While not as bad as Deutsche Bank expected (-8%), June revenues on the Las Vegas Strip of $727 million were a disappointment, down 1%. And May’s brief flurry of hope from Las Vegas locals players faded fast as their losses tumbled 10% to $229 million.The problem on the Strip can be summed up in one word: baccarat. The house got clobbered as winnings plunged 29% on 3% larger wagering. By contrast, all other table games were up 9% despite 14% thinner betting. Slot play was up 12.5%, translating to 4% more win for the house.
Downtown fared far worse than the Strip, slammed -10.5% for $62.5 million. A $71.5 million result on the Boulder Strip represented a hammering to the tune of -17%. Miscellaneous Clark County was down 8% for a haul of $134 million. Despite the subtraction of two Station Casinos properties, North Las Vegas was actually up 3%, winning $23 million. Drive-in markets were a mixed bag, with Mesquite flat at $13 million and Laughlin up 4% to $38 million. Economic bellwether Wendover held out hope, up 2% to $20.5 million. Reno and Sparks had bully months, up 12.5% and 21% respectively. Reno casinos won $69 million and Sparks ones $15 million. Lake Tahoe was unusually placid, flat at $22 million.
Wall Street stock pickers had varying views of Boyd Gaming, which announced 2Q23 results yesterday. J.P. Morgan‘s Joseph Greff reported than the BYD numbers were 4% better than expected and right in line with a strong performance by the company’s online assets. Slot routes in Illinois, a tribal casino in California and lower corporate expenses all further burnished his upbeat picture. Even the troubled South division was described as “right in line … We think these results are no worse than recent buy-side expectations, in the aggregate, though the slight shortfall in its LV Locals segment … may spook investors,” Greff chronicled. Boyd execs attributed the locals softness ($231 million) to an April retreat by customers, followed by flattening in May and June. Out-of-town visitation was “modestly softer” but “We take comfort in this trend line.”
Greff ratcheted his price target up to $79, two bucks higher, and forecast full-year cash flow of $1.4 billion. Online i-gaming revenues of $85 million blew out Greff’s $42 million expectation and, to a less extent, The Street’s $72 million. Managed casinos outperformed by 26%, driven by Sky River near Sacramento. Boyd leadership remained steadfast in its commitment to $100 million in stock repurchases per quarter, as well as $350 million in 2023 capex. Good on them.
Less enthused was DB’s Carlo Santarelli, who called the numbers “a mixed bag from a sentiment standpoint.” Allowing that cash flow had exceeded his expectations, he wrote, “While the upside is likely to be received favorably, most notably within the Midwest & South segment, the lighter than expected results in the Las Vegas locals and Downtown segments are likely to curb excitement around the quarter.”
Some of the Downtown declivity was attributable to Main Street Station having 80% of its rooms out of service and to Fremont Hotel‘s gambling inventory being diminished to the tune of 20% of its slots and 33% of its table games. But … “Net-net, given the easier comparisons and the potential project expenditure related returns, 2024 is shaping up to be stronger than we previously anticipated in the Downtown segment.” The ROI on Boyd’s digital assets looks robust, guided to between $55 million and $60 million by New Year’s. Few in Big Gaming are doing so well in that respect.
Barry Jonas of Truist Securities echoed many of Greff’s sentiments, writing that “While flowthrough was negative Y/Y … land-based trends appear consistent sequentially.” He liked Boyd for its mostly self-owned real estate portfolio, its low leverage, capital returns and 5% stake in FanDuel (an investment that looks wiser by the moment). Jonas stuck with his “Buy” rating as well as his (lofty) $85/share price target. One thing that Jonas uniquely picked up on was Boyd having to cope with higher energy bills, particularly in Nevada and Pennsylvania, another cash-flow suppressant. As for the considerable Downtown underperformance, consolation was taken in the note that business from Hawaii remains durable. Boyd will always have that in its hip pocket.
The NFL picked a hell of a week for Aristocrat Technologies to launch the first league-themed slot machine, NFL Super Bowl Jackpots. It’s set to hit casino floors in time for the kickoff of pro-pigskin season. Two years ago, when game development was incepted, few could have foreseen the rash of NFL-player gambling scandals. The announcement of Super Bowl Jackpots unfortunately coincided with the indefinite suspension of Denver Broncos DE Eyioma Uwazurike for betting on games. “I truly believe that this could be an industry changing event for for slot machines and for casinos themselves … pushing the boundaries, driving innovation to something that really has never been done before,” Aristocrat Gaming CEO Hector Fernandez said. Uwazurike certainly was “pushing the boundaries” of the league’s tolerance of gambling by players. His behavior must have been particularly heinous for Commissioner Roger Goodell to drop such a heavy hammer on him.
The league and Aristocrat have five more NFL-branded slot games teed up, which may tee off some purists who wouldn’t appreciate seeing gridiron action supplemented with lights and bells. Among the unamused, for different reasons, was Broncos coach Sean Payton, who deemed the NFL’s anti-gambling policy excessive. Not that Payton was going easy on his players, telling them, “You can’t bet on NFL football ever, ever, ever. I don’t give an [obscenity] what it is.” Mind you, Payton is not the shiniest messenger, having been suspended himself by the NFL for putting bounties on the heads of opposing players while he was head coach of the New Orleans Saints. But we hope he has learned from experience. As for the NFL’s policy, there’s precious little gray area (as in none) in it, so we can’t imagine what modifications Payton might have in mind.
Against the odds and with no further cost creep, the MSG Sphere has been completed. It’s only almost 100% over budget but, hey, what’s a billion bucks and change among friends? Whether it pencils out remains to be seen, considering that the much larger Allegiant Stadium was built for less. If you cram 20,000 unfortunate souls into standing room, there’s capacity for 37,600 people. Of course you don’t need to bring anyone in to exploit the Sphere’s signature attraction, its fully programmable LED skin. U2 christens the Sphere on Sept. 29, to be followed by a series of shows designed to highlight the venue’s so-called “4D” capabilities. (Has the Sphere found a way to manipulate time, the fourth dimension?) Smell-O-Vision of a sort is promised, as it fine-tuned temperature control. We’re just glad that A) it’s finished in time for the Las Vegas Grand Prix and B) we don’t have to pay its electrical bill.
Looking for something to do this weekend? Head on over to Amazon Prime or Vudu to stream the set-in-Vegas drama Prisoner’s Daughter. It’s one of the few films located in Sin City that actually captures what it feels like to live there (kudos to the location scout). Director Catherine Hardwicke (Twilight) uses not one shot of a casino floor or slot machine, which is a herculean achievement, even if she can’t conceal the predictable trajectory of the plot. Most of the performances are solid and, in one instance, extraordinary. This flitted through theaters last month but here’s your chance to experience it in captivity, especially if you’ve already seen Oppenheimer. (Who hasn’t?)