Station praised; Smoke the bastards out

A chorus of hosannas arose from Wall Street this week, singing the praises of Station Casinos. First off was J.P. Morgan analyst Joseph Greff, who upped his 2024 and ’25 projections “on stronger than previously modeled Durango [Resort] property estimates.” His 1Q24 estimates for cash flow goes to $242 million, with $38 million coming just from Durango Resort—and at the cost of 6% cash-flow decline at other Station casinos. The growth just keeps on coming, with full-year cash flow in 2024 of $919 anticipated, followed by $942 million next year. Wall Street, on the whole, expects $883m and $926m, respectively. And that’s not even Greff’s best-case scenario.

“We continue to like the risk-reward in RRR, and expect RRR’s 1Q24 and outlook to shine versus peers when it reports earnings sometime next month,” Greff wrote. It helps, of course, that Vegas-only Station was spared the harsh winter weather that marred much of the rest of the country. Greff noted that Las Vegas locals-derived gambling revenue is up 4% through the first two months of the year. He also thinks that Durango could generate as much as 20% ROI, unheard-of in the present day casino industry … indeed, not since way back in the early Nineties. (Steve Wynn, essentially, killed high ROI with the Bellagio-begun arms race, which Station and most others aped.)

“We think RRR’s current momentum also speaks to the strength of the LV Locals market—population growth migration from Southern [California] and related positive income mix shift as well as a favorable near- and longer-term market-wide supply-demand dynamic,” continued Greff. The boffin ratcheted his Station price target up to $69/share, a six-buck increase and put a $662 million valuation on Station’s raw land, of which 441 acres are slated for development.

Over at Deutsche Bank, analyst Carlo Santarelli joined the swelling chorus of praise, writing “we have become increasingly comfortable with; 1) continued locals market promotional discipline, 2) continued above expectation performance at Durango, and 3) lower than expected cannibalization across both the [Boyd Gaming] and RRR portfolios. Accordingly, we have raised our forecasts for RRR for 2024 and 2025, as well as our price target.” The latter went to $70/share, all the way up to $62. Santarelli continued, “We continue to view RRR as the best, controllable organic, growth story within our coverage universe, given the underlying stability in the LV locals market, the above expectations performance at Durango, and the pipeline of future development project opportunities available to management.” We couldn’t have said it better ourselves.

Flatness was the operative word for casino revenues in Maryland overall last month, barely up at all and tallying $178 million. The most robust performance came from little Hollywood Perryville, up 6% to $8.5 million. By contrast, Ocean Downs was down 6.5% to $7.5 million. MGM National Harbor (above) led the big boys, up 3.5% to $75 million, while its only true rival, Maryland Live, was good for $65 million (flat). Horseshoe Baltimore had a good month, by Horseshoe Baltimore standards, down only 4% to $17 million. Could it be finally bottoming out? Rocky Gap Resort continues to flounder under Century Casinos, down 6.5% to $5 million.

Clearly fed up with the foot-dragging of the New Jersey Lege with regard to continued smoking, casino workers are taking matters into their own hands. Casino Employees Against Smoking Effects (CEASE) and the UAW joined forces yesterday to sue the state for unconstitutionally exempting casinos from the state’s smoking ban. Senatorial hopeful Rep. Andy Kim (D) also lent his voice to the cause. Said Kim, “You’re not asking for the moon—you’re asking to be treated like everybody else.” True that. The lawsuit alleges that the state constitution was violated when Big Gaming was exempted from the 2006 Smoke-Free Air Act, which acknowledged the dangers of secondhand smoke. Said CEASE leader Pete Naccarelli, “we’re tired of seeing co-workers become sick or even die from a litany of diseases that could have been prevented. It’s shameful and it cannot continue.” The Lege could make this go away—and fast—if it acted on a total smoking fatwa that Gov. Phil Murphy (D) has long since promised to sign. The ball’s in their court.

Jottings: On the very off chance that you missed it, the Tropicana Las Vegas closed this week. Bally’s Corp. finished the process of running the venerable resort into the ground and now must dispose of its carcass, a process that now been punted into next October, five months later than planned … Congratulations to Caesars Sportsbook, which has achieved accreditation from the Responsible Gambling Council. The Toronto-based nonprofit is reportedly very picky about who it chooses, with BetMGM getting its nod last year … Another sports betting corpse has hit the floor. 888 Holdings is getting out the U.S. and selling its assets to Hard Rock Digital. The company recently got shown the door in Delaware and never made significant traction elsewhere … Win-River Casino’s tribal owners want to move it and just cleared a major environmental hurdle. Opponents are not mollified, noting that the project would worsen traffic on I-15 (below) and infringe upon the site of the Sacramento River Massacre, a major stain on California‘s history …

The satellite of Harrah’s Cherokee, in Murphy, North Carolina, is so successful that the casino is busily adding a 12-story hotel, 300 slot machines and eight table games, a bar, a poker room, and a parking garage. Completion is expected late this year … The first casino resort in Thailand could, much to the chagrin of Japan, beat MGM Osaka to market. The Thai cabinet is set to approve as many as eight casinos, with a minimum investment of $2.7 billion. The more pressing concern is for Singapore, where the majority of gambling revenues is garnered from tourists, including Thais … Circa Sports has launched operations in Kentucky, further widening its exposure. Circa’s Bluegrass State presence is online-only, it appears … News of the Weird: A hotel-cum-synagogue has been announced for a plot of land just behind Treasure Island. The King David Hotel, as it’s styled, would be the nearest temple to the Las Vegas Strip—and Dr. Miriam Adelson must be kicking herself for not having thought of it. We’re not the only (and perhaps not the first) people to label this a failsino.

At loose ends? If need to see a movie this weekend, catch Liam Neeson in gritty In the Land of Saints and Sinners, which is going virtually unpublicized. You’ll thank us later.