Today it was Credit Suisse analyst Ben Chaiken‘s turn to weigh in on MGM Resorts International‘s 4Q20 numbers and he found even more to like than did Joseph Greff yesterday. Leading with Macao, Chaiken saw MGM China capturing more of mass-market play “which presents a powerful high margin earnings story should there be a mass recovery story in ’22, as is our expectation.” The only damper on that prospect is the stream of big-ticket resort openings from Sands China, Sociedade de Jogos de Macau and Galaxy Entertainment, which could shake things up further. Chaiken also predicted that Wynn Resorts would pivot to mass-market players, presumably because VIP action has been thin on the ground. Like us, Chaiken was keen on the performance of MGM’s regional U.S. casinos, which have boasted “a faster than expected rebound” from pandemic constraints. Although he arguably buried the lead, the analyst was also impressed by BetMGM‘s performance in both i-gaming and sports betting, “outperforming expectations … driven by efficient customer acquisition and better than expected share.”
Continue reading MGM revisited; Mixed month for Indiana
Why so sanguine? OSB and Internet gambling were “objectively impressive” with BetMGM forecast to capture 15% of American OSB share and 20% of i-gaming action. (He wasn’t so chill about the Strip, lowering his cash-flow projections.) The good online news inspired Greff to boost his MGM price target from $32/share to $37. MGM leadership thinks business will not return to 2019 levels for a couple of years, projecting that it will be 90% of prior-year levels by late 2022. Greff is a bit more optimistic than that. Strip occupancy fell from 89% to 38%, thanks of course to nonexistent convention business, table-game wagering was 41% less (though the house won more often) and “properties are still being negatively impacted by capacity constraints, lack of demand/airlift, etc.”
Penn National Gaming reported 4Q20 earnings today and they were down 23% from last year. Many reasons were cited, including lower consumer spending, casino closures in Illinois, Michigan and Pennsylvania, and new restrictions in Ohio and Maine. Oh yes, and Covid-19. Fortunately for Penn, it had done a sufficiently good job of lowering expectations that Wall Street wasn’t fazed by the numbers. After the New Year ‘skinny stimulus,’ Penn is describing January business as “thus far encouraging,” with more foot traffic and longer stays. Sports betting is also providing a critical boost. JP Morgan analyst Joseph Greff wrote that Penn “is continuing to see encouraging growth in the younger demographic tiers of its database, and expects the roll-out of vaccinations will encourage more guests in all age segments of its database to return to land-based facilities soon.”
More than 23 million Americans are expected to bet legally or otherwise on the Super Bowl, according to the American Gaming Association, which predicts $4.3 billion in handle. 7.5 million punters will be doing their wagering online, 63% more than last year. The action leans heavily (56%) toward the Kansas City Chiefs—sorry, GOAT—with 12 million citizens betting against friends, as opposed to 1.5 million using retail sports bookies, down 61% from last year, before Covid-19 struck. Action with Lefty in the back alley will be patronized by nearly two million Americans, down 21%, a sign of progress. Speaking of progress, the AGA says, “34 percent of Americans remember seeing responsible gaming messaging in the past year, up five points from 2020. Super Bowl bettors were even more likely to see responsibility content, with 53 percent seeing responsible gaming messaging in the past year.” As AGA prexy Bill Miller puts it, “Responsible gaming is core to legal sports betting’s long-term success, and this is borne out by continued demand for consumer protections only available in the legal market.”