Author: David Mckee

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Circa picketed; Sundry green shoots in Vegas; Sports book busted

If you cruise by Circa, you’re liable to see members of Teamsters Local 986 walking a picket line on behalf of the ‘Circa Seven,’ a group of unfortunate warehouse workers. The seven were employed by Derek Stevens‘ Three Corners company, which services Circa. What caused the Circa Seven to get the axe? According to the Teamsters, it discovered they were pursuing union membership and gave them the chop. “The Circa Seven came to work, informed that their jobs were ‘outsourced’ to [subcontractor] QLI and then fired without warning,” claims Local 986 Secretary-Treasurer Chris Griswold. “It is heartless of this company to displace its own workers during the worst health crisis in a century.” If you agree with the Teamsters, you can make your feelings known online. If you side with Stevens, you of course don’t need to do anything … except maybe cross a picket line.

Room rates on the Las Vegas Strip were tanking this time last year, so maybe improvement is in eye of the beholder but they continue to trend upward. For April 18-24 they’re 28% higher, averaging $129/night, including an encouraging 2% improvement in weekday rates (weekends are up an eye-popping 73%). Mind you, at that time last year the averages were -33% midweek, -56% weekend and -44% overall. Caesars Entertainment is seeing a 23% midweek climb and a 106% improvement on the weekend. Venelazzo leapt 185% weekends and 50% weekdays. Convention-dependent MGM Resorts International saw only a 1% midweek nudge, plus a 70% weekend uptick, while Wynncore tumbled 26% midweek, even on such an easy comparison, and bumped up just 12% on the weekend. Was it too soon for Encore to reopen?

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Strip sux but locals steadfast; Virgin LV loses its virginity

Things simply have to get better on the Las Vegas Strip. Not even a Feb. 15 capacity increase saved some casinos from perdition. Let’s hope February represented a bottoming-out of gaming revenues, as tourists starting flocking back this month. Strip gaming win was down a precipitous 41.5% to $348.5 million, led by slot winnings that were 34% down (to $189 million) on 27% less coin-in. Baccarat continues to be a black hole into which casinos plunged 58% on 58.5% less wagering. Players dropped 36% less on the green felt at non-baccarat table games but revenues suffered 43%, as punters bet less and won more. The Strip’s woes can be explained by a 54% falloff in visitation. 1.6 million arriving and departed airline passengers represented a 58% decline, including a measly 8,033 international travelers. Conversely, auto traffic was actually up at the California border by 1.5%. Hotel occupancy was a woeful 42%, depressing revenue per available room by 65% and room rates 26.5% (to $104/night). With no measurable convention business, midweek occupancy was 32% compared to 63% on weekends.

Las Vegas locals casinos were the bright spot, flat at $186 million, quite an accomplishment in a depleted Silver State economy. (Fortunately, employment numbers have been trending positively.) Tighter slots meant only 1% less win despite 6% lower coin-in. Perhaps the infusion of Circa eased Downtown‘s pain. It was only off 7% ($51.5 million), while North Las Vegas slipped 12% ($19 million), the Boulder Strip dipped 2% ($64 million) and Laughlin tumbled 31% ($33 million). Miscellaneous Clark County casinos were up 3.5% ($103 million) and Mesquite climbed 5% ($13 million). Upstate, Reno slid 14% to $50 million but Lake Tahoe leapt 16% to $20.5 million. Utahns shunned Wendover, down 9.5% to $17.5 million.

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Demand, prices way up on the Strip; Big casino push in Texas

Emboldened by a combination of new, 50% capacity limits in Nevada and $1,400 stimulus checks, visitors poured into Las Vegas and resorts were quick to profiteer, er, monetize the nascent demand. The Strat more than tripled room rates, from $50/night to $179, this at a place that was just breaking even a few months ago. Paris-Las Vegas vaulted from $55/night to $284. The Cosmopolitan of Las Vegas was even bolder, charging as much as $610 a night for a room. Prices were described as being “at pre-pandemic levels,” which is manna in the desert to hoteliers. Whether this bounce is sustainable—jobs, jobs, jobs—remains to be seen but if it is, it would mean a Vegas recovery much sooner than we (or the industry) expected. In this return to the Good Old Days, resorts reverted to some of their bad old ways: Bally’s was charging $13 for a bottle of Dos Equis. Really? If there’s one thing that can nip a recovery in the bud it’s price-gouging, although demand for Sin City could be so unabated that customers are willing to suffer anything for it.

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Quote of the Day

“Much of what takes place presently seems to be based between the two extremes of corporate image-cleansing and the glorification of victimhood. Moreover, the degree of virtue signaling at these extremes is neither constructive nor pretty to watch. This all needs to change to give the appearance that the problem gambling effort has adult supervision. In short, I think we all need to try harder.”—Richard Schuetz, on the dysfunction of anti-problem-gambling campaigns … and much else.

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Packer out, Blackstone in at Crown?

Cosmopolitan of Las Vegas owner Blackstone Group threw a lifeline to troubled Crown Resorts, in the form of a $6.2 billion buyout offer. The rope comes with a substantial string attached—Australian regulators must preserve the (sleazy) Crown casino licenses. Without them, Crown isn’t worth that much, it seems. Heck, it’s not worth that much now: Blackstone’s offer was for $9.15/share, which is 20% higher from the pittance where Crown is trading. The company has already lost its Sydney license, and its ones in Melbourne and Perth are under investigation. Blackstone is quite the high roller at the moment, having just plunked down $6 billion for Extended Stay America (in tandem with Starwood Capital Group). In the meantime, Blackstone may not find it so easy to just demand three Australian casino licenses, given the depths of the problems at Crown, which has been found to have facilitated money laundering, among other sins.

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A cautionary tale

Las Vegas, be warned: This could be you. We’re referring to the chaos in Miami, where an 8 p.m.-6 a.m. curfew has been imposed by police in response to widespread hooliganism. The out-of-control situation in the streets was brought on by Gov. Ron DeSantis‘ open-for-business, head-in-the-sand attitude toward Coronavirus. There are no capacity limits, no masking mandates and a general elimination of restrictions meant to protect the public health. The result was thousands of overeager party animals descending upon Miami to, as City Manager Raul Aguila put it, “engage in lawlessness and an anything-goes party attitude.” Add Mayor Dan Gelber (D), “there are very few places that have been open as our state have been open. We’re in the middle of a pandemic. The virus is still very present in our community. We have 1,000 infections a day on most days.” That will fall on deaf ears in the governor’s mansion, where a Luddite, anti-science attitude holds sway.

Consequently, you have what The Associated Press describes as an “unruly spring break crowd gathering by the thousands, fighting in the streets, destroying restaurant property, and refusing to wear masks.” Five combined police forces and even SWAT teams have been all but powerless to control the rabble. DeSantis probably thinks the mob is good for business but Aguila responds that they’re not patronizing local businesses or restaurants, merely crowding the streets … twerking and ‘making it rain.’ Streets have been blocked by rioters, shots fired and at least one restaurant destroyed outright. As for the law-enforcement response, tourist Heather Price moped “I just feel like it’s really not fair. People paid a lot of money to come all the way out here, just to not be able to do the activities they wanted to.”

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Las Vegas: Are happy days here again?; Sands dibs NYC

As we’ve often said, when the American economy gets the flu (literally, in this case), Las Vegas catches pneumonia. During the depths of the Covid-19 pandemic, unemployment in Vegas levitated to 34%. Today it is a still-unhealthy 10.5%. Nonetheless, the Wall Street Journal paid a visit to Sin City and found a spirit of optimism, whether manifested in full classes at dealer schools or the $6.25 billion paid for Venelazzo. As one dealer-school manager put it, “You have to invest in the idea that Vegas always comes back bigger and better.” As the WSJ noted, Las Vegas may be attempting to diversify economically but it lives or dies with tourism.

“An all-time high of 42.9 million people visited Las Vegas in 2016, and convention attendance reached a record-setting 6.6 million meeting attendees in 2019,” reports the WSJ and while Vegas is recovering perhaps faster than anticipated, the brain trusts with whom reporters spoke don’t expect pre-pandemic numbers to return until sometime in spring 2022 or later. It’s a long climb back from 2020’s perigee of 55% fewer visitors (numbers not seen since 1991) and 43% less Strip gambling revenue, after all. A state budget overly dependent on gaming revenues and entertainment taxes is looking at a recovery not before 2023 at the earliest. Room rates have yet to recover their January 2020 average of $153/night. Hopefully, for the average Las Vegan, the road back will not be as long as after the Great Recession, when inflation-adjusted personal income didn’t return to normal until 2014.

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A.C.: A month to forget; Trump sticks it to Miami

Casino revenue headed 32% south in Atlantic City last month, to $148 million. Those were augmented with $46 million in sports-betting dollars and $94 million from Internet gambling (+80%), so that probably counts as a silver lining to a dark cloud. This Friday’s increase of capacity limits from 35% to 50% is expected to boost casino revenues. February slot winnings were -31.5% and table win -34%. Borgata had a terrible month at the slots, -45%, while its table-game winnings were 36% downward. Quarter-to-date, Borgata is tracking over twice as badly as JP Morgan analyst Joseph Greff projected. The Caesars Entertainment threesome fared even worse, down 40%, pretty evenly divided between slots and tables. Harrah’s Resort performed most weakly, falling 43% to $15 million, while Caesars Atlantic City was -37% to $13 million and Tropicana Atlantic City tumbled 38.5% to a Caesars-best $16 million.

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Trop sale teased; Michigan sports betting explosive

Shutterstock: John Patrick Ross

Gaming & Leisure Properties Inc. hosted JP Morgan analysts last week and tried to get them all hot and bothered with talk of a Tropicana Las Vegas sale. It said it felt one would happen sooner, not later, adding that it “feels like it is signing one [non-disclosure agreement] per day.” Before we get our panties wet, let it be known that GLPI then admitted that it’s only “a handful of serious buyers that have capital to effectuate a transaction.” Talk is cheap and so are NDAs, it would appear. The Trop would have to endure yet another market repositioning, whoever buys it and GLPI confesses that a sale will be easier said than done (it “has heard a broad range of prices, it notes the devil is in the details to finalize a deal”). A bigger opportunity would appear to be the eruption of sports betting, which “should help crossover play to table games.” It also makes casino operators more credit-worthy, which GLPI can exploit by purchasing their real estate.

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Wall Street meets Las Vegas, Part II

Station Casinos dispatched Executive Vice President Rodney Atamian to meet with JP Morgan analysts last week. According to Joseph Greff, he reported, “solid/improving visitation and spend per visit trends.” A possible increase in Nevada casino-capacity limits to 50% should propel that further, one presumes. As with other regional gaming companies, the under-40 crowd is providing the momentum as core Baby Boomers stay on the sidelines. “However, as vaccination trends have improved, this core customer has begun to return as well.” Management doesn’t anticipate promotional wars but expects some upward creep in labor costs. While undecided on the future of the Palms, Station is persuaded that whether by a sale or a reopening under “an improved cost structure/market strategy” it can be successfully monetized, although the potential new market was unspecified. As for its undeveloped real estate, Station noted strong expressions of interest both from industrial developers as well as residential builders. The fates of three closed locals casino remain hazy, however.

As for Station’s archrival, Boyd Gaming, CEO Keith Smith and CFO Josh Hirsberg showed the flag, and teased the 1Q21 numbers by disclosing “strong” January performance with “momentum continuing into February and March.” Visitation and consumer spending are higher, albeit in the 25-to-55 age stratum. Boyd expects older customers to return in 2Q-3Q21. “Of note, BYD has seen a positive uptick in business as stimulus checks get mailed, and thus expects future benefit in the coming weeks.” Indeed. Also, the wider popularity of cashless gaming appears to be increasing the slot manager’s Holy Grail, time on device.

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