That in essence is the question posed today by Global Gaming Business, in an excellent article by Marjorie Preston. And if GGB is querying the viability of the Nipponese casino market you know things are bad. Even normally bullish Brendan Bussman tempers his optimism with caution as regards the 30% tax on casino revenues, saying “any time you have a tax rate at that level across the board on slots and tables, it’s difficult for any operator to make the numbers make sense. You could say the same thing about Chicago, which is a 40 percent effective tax rate. That’s why everybody’s pulled out of Chicago.”
Already the heavyweights are retreating. Sample verdicts include those of Wynn Resorts CEO Matt Maddox who said he’d withdraw “if it doesn’t make financial sense.” And it didn’t. Ditto Las Vegas Sands CEO Rob Goldstein: “We’re used to writing big checks, but all that money on one [megaresort] makes you stop, pinch yourself and ask if you can get the returns your shareholders deserve.” The only megawatt operator who’s favored to cinch a spot is MGM Resorts International, which will have to invest $9 billion for the privilege. Elsewhere, cities have chosen to go with obscure Canadian private equity firm Clairvest (?!?!?) and Casinos Austria, which doesn’t currently run anything remotely on the scale the Japanese government wants. Sure, Melco Resorts & Entertainment and Genting Group still have a shot at Yokohama but …
That’s where Japan’s politics enter into the equation. Public sentiment runs heavily against casinos and especially in Yokohama, so the chances of anybody getting that plum are remote as of this writing. The same could be said of Tokyo which, surprisingly, is no better than a fallback position. Bussman still maintains that Japan is the Holy Grail of gaming (his words) but a combination of governmental lethargy, severe operational restrictions (only 10% of floor space to be devoted to gambling), high taxes on GGR and steep investment requirements only reinforces our skepticism.
No such worries in Indiana, where gambling revenue shot 24% past July 2019 numbers. The headline is that Hard Rock Gary is closing fast on Horseshoe Hammond. The latter is still tops with $36 million (up 11%) but Hard Rock banked $32 million last month. Caesars Entertainment likes to say it has the best brand in gaming but results in Atlantic City and elsewhere argue powerfully for Hard Rock. Ameristar East Chicago gained 38% to reach $23 million while Blue Chip was flat at $13 million. Boyd Gaming got some additional bad news down south at Belterra Park, which slipped 9% to $9 million, even with two extra weekend days. Tropicana Evansville grew 16% to $14 million, Rising Star fell 13% to $7 million (which went discreetly unmentioned in the company’s latest earnings discussion) but Caesars Southern Indiana jumped 21.5% to $22 million. The Cherokee are going to inherit a gold mine when their acquisition closes. Mid-state, French Lick Resort took -13% licking, down to $7 million, Hollywood Lawrenceburg gained 4% to $15 million, Indiana Grand leapt 25.5% to $31 million and Harrah’s Hoosier Downs jumped 18.5% to $22 million. So it was a banner month for Caesars, Penn National Gaming and Hard Rock, a mixed bag for everybody else.
As for Hoosier State sports betting, revenue is tracking at $17.5 million from $195 million in handle. In terms of online handle, DraftKings was tops with 34%, followed by FanDuel with 31% and BetMGM with 15%. From there it was way, way down to William Hill (5%), BetRivers (4%), PointsBet (4%) and Barstool Sports (4%).
Our Atlantic City correspondent revisited the Boardwalk this week and found Golden Nugget “lightly attended, and valet parking was closed. Also, three of GN’s retail shops were closed and empty (100% of everything @ GN is owned by Landry’s).” Ouch, Tilman. Next up was Harrah’s Resort: “I was hoping to use up my comps on a sweatshirt in their gift shop and found none. The only thing worth buying in their gift shop was a newspaper.” The slot floors were as you see above. “Does Eldorado have a corporate plan to empty their casinos? Third and best was Hard Rock. It was busy, the casino is more brightly lighted than most A.C. casinos, and the ‘vibe’ was upbeat.” By the way, do you ever wonder what those pricey spaces on the Monopoly board look like? Nothing very good, we regret to say.
Philadelphia Live, despite being “not so Live” (rest easy, Parx), seems to be getting the hang of the customer-service thing. Small tacos were $2 each and happy-hour appetizers were half price, and the bar got high marks from our friend, who plans on returning soon … a good sign for Cordish Gaming, in that he has been a regular detractor of Philly Live. Speaking of Philadelphia, non-smokers caught a break when the city’s casinos extended their interim no-smoking policy for an indefinite period of time. Americans for Nonsmokers’ Rights was quick to praise with faint damns, saying “Had these casinos simply remained smokefree indoors and turned their attention to permanent outdoor smoking areas, they could have maximized their investment in deep cleaning while also protecting the health of their staff and customers and reducing costly turnover.” ANR doesn’t just look a gift horse in the mouth but counts all its teeth.
Jottings: Being a lead-pipe cinch to get an Arizona sports-betting license, FanDuel is rolling out a sneak peek of its sports book at Footprint Center, home of the NBA‘s Phoenix Suns. It boasts 40 TVs, six walk-up betting windows and 26 self-serve betting kiosks. Color us impressed … CQ Holdings isn’t doing tiddly twat with despised Belle of Baton Rouge but rival Hollywood Baton Rouge is being more proactive. It’s broken ground on a land-based casino, due to open in late 2022 at a cost of $60 million. “This is the right thing to do,” said Louisiana Gaming Control Board Chairman Ronnie Johns, “The fact that these riverboats are out on the Mississippi River, Hollywood and the Belle, there’s just a lot of safety factors out there. The ships coming in, the barges on the river, a storm. You never know what’s going to happen.” Indeed … The proposed Urban One casino (above) in Richmond is all systems go for November’s election ballot. We’re happy to report that Urban One has been back to the drawing board and come up with a more appealing look to the $562 million project … Another setback for Macao: As Coronavirus resurges, casino revenues plummet. Early August grosses of $15.5 million were the worst seen since September 2020 … Last but far from least, Barstool Sports is dickering with Major League Baseball to stream live games with in-game betting functionality. It’s said that the talks could go either way but MLB needs to fill the void after ESPN dumped much of America’s pastime from its airwaves.
It would be an epic error in my opinion for Major League Baseball to partner with controversial Barstool and it’s public face Mr. Portnoy. This whole notion that Portnoy can “bring in young people” through wagering on games is silly. Portnoy was arrested in 2019 for having fake Super Bowl media passes, since when do multi-billion dollar sports leagues feel the need to partner with convicted fraudsters, it’s depressing… That Arizona sports book looks fabulous, but it raises some societal questions, inevitably there are going to be people loitering around there, especially in the summer desert heat. When something like pot or sports betting gets legalized, you have to start from scratch, there are going to be hurdles and issues popping up. Arizona has chosen to let big players get the licenses, mom and pop outfits need not apply. we will all get to see a very addictive vice get marketed and introduced nationally in real time. I fear for the vulnerable people who have not learned how to control their gambling yet, I will watch for that in the people I know…