Caesars meets The Street; NYC shuffle; Shreveport switcheroo

Caesars Entertainment CEO Tom Reeg and Senior Vice President of Corporate Finance Brian Agnew just sat down with Deutsche Bank analyst Carlo Santarelli, who came away sufficiently impressed with the Roman Empire to maintain a “Buy” rating on CZR. Santarelli found the execs “largely balanced and consistent,” their top priority being to reduce debt at the company, which definitely should be Job One. Other leading concerns are “operational prudence” and online execution. The analyst was pleased with “stable operations, underpinned by continued strength in Las Vegas,” as well as by continued traction towards profitability and growth in the Digital business.”

Group business in Sin City “looks solid, albeit in the face of difficult comparisons.” Rates on groups are down, mainly because much of the business was booked during Covid-affected periods when such trade needed to be incentivized. The pendulum is expected to swing in the other direction next year. The company is also anticipating a $25 million cash-flow bump from the Formula One race, not counting how it affects the casino floor. Reeg and Agnew actually expect it to be of greater incremental impact than next year’s Super Bowl, if you can imagine that.

If you’re hankering for a Flamingo sale, forget it. “Given the financing environment, we don’t expect much in the way of Strip M&A and, as such, we don’t anticipate CZR is likely to revisit its Strip asset sale in the near term.” Santarelli hinted that a non-Caesars Strip megaresort might come on the market soon-ish (Fontainebleau? Dream Las Vegas?) but that Caesars wouldn’t be a buyer. And if you think Caesars’ Las Vegas Strip properties are looking dowdy (we don’t think so but you would know better), too bad: “We don’t expect meaningful spend on LV Strip projects in the near to medium term, though management believes there are a handful of $20-30mm smaller scale projects across the portfolio, each of which can garner >20% returns on investment.”

Caesars has ambitious goals for its online products, aiming for $500 million in annual cash flow and a doubling of its i-casino market share. (It currently enjoys 10% of the OSB market.) Expect tighter i-casino holds as well as a “rolling off [of] economically inefficient partnerships … From an industry perspective, while promotions have come down, management believes the promotional behavior remains largely similar, if not more aggressive, for new state launches.” The company itself has tried to cut back on OSB promotions, resulting in “a healthy improvement in their net gaming revenue.” Indeed, in terms of efficiency, Caesars’ promotional outlays are deemed second only to those of Barstool Sports. Cash-flow margins are also expected to improve as Caesars sheds at least two of its three major partnerships (ranked in our order of least-to-greatest likelihood: the NFL, CBS Sports and ESPN).

Although it hasn’t come close to its biggest Lake Charles rivals, management believes that Horseshoe Lake Charles has had “a good start” and will yield $60 million annual ROI. The only managerial qualm is that 170 hotel rooms aren’t enough and that a second tower may be needed.

Casinos in Maryland reported their March revenue, which tallied $176.5 million, a 3.5% bump. The state was evenly split between gainers and losers, led by MGM National Harbor‘s $72.5 million (+7%) and Maryland Live‘s $64.5 million (+5%). Also up was Ocean Downs with $8 million and a 4% gain. Ceding dollars were hapless Horseshoe Baltimore (above, $18 million, -4%), Rocky Gap Resort ($5.5 million, -5%) and Hollywood Perryville ($8 million, -5.5%). Next door in West Virginia, gaming revenues nudged upwards a point, with Hollywood Charles Town slightly outperforming the overall market.

“The process to license three new Las Vegas-style casinos in the New York City area continues to grind away like a glacier scouring the side of a mountain,” writes Mark Saxon in US Bets and he’s not being hyperbolic. As Saxon notes, community-advisory boards answerable to Mayor Eric Adams (D) and Gov. Kathy Hochul (D) have the power to scuttle casino proposals even before they get to the siting-board level. One such could be Caesars’ relatively thrifty Times Square pitch, which would raise congestion and zoning concerns, Saxon writes. Residents could also (and probably will) voice strong opposition to Wynn Resorts‘ proposal for Hudson Yards, which would be proximate to a school and would require building a platform 10 acres (!) in size.

The oddball Freedom Plaza project, which would include a Ferris wheel and part of the Berlin Wall, as well as—oh yes—a casino, has the advantage of already owning seven acres near the United Nations. As strange as the something-for-everyone (marina, soccer pitches, low-income housing) seems, that could be its saving grace with local politicians. Saxon has not opinion on the “James Bond” luxury-casino notion for across the street from St. Patrick’s Cathedral but we still think it’s too daft, niche and potentially offensive to Catholics to make the final cull.

$5 billion Sands Nassau, out on Long Island, has three hoops to jump through, as it must also be approved by the county Lege, since it would be built on public lands. New York Mets owner Steve Cohen is still wheeling and dealing to put a Hard Rock-branded casino next to Citi Field. Writes Saxon, “Local leaders could be swayed by the idea of turning a somewhat blighted, industrial stretch of the city into a walkable area that would include year-round entertainment venues,” but that proximity to Resorts World New York could doom it. That leaves long-shot (and long-distance) Coney Island, to be developed by a ragtag alliance led by Saratoga Casino Holdings. It’s an hour from Manhattan, Saxon reports, and short on hotel capacity, but he thinks the whims of politicos are not to be underestimated.

Interestingly, Saxon overlooks Bally’s New York (above). The latter must be a desperation move by Bally’s Corp. indeed, as it would entail building a casino across the street from a slum, not to mention partnering with the Trump Organization, a convicted felon. Regulatory headache much?

We’ve been quietly skeptical about Foundation Gaming, the no-name casino outfit that took over “dilapidated” Diamond Jacks in Bossier City, at the behest of desperate state regulators. Now Foundation is out without having hammered a single nail on the rehabilitation of Diamond Jacks. Fortunately, the owner-to-be is a real heavyweight with a track record to boast of and whose involvement is a real vote of confidence in the challenged market: Cordish Gaming. “It will set the project back a few months, but it will greatly enhance it,” Louisiana Gaming Commission Chairman Ronnie Johns said of the flip and he’s absolutely right.

That’s not to say Cordish is letting any grass grow under its feet. It will present plans for what will undoubtedly be Shreveport Live on April 17. Cordish is all gung-ho about the rebranding but isn’t coughing up any details of how much it paid for Diamond Jacks or whether Foundation’s $200 million renovation budget will be upped. We expect that it will, however. Cordish doesn’t do things by half-measure.

Two veteran gaming executives were approved unanimously by the Nevada Gaming Control Board. One must question the approval of Joe Asher, given the taint of Cantor Gaming on his resumé but Wynn Resorts CFO Julie Cameron-Doe was such a “slam dunk” that even NGCB doofus George Assad said so. Still, one must question Nevada‘s slow-moving, hire-first-license-later process, a holdover from the Lefty Rosenthal era.