Station sitting pretty; Missouri booms; All bets off at MGM

Despite fourth quarter revenues that were 28% off the pace ($122 million) in Las Vegas, analysts on Wall Street are liking Station Casinos these days. Native American management fees in 4Q20 were up 21% ($25.5 million) for one thing. JP Morgan‘s Joseph Greff opined that the Vegas locals market “should be in a good supply-demand relationship for a while.” And it’s throwing off a great deal of free cash flow, a good thing to have when A) the Palms investment may be extremely difficult to recoup and B) you’re looking at new projects like Durango Station, which management expects to generate 20% or better ROI. And no wonder, given how underserved that part of the valley is. Having four shuttered casinos isn’t a bad thing, says Greff, reporting that traffic is being redirected into other Station properties. “Moreover, we think there is upside potential in our future forecasts related to a return in its older, core customer (65 years and older), which should complement/provide a cushion related to its presently favorable growth in new, younger casino patrons.”

The improved bottom line is helped by ixnaying buffets and other low-margin items, prompting Greff to up his price target from $31/share to $34. He’s taking a wait-and-see attitude on the liquidation of the land bank, which must wait until the Vegas market improves. Even when it does, we don’t see Station selling land without removing the gaming entitlement first, as locals can’t generate enough moolah to prompt the reopening of closed casinos, let alone support new ones—and (more to the point) Station isn’t going to let new competition in if it can help it. (Would you?) Management seems to be making all the right calls at this time and has ridden out the pandemic superbly. If and when real estate is liquidated, Greff predicts the proceeds will go toward paying down Station’s debt load. Oh, and dividends could be on the horizon, too. Shareholders, rejoice!

Between $600 stimulus checks and an extra weekend day, Missouri gamblers had incentive to come out and play last month. And did they. Revenues were up 6% for a gross of $147 million. Greff called it “one of the best January’s [sic] ever.” Slots ($128 million) grew 10% and table games ($19.5 million) hopped 14.5%. Only Penn National Gaming had reason to be an unhappy camper, as Hollywood St. Louis tumbled 24% ($14 million) and River City slipped 7% ($16 million). Caesars Entertainment had an extremely good month at cushy Lumiere Place (pictured), vaulting 26% to $16 million and Ameristar St. Charles continued to lead the market with $26 million (+22.5%). All the little outstate casinos performed dramatically better, well into the double digits, except for St. Jo Frontier, down 8%.

Bally Corp. scored a triumph in Kansas City, boosting revenue at Isle of Capri Kansas City to $7 million, a 33% climb. Market leader was Ameristar (again) with $16 million, up 4.5%. Harrah’s North Kansas City gained the same percentage, closing out at $15 million, while Argosy Riverside inched up 2% for $13 million. Penn needs to send some marketing savants to St. Louis (or maybe just ask its dwindling customers) to find out what’s wrong there.

Enraged sports bettors called the cops—multiple times—on MGM Resorts International properties on the Las Vegas Strip, wanting their money back. The BetMGM app and walk-up sports books alike were paralyzed by a major technical snafu that caused management to refuse to pay bets. (A source reports the wagers were honored later that night but we have been unable to obtain confirmation from MGM.) The company, to its credit, alerted customers to the problem at 6 p.m., a half-hour prior to Super Bowl kickoff. NetworkInVegas.com reported that the calls to Las Vegas Metro backfired, as both the police and MGM staff threatened to 86 anyone who insisted upon cashing a winning ticket. One tweeter stated that MGM “has all sports book sites closed with security personnel blocking entrances,” offering two free drink tickets as compensation—hey, at least you can get a stiff drink at MGM, unlike Caesars. On a less happy note, MGM blocked tweeters whose messages it didn’t like. This whole kerfuffle, even if resolved properly, was a serious PR gaffe (like this one), the kind that BetMGM can ill afford as it rolls out its product in other states to the east.

Speaking of Super Bowl LV, the fix was in regarding that streaker on the field (yes, streaking is a thing again). Seems the offender, Yuri Andrade from Boca Raton, had placed a $50K bet that there would be an on-field streaker. The alleged bet would have—and apparently did—paid Andrade 375 grand (less $1K he used to post bond for a friend), more than enough to bail him out of the hoosegow. We wouldn’t blame any casino that refused to honor this particular wager. The whole stunt was evidently planned as a promo for the Vitaly Uncensored Web site. Gee, thanks. At least it enlivened a dull fourth quarter for some.

If Red-baiting Sen. Pat McCarran‘s name comes off the Las Vegas airport, some other luminary will have to be selected in his place. Richard Schuetz nominates Benjamin “Bugsy” Siegel, while we plump for aviator Howard Hughes, a man who changed Sin City profoundly. Speaking of aviation pioneers, what about Kirk Kerkorian? Yeah, he owned a few casinos too. Your thoughts on the subject are cordially invited. Just don’t suggest Harry Reid. Please.