Category: Casino News

That’s how JP Morgan analyst Joseph Greff described the online sports-betting bill enacted by the New York State Lege. The latter essentially caved to Gov. Andrew Cuomo (D), giving control of OSB to the state lottery. Instead of the one-operator solution proposed by Cuomo there will be … wait for it … two. Big whoop. Those two casinos will be enabled to host four ‘skins’ on their Internet platforms. So, as we predicted, somebody (maybe a lot of somebodys) are going to be left out in the cold. The ‘Net platform providers will each pay Albany $25 million for a 10-year concession plus an annual levy of $5 million to the host casino “to alleviate the constitutional requirement that sports wagers are placed at casinos.” No tax rate has been announced but both Greff and Credit Suisse‘s Ben Chaiken anticipate it will be steep, probably in the 50% range, another Cuomo object of desire.

The cure may be worse than the disease. Greff, for one, finds himself with more questions than answers. For instance, what’s the difference between a platform provider and an OSB operator (Cuomo tipped his hand here by taking a meeting with DraftKings)? The bill calls for a minimum of four skins but what’s the maximum? Who gets to choose the skins, the state or the private sector? Will Native American tribes be eligible to compete? Will they sue the state and how might this delay the launch? Greff foresees the Empire State going live by the start of NFL season, as the bid process will begin July 1 with a truncated, 30-day RFP period. Regulators, says Chaiken, have five months to decide, which kind of shoots that NFL-kickoff target in the keister. The New York Gaming Commission gets to play King Solomon, depending on how much Cuomo tries to interfere.

Joseph Greff and his fellow JP Morgan analysts looked at recent trends in Las Vegas and any place not named Atlantic City, and liked what they saw, raising their price target on the stock five bucks to $101/share. Positive factors include recovery in leisure travel (group business is seen as coming back late this and into next year), “legs to a recovery in U.S. drive-to, regional markets, with our anticipation of a return of the 55+ year old customer, which has lagged other customer segments such as a younger demographic,” as well as “permanently higher margins,” thanks to job cuts and other economies. The pending close of the William Hill purchase poises CZR to capitalize on the explosion of U.S. sports betting and growth of online gambling. So far the only consequential property sale on the horizon is that of Horseshoe Hammond, with Las Vegas Strip dispositions having faded into the hazy yon.

Greff espies “incremental evidence of a recovery in Las Vegas and a sequential pick up in most other regional markets.” The “quite strong” March results, however, don’t include meaningful numbers of Baby Boomers, evidently fighting shy of the Covid-opportunity zones that some Strip casinos present. As vaccinations continue to ramp upward, Greff expects this problem to abate. His estimates for 3Q21 and 4Q21 are unchanged “but we can see a scenario where our/Consensus estimates here may be too conservative.” Also, if people continue to behave carelessly and Covid-19 rates keep spiking, that’s going to kick the nascent gaming recovery into a cocked hat.

A University of Massachusetts Amherst panel led by respected academic Rachel Volberg has been studying casino gambling in Massachusetts and likes most of what it finds. It concluded that Bay State dollars had been significantly repatriated from neighboring states (the primary goal of legalization) and there was “no negative impact” on the state lottery. Citizens were fleeing the state in smaller numbers, going from 33% of cross-border business in 2013-4 to 16% in 2019. Bay Staters who were gamblers went up by 14% in the same period. 70% of study participants identified themselves as regular gamblers, while 3.5% admitted to being problem gamblers, with another 12.5% identified as at-risk. A fifth of them devolved into problem gambling while most pulled back into recreational gambling. Heavy ad blitzes “precipitated relapse. We can’t prove that but it’s very tantalizing,” said investigator Robert Williams. He added that “there is no ‘silver bullet’ to prevent problem gambling. Rather, a wide array of educational and policy initiatives is needed to address the multifaceted biopsychosocial” causes.

Low-income men were the likeliest to develop disordered-gambling habits, with substance abuse and mental ill-health cited as co-presenting morbidities. “Each problem gambler has a unique array of risk factors,” Williams said. “You need to tackle problem gambling from a multidirectional way as well.” Paradoxically, 9% of self-identified problem gamblers denied anything was wrong. The UMass teams recommendations include a cap on casino advertising, more education on problem gambling and active encouragement of disordered gamblers to seek treatment. Concluded Massachusetts Gaming Commission Chairwoman Cathy Judd-Stein, “There has been no other longitudinal study of gambling behavior of this scale in the United States. It shapes our understanding of gambling behavior in Massachusetts and contributes to the few comparable studies worldwide.” Agreed. Let’s hope it’s the start of a trend. Your turn, Nevada.

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?

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.