies.” As for the Illinois expenditures, he characterized them (correctly) as “defensive” and described Penn’s Land of Lincoln performance as “relatively lackluster.” (It looks like microscopic-revenue Argosy Belle will be left to its own devices.) “Further, we question how investors will receive the addition of, an assumed, ~$45 mm in new lease debt (~$360 mm of capitalized rent debt), as well as $225-275 mm of incremental spend off PENN’s balance sheet, at a time when gaming balance sheets are under scrutiny.”
Numbers are in for September’s online sports betting in New York State, where operators realized $143 million on $1.25 billion in handle (of course, they realized a great deal less after taxes). The industry is keeping mum about how much went back out in promotions, which is becoming a touchy topic. FanDuel captured the most revenue ($66 million), followed by DraftKings ($45 million), then Caesars Sportsbook, way back at $19 million. DraftKings improved its market share the greatest, while BetMGM lost the most ground. Dividing the remaining $13 million were BetMGM, BetRivers, PointsBet, WynnBet, WorldBET (Genting in drag) and BallyBet. To look at it positively, do they have anywhere to go but up? And to give the devil—Andrew Cuomo—his due, the ex-guy had Big Gaming pegged, knowing it would swallow a consfiscatory, 51% tax bill for the privilege of losing money in the Empire State, simply because its constituents couldn’t bear to be on the outside looking in.
Jottings: Taking a page from Donald Trump, sleazy gaming baron Kazuo Okada and his minions forcibly seized control of Okada Manila last May 31. The casino putsch was ultimately overthrown by the courts and now Kazuo is in the hot seat. The Philippines Department of Justice has handed down indictments of him and three associates for grave coercion in an “unlawful plan to take control and possession of Okada Manila.” Okada’s three henchmen are indicted for their direct actions, Okada for having prior knowledge of the coup … Elsewhere in the Pacific Rim, researchers offered dueling versions of the future of Macao. Eventual return to world dominance was predicted by Fitch Ratings while boffins at the University of Macau say the Macanese economy will contract over 29% this year and recovery is “a long way off” … The hits keep coming for ethically challenged Star Entertainment. Not only is it on the brink of losing its New South Wales license, Queensland will probably be next. Top state regulator Shannon Fentiman says Star should get one last chance before the axe falls … The Culinary Union continues to bedevil Station Casinos at Nevada Gaming Commission hearings—but don’t expect the Station-slurping commissioners to take action anytime soon.
Quote of the Day: “It does not require many words to speak the truth.”—Chief Joseph, warrior and statesman.