Sands impresses; Trump’s new Mob pal; Boardwalk blotter; Mega-Jottings

Wall Street was in a sunny mood this week after Las Vegas Sands‘ 4Q22 earnings presentation. As Credit Suisse analyst Ben Chaiken summarized, “two large takeaways in our view were strength in Singapore and what we felt was a positive tone from [management] concerning the trajectory of Macau, due to pent-up demand potential.” Normally we bristle at the overused phrase “pent-up demand” but early indicators from Red China are that gamblers are champing at the bit to get into Macao.

Cash flow at Marina Bay Sands was well ahead of The Street’s expectation, hitting $386 million at gambling monies reached an all-time high. Chaiken said Macanese trends have “accelerated” heading into Chinese New Year—in which visitation is at 40% of 2019 numbers—and that Sands is on course to post positive ROI again. But, wrote Chaiken, “the Singapore rebound (faster than we expected) could provide insight into what a Macau recovery could look like,” especially when achieved with air travel into Singapore that is still constrained at two-thirds of pre-Covid levels.

Macanese skeptic turned optimist Joseph Greff of J.P. Morgan called the current trends a “positive turn in momentum,” dismissing the negative ROI of 4Q22. (You get the sense the earnings call was more of an extended rehearsal for the 1Q23 rollout.) Greff noted that Marina Bay Sands is seeing cash-flow levels that exceed 2019 even without a meaningful contribution from China. Recapitulating some of Chaiken’s themes, he wrote, “We think premium mass GGR levels in this month are probably not too off from 2019 levels (wow), reflecting pent up demand (spend levels much higher than pre-pandemic levels, not too dissimilar from what Las Vegas/other travel markets experienced earlier in the US recovery) and junket VIP migration into premium mass.” There’s no zealot like a convert.

Rushing out on a limb, Greff raised his LVS cash-flow target for Macao by 38%, based on a few weeks of January play and the retirement of the absurd ‘zero-Covid’ policy by the Chinese government. He may have a point. Sands’ gambling revenues in the enclave rose almost exponentially in the last quarter, with mass-market action up 97%, although winnings from high rollers inched up only 8%. This is the new face of Macao, like it or not. It’s a good thing for Sands that the Pacific Rim is looking so buoyant, as it’s carrying a worrisome $16 billion debt (but is not exposed to the U.S. market at present).

Compared to Greff and Chaiken, Deutsche Bank analyst Carlo Santarelli was subdued, calling the numbers “better than expected” and saying that management’s “tone on the call was as upbeat as it has been in some time, with favorable, though more qualitative than quantitative, commentary on 1Q23 to date trends in Macau.” Chinese New Year was said to be outperforming visitation, with spend per visitor “healthy” by 2019 standards. Not even a wider full-year operating loss was enough to quench Wall Street’s flame.

What went unremarked by the analysands was Sands’ formal plan for Nassau in New York State. “Japan isn’t there and Korea has nothing viable to speak of today,” said CEO Rob Goldstein. “So we’ll jump to New York, which is an extraordinary and unique opportunity, because of the simple dynamic of a huge market with limited capacity. It’s probably the only place in the U.S. where you have millions and millions of people and just a handful of casinos.” He elaborated, “The evidence of the market is clear just by looking at the three operating properties that have table games, though not a great product in New York as far as room capacity, yet they’re still approaching $2 billion in slot machines.” The CEO is at pondering a $4 billion or $5 billion investment, which ought to be music to Gov. Kathy Hochul‘s ears.

The centerpiece of the proposed development would be conversion of the Nassau Coliseum into a high-end entertainment center, coupled with 400,000 square feet of convention space and a four- or five-star hotel. Goldstein touted it as a “transformational” resort rather than just a regional casino (in other words, not another Sands Bethlehem). Singapore-style, the casino would take up 10% of the total square footage, with emphasis placed on (per Buck Wargo) “celebrity-chef restaurants, experiential events and venues, a day spa, swimming pool and health club,” plus live entertainment and conventions.

Does failed gambling mogul Donald Trump still want a Florida casino? Maybe not. Why else would he be so cavalier as to do a grip-and-grin with erstwhile Philadelphia Mob boss and convicted felon “Skinny Joey” Merlino? (Then again, the mobbed-up Trump has spent his entire life insisting that rules are for schmucks, not him.) Merlino is fresh off a two-year stint in the big house for—get this—illegal gambling. Just the sort of “whale” you’d want patronizing a gaming-enabled Trump Doral. Don’t you get the feeling Trump is just daring Sunshine State regulators to do something about this if he’s offered a license? Trump mouthpiece John Barron defensively declared, “President Trump takes countless photos with people. That does not mean he knows every single person he comes in contact with.” Mighty careless of him, especially for someone aspiring to get back in the casino biz.

Yes, Virginia, there’s still an Atlantic City. Among recent developments was a bash serial fabulist George Santos threw for campaign donors, according to our East Coast correspondent. No word on whether there was any drag entertainment. In other news, “the casinos are very concerned about Mayor Marty Small‘s proposal for a ‘road diet’ for Atlantic Ave., making the four lanes and left-turn lane into only two lanes and left-turn lane, in order to get federal megabucks to pave the street (most cities have dollars in their budgets to pave their own streets), not so in A.C. I hope Trenton continues to control the Atlantic City budget for a few more years (decades?).”

On the supermarket front the rest is silence, as not a peep was heard during the latest Casino Reinvestment & Development Authority meeting. The Garden State leads the nation in cannabis prices, by the way, with wacky tebaccy costing $60 an ounce versus $40 in New York State, $30 in Colorado and California, and a mere $22 in Massachusetts. Sadly, “legendary DJ Jerry Blavat died in hospice (which explains why he couldn’t perform at Bally’s Atlantic City for New Years Eve).” Hey, give the man props for having the optimism to make the Bally’s booking in the first place. That’s grace under pressure, to say the least. Even more sadly, four dead whales have washed up on the Atlantic City beaches over the last two months. And no, we’re not referring to high-rollers who defaulted on their markers.

Casino legalization in Texas probably isn’t going anywhere so long as Lt. Gov. Dan Patrick (R) controls the calendar in the state Senate. Fortunately, that’s not keeping Big Gaming from trying its best. A bigger problem may be that the Texas Sports Betting Alliance is working in rivalry with Las Vegas Sands and others who want to legalize casinos, as opposed to going for the soft underbelly that is online sports betting. Casino backers may be over-relying on some noncommittal campaign blather by Gov. Greg Abbott (R, below), although they definitely have Speaker of the House Dade Phelan (R) in their corner. The Lone Star State budget is not as Covid-starved as you might imagine (quite the opposite), so there isn’t the imperative of a fiscal crisis to push gaming across the transom.

On a more hopeful note, 75% of Texans polled support at least having the debate in the Lege and 69% of born-again Christians, believe it or not, favored putting it to a statewide vote. While there’s already a casino bill before the Senate, the state House is waiting on Rep. John Kuempel (R) to make a move. Sports-betting advocates, meanwhile, can aim former governor Rick Perry‘s silver-tongued oratory at the Lege. The Sports Betting Alliance backs him up with 20 lobbyists while Sands has gone into Overkill Mode, fielding 69 lobbyists to pester lawmakers. Dr. Miriam Adelson has also poured over $3 million into various campaign coffers, although money doesn’t always talk in Austin. For instance, House Republican Caucus Chairman Craig Goldman took Adelson’s money and rewarded her with a stance of neutrality.

Other interests piling into the state capitol are International Game Technology and Landry’s, whose CEO, Tilman Fertitta is finally providing more than lip service to the cause. Among the unimpressed was Texas Baptist Christian Life Commission lobbyist Rob Kohler, who told the Texas Tribune, “I’ve been on this issue for 20 years, and it always begins with the same kind of attempt to direct people’s attention to it.” What are the odds on 2023 being any different? Better, we hope.

The free market in sports betting is claiming another victim. bet365 has abandoned its quest for a Massachusetts license, opening up a “tethered” permit for another operator, if one can be found. Like Caesars Sportsbook, bet365 was going to pair with Raynham Park horse track, near Boston. Although it continues to pursue expansion into three other states, including Ohio, British-based bet365 has seen its profits decimated by the cost of cracking the U.S. market.

Jottings: Yesterday was earnings day for BetMGM, and analysts bent the ears of CEO Adam Greenblatt and CFO Gary Deutsch at considerable length. The bottom line is that BetMGM will be profitable by year’s end, although that wasn’t soon enough for some antsy stock boffins … Vici Properties CFO David Kieske may have sealed the doom of the unfinished St. Regis at Venelazzo. He told a local audience that “We’re a passive real estate landlord completely behind the scenes. Our operators run the businesses in the shape or form they do best. We do not get involved.” … This hasn’t been Buffalo‘s year, culminating with an embarrassing loss to the Cincinnati Bengals last weekend. But Seneca Gaming has come to the rescue on the charitable front, whether with food drives or providing housing for blizzard-stranded employees … $75 million has been earmarked for the upgrade of Q Casino in Dubuque. The place hasn’t been redone since before the Great Recession, so it’s probably overdue. A Hilton-branded hotel may figure into the plan …

Kudos to Nevada Gov. Joe Lombardo (R), who’s just nixed any special tax to get the Oakland Athletics to Las Vegas, possibly to the detriment of the Tropicana Las Vegas. Both taxpayers and tourists are socked too heavily as it is … The Neon Museum, arguably Las Vegas’ greatest treasure, has far more artwork than it can display. So Executive Director Aaron Berger is on the hunt for overflow space. Thus far not site has been identified, the Reed Whipple Cultural Center having been deemed overly decrepit … Air war: Betway is taking to the airwaves to advertise its product. The 50-second “For the Sport of It” spots risk taxing viewers’ patience … Bad news for Derek Stevens: Analysis firm Eilers & Krejcik ranks Circa Sports‘ mobile-betting application 36th out of 39 tested. “Circa’s performance in Colorado also suggests an uphill struggle when in competition with the big U.S. apps, and their marketing budgets,” analysts wrote … That’s not half as bad as news 133 FanDuel customers got—a MailChimp security breach left their data vulnerable to theft … Indiana‘s tribal Four Winds Casino has set a Feb. 1 opening date, even though it’s still short of staff. When ready, the hotel will offer 83 suites, 317 rooms, a spa and a conference center … The weekend is here, and we urge you to spend some quality time with Academy Award nominees Everything Everywhere All At Once and The Banshees of Inisherin, now back in movie theaters, probably for a limited time only.