Rumors of Atlantic City‘s imminent demise—mostly spread by Big Gaming itself—proved exaggerated last month. Casino revenues ticked up 2.5% to $236.5 million. Table play, up 14%, carried the Boardwalk, as slots won 1% less. And one less weekend day didn’t even hurt. Golden Nugget had a bad month, however, falling 13% into last place with $10 million. Volatile Caesars Atlantic City, by contrast, had a bully March, shooting up 17.5% to $19.5 million. Scarcely outdone was Borgata, vaulting 15% to $67 million. Some of that evidently came at the cost of Hard Rock Atlantic City, down 4% to $42.5 million. Ocean Casino Resort rounded out the top three with $35.5 million, up 2%.
In spite of Caesars’ surge, Harrah’s Resort outgrossed it with $20.5 million (-2%) while Tropicana Atlantic City slid 6% to $18.5 million. Bally’s Atlantic City slipped a point to $11 million while Resorts Atlantic City plunged 12% to $11.5 million. So all three grind joints were down, a harbinger of the days to come when low rollers will no longer have to go to Atlantic City for their fix.
New Jersey sports books held only 8% in March, as handle plummeted 9% to $1 billion—but revenue catapulted 23% to $87.5 million. FanDuel was prevalent over DraftKings, $34.5 million to $22.5 million. BetMGM was next with $9 million, followed by Fanatics and its $6 million. Also-rans were Caesars Sportsbook ($4 million) and BetRivers ($1 million), while theScore Bet fell below the cutoff point. iGaming was dominated by FanDuel’s $63.5 million, while DraftKIngs ($58 million) grappled with BetMGM ($56 million). Caesars Palace Online put in a strong showing with $21.5 million, trailed by Fanatics ($12.5 million), BetRivers ($11.5 million), BallyBet ($5.5 million) and Hollywood Casino ($3 million).
Meanwhile, next door in Pennsylvania, casinos did feel the lack of that weekend day as their receipts slipped 3% to $295 million. Except for Philadelphia Live (above), none of the bigger casinos was up. The Cordish Gaming property gained 4.5% to $23 million. Parx Casino cleared a cool $50 million but was off 3.5%. Other Philadelphia-area casinos saw Rivers Philadelphia dip 3% to $19 million, Valley Forge Resort up 6% to $13 million and Harrah’s Philadelphia flat (finding bottom?) at $11.5 million. Wind Creek Bethlehem took an 8.5% hit but dominated outstate casinos with $45 million. Rivers Pittsburgh banked $30 million (-1%), Hollywood Meadows slid 5% to $15.5 million and Pittsburgh Live tumbled 11.5% to $9.5 million.
Cult casino Lady Luck Nemacolin continued its streak of adverse fortune, down 4.5% to $2 million, Mount Airy Resort was flat at $16 million and Mohegan Pocono slumped 6.5% to $17.5 million. Presque Isle Downs was down 8% to $8.5 million and Hollywood Penn National missed by 6% ($14 million), whilst Hollywood York did best among the satellites, up 3% to $9 million. Parx Shippensburg leapt 9.5% to $4 million and Hollywood Morgantown was up 3% to $7 million. Next month we add Happy Valley Casino to the mix, much to the chagrin of many of its neighbors.
The sports betting schism was even more pronounced in the Keystone State as handle sank 13% but winnings vaulted 38%. Hold was a respectable 9% on handle of $731 million and $68 million in revenue. FanDuel edged DraftKings, $26 million to $19 million, and everybody else was way back: BetRivers ($3 million), BetMGM ($4 million), Fanatics ($4 million), theScore Bet ($2 million), Caesars Sportsbook ($2 million), etc. iGaming’s palm went to FanDuel ($67.5 million), while nice chunks of the action went to BetMGM ($43 million), DraftKings ($41.5 million) and BetRivers ($40 million). Caesars Palace Online bested Hollywood Casino, $15 million to $6 million. Statewide iGaming win was up 7% to $255.5 million.
Keeping mum about a potential takeover by casino baron Tilman Fertitta is Caesars Entertainment. The former’s 45-day window of exclusivity to execute a buyout is closing. Management could make a counteroffer to shareholders. In either event, don’t expect to get rich quickly if you own CZR shares. J.P. Morgan analyst Daniel Politzer sees a $35/share or so cap on bids for a stock presently trading around $27/share. In other words, it sounds like sanity is prevailing for the moment.
Politzer reports that “public investors have focused more on risks (Strip demand, regionals maturing, leverage, Digital competition) than on its strong cash flow generation, while credit markets have remained relatively accommodating.” He added that “to date, debt reduction and share buybacks have not provided meaningful support to the share price.” If Fertitta bids $35/share, that would be a market-average 7X cash flow for assets that are doing well regionally but underperforming on the Las Vegas Strip at present. Would those latter holdings diminish in the event of a buyout? Politzer hints at asset sales, something on which CEO Tom Reeg has been unable to pull the trigger.
Three possibilities are forecast by Politzer, all of which include a $2 billion investment by Fertitta himself. One is a management-led takeout in tandem with Fertitta. Another is a variant on #1, compounded by a spinoff of Caesars’ (few) remaining assets, some of which Vici Properties has hesitated to touch. Third is a Fertitta Entertainment takeover. Politzer sees all three scenarios playing out at $32/share. Reeg would stay in place under #1 and #2, which is a depressing thought. #3 could cost a staggering $16 billion, partly funded by asset sales, some of which would be necessary to avoid antitrust concerns (think Atlantic City). It would leave Caesars reeling under $14 billion in debt (up from a mere $9.3 billion at present). Las Vegas, Atlantic City and Lake Tahoe/Reno asset sales wouldn’t bring much: $275 million, not even enough to cover transaction fees. Also, Fertitta’s $1.4 billion stake in Wynn Resorts complicates the picture.
Polizter favors scenario #1, a Reeg/Fertitta alliance. It wouldn’t come cheap, at $6.2 billion, but it’s not the wild leap into the unknown that a purely Fertitta takeover would be. Let’s keep our fingers crossed.
In case you missed it, according to the rightward-leaning Nevada Independent, only “roughly 250 people” showed up at Circa for a Donald Trump dog-and-pony show. Legendary journalist John L. Smith took in the proceedings and found it “a swell roadshow” if perhaps less than met the eye.