Category: Casino News

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Roman Empire conquers Venice

In a dramatic, dead-of-night deal, Las Vegas Sands sold The Venetian and Palazzo to a REIT/private-equity combo of Vici Properties and Apollo Management for $6.25 billion. Vici and Apollo obviously have a considerable appetite for risk on the Las Vegas Strip, still moribund, as Sands got every dime for which it was asking, maybe a bit more. The cash-flow multiple was 13X for those trophy assets, which seems in line for Strip real estate to us and which Credit Suisse analyst Ben Chaiken called “healthy however you cut it.” He added that the money would probably be funneled into development in New York City, Texas or Macao. We’d add one other possibility. According to Global Gaming Business, Sheldon Adelson‘s New Year’s Eve meeting with James Packer may well been to explore a Sands buyout of troubled Crown Resorts (facing multiple regulatory probes in Australia). Adelson talked a great deal about using Sands’ vast liquidity for mergers and acquisitions during the Great Shutdown. If CEO Rob Goldstein is of the same mind, that $6.25 billion would go a long way toward snapping up Crown and its Antipodean assets.

“Not leaving any Las Vegas value on the table” was JP Morgan analyst Joseph Greff‘s immediate take on the deal. And what will Goldstein do with all that lucre? “LVS will likely use the proceeds here to invest in mobile gaming, where its efforts thus far have lagged peers, and for it to get involved in the next great thing in gaming, the company would likely have to buy its way in, and now has a pot of money to do so,” he wrote. Goldstein rationalized the move by saying that LVS “is focused on growth, and we see meaningful opportunities on a variety of fronts. Asia remains the backbone of this company and its developments in Macao and Singapore are the priority.” So long Vegas and don’t let the doorknob hit you in the ass. The deal, of course, includes Sands Expo Center, the linchpin of Venelazzo, as well as the MSG Sphere, whose future seems very secure, even if it won’t open for another two years. (No reason to hurry in the present Strip economy.) Sands shares traded a wee bit higher on the news while Vici remained flat.

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Sports bets a hit in Virginia; Vegas recovery an iffy prospect

Online sports betting was quick out of the gate in Virginia—$59 million in handle in 11 days—although books spent so much money acquiring customers that they took a loss on the month. “Debuting ahead of the NFL’s conference championship games and the Super Bowl ensured there would be heavy interest from bettors. In addition, launching with top-flight sportsbook operators in place to serve a market with years of pent-up demand is a recipe for success,” diagnosed PlayUSA analyst Jessica Welman. Although Tennessee, with a full month of wagering, notched $134 million in handle, the neighboring state recorded less wagering per day than did Virginia. As for the monetary loss, analyst Dustin Gouker observed, “We saw the very same dynamic play out in the first days of Michigan’s online market, as well. The bottom line is that Virginia’s market is off to a good start, with significant interest from bettors across the state. That will certainly pay off for the state in coming months.”

While per-operator numbers are not available, first-mover status (Jan. 21) undoubtedly redounded to the benefit of FanDuel. It was followed into the market on Jan. 24 by BetMGM and DraftKings, then BetRivers on Jan. 26. William Hill didn’t arrive upon the scene until February, although it won’t be the last into the pool. Since enabling legislation for sports betting in Maryland is still tied up in the Lege, Virginia has every opportunity to make hay whilst the sun shines.

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Hope in the Roman Empire; DraftKings rules

Although it tried to flash Wall Street some ankle yesterday, Caesars Entertainment’s 4Q20 numbers failed to surprise analysts. In a reverse image of the rest of the industry, better-than-expected cash flow on the Strip (cost-cutting?) was “more than offset” by weakness at regional properties. JP Morgan analyst Daniel Politzer blamed “negative impact of regional property closures, restrictions, and soft demand at destination properties.” Funny, but you don’t hear about the latter from MGM Resorts International or Penn National Gaming or Boyd Gaming or …

Like most of its fellows in the industry, Caesars sees meeting business returning to the Las Vegas Strip after June. As for Joe Average travelers, bookings are up 20% month/month, with half of those reserved over 30 days out. March is a mixed bag, with midweek occupancy only 50%-ish but weekends up to 95% or higher. That’s a trend line moving in the right direction. Despite weekend rates that have sometimes verged on terrible (or perhaps because of them), CZR properties packed them in on the Wilder/Fury fight weekend: 99% occupancy. Politzer foresees Baby Boomers coming back and gives the Strip a six-month-to-one-year recovery timeline. It will be no trick to surpass last year but if 2021 even just comes within shouting distance of 2019, that will indeed be something to celebrate.

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Vegas locals strong, Strip stinks; Economic boom foreseen

Even with $600 extra in their pockets, gamblers could not be lured back to the Las Vegas Strip last month. Strip revenues of $321.5 million represented a 44% implosion from 2020. Statewide, the falloff was 26.5% to $762 million. Once Nevada casinos become diversified destinations again recovery is inevitable but we’re hardly there yet. At least Las Vegas locals were generous with their play: off only 6.5% from one of the two biggest months in American gaming (February 2020 being the other). True, casino capacity was capped at 25% but that didn’t keep the locals away—and their play may have been even stronger than it looks ($200 million), slot revenue from the final weekend not having been reported yet. JP Morgan analyst Joseph Greff struck a hopeful note: “Given improved vaccination rates, slower COVID-19 new case trends, and increased capacity limits, we think this month likely marks the bottom of LV Strip [gross gaming revenue], and we expect CZR to confirm this on tonight’s earnings call.”

Things could hardly get worse. Last month, McCarran International Airport‘s traffic cratered -64%. International travel (see baccarat results, below) plummeted 93%. Spirit Airlines held its market share best, off 40%, while Southwest Airlines was down 61% despite having a vast lead in volume. As for the small(er) fry, American Airlines dropped 59%, followed by Frontier‘s 64% and Delta‘s 68%.

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Louisiana better than it looks; Covid checkmates brothels

Casinos in the Pelican State were off 10% in January. However, when one adjusts the numbers to account for the permanent closure of Diamond Jacks in Shreveport and the all-but-permanent shutdown of Isle Grand Palais on Lake Charles, gaming revenues were only down 6%. We’d call that recovery, given a difficult comparison, stimulus money on the loose, capacity limits (50%), gaming-position limits (75%) and an extra weekend day. Penn National Gaming properties prospered, up 10%. By contrast, Caesars Entertainment took a -38% walloping. Somewhere in between (-11%) was Boyd Gaming. Staying with Lake Charles, L’Auberge du Lac and Golden Nugget were tied at just under $26 million, a 7.5% gain for L’Auberge and a 2.5% for the Nugget. Delta Downs rounded out the market with $14 million, up 3.5%.

Caesars needs a course correction in Bossier City/Shreveport, where Horseshoe was eclipsed by Penn’s Margaritaville, $12 million to $16 million (-16% vs. +36%). Eldorado Shreveport slipped 6.5% to $7 million, while Boomtown Bossier inched up 3% to $4 million and Sam’s Town stumbled 24% to $4.5 million. Harrah’s Louisiana Downs nudged 2% higher to $4 million. In Baton Rouge, customers continue to flee Belle of Baton Rouge, collapsing 43.5% to $1 million. Doing better was Casino Rouge, up 3% to $4.5 million. Surprisingly, L’Auberge Baton Rouge was 2% lower but still dominated the market with $13 million.

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Mixed signals from Vegas; It’s all good in Atlantic City

Is the new year bringing a Las Vegas comeback? If you set store by anecdotal evidence, things look relatively normal on Fremont Street. God knows Downtown could use a dose of normality, especially after a December devoutly to be forgotten. For those, like us, who are waiting upon empirical evidence, the good news is that there is some, albeit hailing from the Las Vegas Strip. Room rates for March 14-20 are 49% off last year’s pace, averaging $134/night. Whilst this may not be indicative of “surging” demand, there are some positive omens. Whoever decided to close Palazzo midweek was a genius. Las Vegas Sands‘ room rates are shooting up 47% on weekdays and 19% on weekends, when competition is stiffer. The Venetian is carrying the market at this point. Frankly, everyone else’s midweek rates stink. Convention-reliant MGM Resorts International can perhaps be excused for being down 57% (reopening three hotels will make that price point harder to defend) but how to explain Caesars Entertainment‘s -67% and Wynncore‘s -68% At least MGM and Wynn Resorts are rebounding on weekends, down 25% and 28% respectively. Caesars is in the weekend tank, off 46%. Perhaps management is trying to recoup traffic by deep discounting but that’s the best spin we can put on it.

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Boyd better than expected; Marching through Georgia

Boyd Gaming leaked January data, what Wall Street calls “offered an encouraging commentary,” to help put an upbeat spin on its 4Q20 numbers. It worked like a charm. JP Morgan analyst Joseph Greff moved his price target up $8 to $62/share. He was motivated by news of “improving gaming customer spend trends thus far in the 1Q21 relative to its results in the 4Q20 … this is despite the older casino patron demographic not really returning to any great extent, which is something that could serve as upside or a cushion to the presently strong/growth trends from younger, non-rated players.” He liked a business plan structured around a “favorable localized/regional footprint predominantly focused on a drive-to, leisure gaming customer.” Greff also raised his cash flow estimates based on strength in the Midwest and South regions of BYD and on its strong sports-betting prospects, thanks in part to FanDuel (“DFS Operator #2” in Wall Street code).

Fourth-quarter revenues were a better-than-expected $636 million (Greff anticipated $608.5 million), despite being 24% down from 2019. But the Midwest and South were only 15.5% off the pace, bringing home the bacon to the tune of $456 million. This enabled the company to shrug off the temporary closures of Par-A-Dice and Valley Forge Casino Resort. In Las Vegas, support from locals was somewhat undone by lackluster tourist biz, particularly at The Orleans. Vegas numbers overall were down 28%, a $161.5 million take. Downtown needs a defibrillator, generating just $18 million, a 74% collapse “pressured by weaker tourism to southern Nevada, especially from the core Hawaiian customer base.” In other words, Main Street Station isn’t coming back any time soon and no reopening date was floated for Eastside Cannery on the Boulder Strip. Greff forecast a recovery in locals biz (good for Cannery) but only “modest” improvement in Downtown numbers.

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Michigan gaming explodes; Massachusetts droops

Online sports betting and Internet gambling have come to Michigan and they’re a smash hit. In the first 10 days of sports betting, handle was $115 million, with revenues of $13 million. FanDuel led market share with 32% of handle, well ahead of DraftKings‘ 24.5%, followed closely by Penn National Gaming‘s 24%, then BetMGM‘s 20%, per Credit Suisse analyst Ben Chaiken. He described the i-gaming haul—$29.5 million—as “well above expectations,” led by MGM Resorts International with 38% of market share, trailed by FanDuel’s 23% and DraftKings’ 24%. Whereas Chaiken had anticipated a monthly gross of $28 million, he’s upped that to $90 million, quite a dramatic change to say the least. To put that in perspective, it would be at least $10 million higher than Pennsylvania, which has 3 million more inhabitants. Talk about the proverbial “pent-up demand”! The downside was that sports books spent so much to acquire players that they ended up losing $5 million.

“The circumstances for Michigan’s online launch could not have been better ahead of two of the biggest sports betting holidays of the year,” reported PlayUSA analyst Dustin Gouker. “Ultimately, it’s a small sample size, and the results of which are less important than sportsbooks launching and engaging sports bettors and setting the groundwork to flourish for years. By that metric, Michigan’s launch was a success.” It not only obliterates Tennessee‘s online-only debut but, with 10 OSB books, was the largest-scale launch in U.S. history. Gross receipts for tribal operators were mostly small potatoes, except for DraftKings/Bay Mills Indian Community‘s $3.5 million. Other big winners were BetMGM ($5 million) and Barstool Sportsbook/Greektown Casino ($3 million). Although FanDuel led in handle, luck was with the punters, leaving the casino with well under a million dollars won.

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A.C.: Trump Dump gone, Hard Rock and Ocean going strong

At 9:08 a.m. yesterday, one of the towers of Trump Plaza was finally imploded, an important first step in clearing Atlantic City of its last excrescences of You Know Who. Maybe owner Carl Icahn, having been a “george” donor to the Boys & Girls Clubs of Atlantic City, can hold a charity raffle for the right to push the plunger on the next tower, assuming it doesn’t crumble of its own accord.

Now would ordinarily be the time for a catty metaphor involving implosions and Atlantic City gaming revenues but they actually did fairly well in January, 17% off last year’s pace. (And, as American Gaming Association President Bill Miller will point out, January and February 2020 were two of Big Gaming’s best months ever.) Casinos grossed $160 million, led by Borgata despite a pummeling from newcomers Hard Rock Atlantic City and Ocean Casino Resort. Borgata slot winnings fell 28% and table win plunged 31%. Citywide, table games were the saving grace, off 9% while slots were down 19%. Slots were also unkind (-28%) to the Caesars Entertainment threesome, down 25%, while its tables were -13%. Volatile Caesars Atlantic City was the most stable for a change, off 9%, for a $15.5 million gross. Harrah’s Resort plummeted 38% to $15 million while Tropicana Atlantic City imploded, er, tumbled 24% to $15.5 million.

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