No executives? No financing? No problem, right? Big problem! Just ask the nonentities behind a proposed Terre Haute casino. They just got turned down for a license. This almost never happens in “gold standard” Nevada, not because casino projects have their houses in order but because licensing is delayed until the last possible minute, when the casino is a fait accompli. In Indiana’s case, the $125 million Lucy Luck casino hadn’t even broken ground yet. The project is a hand-me-down from discredited Spectacle Entertainment, who dibbed Terre Haute several years ago. “We’re now a year and a half into this process and still talking about things that are prospective in nature,” said an obviously exasperated Indiana Gaming Commission Executive Director Sarah Tait.
Where to go? Back to Square One of the licensing process, provided that the deficiencies noted above are cured. Also, more transparency will be required as to Lucy Luck’s proposed financiers. Hard Rock International, meanwhile, lurks in the wings as a potential savior, having offered to manage the casino. Even so, the covenants for financing Lucy Luck expire June 30 and a June or July groundbreaking is now a fanciful notion. Pouted lead businessman Greg Gibson, “we may reapply, but I’m not sure if we will. Terre Haute deserves this casino, and I wish it could be alongside Lucy Luck Gaming.” Maybe not. Terre Haute deserves casino developers who aren’t all hat, no cattle.
Elsewhere in Indiana, Caesars Entertainment has been cleared to take Horseshoe Hammond off the sale block and we’re glad. It never made much sense for the Roman Empire to part with the Hoosier State’s top-performing casino. Besides, since Caesars isn’t applying for the Chicago casino license, it would abandon a lucrative market with nothing to show for it. The impetus for the reversal is reported to have come from Caesars, so kudos to CEO Tom Reeg. This frees Caesars up to focus on its new, Hard Rock challenger in Gary. Commissioners agreed, adding that it was important to keep Horseshoe’s brand equity in the state.
Deutsche Bank analyst Carlo Santarelli was in Las Vegas last Monday and Tuesday, and found the Strip “vibrant” and “busier than expected” midweek. Companies were upbeat, thanks in large part to “strong” group bookings in the third and fourth quarters. “While the mix of the patronage remains off from an historical perspective, most management teams agreed that the business is in fact returning to historical norms, with weekends sold out and midweek continuing to build,” Santarelli wrote. Meeting and convention business is back to normal for 2022-3, meaning more ancillary revenues from catering, events and higher room rates. It also means less reliance on the despised online travel agencies. Customer spending was described as “meaningfully improved,” as Americans burn through pent-up demand, accumulated savings and even unemployment benefits.
Locals gambling win is up 8% year to date, despite tracked play being in the low double digits. May and June revenues aren’t enumerated yet but operators see no signs of a slowdown from April, which was 18% higher than the banner year of 2019. Baby Boomers are returning, younger customers are holding firm and “spend per patron and time on device metrics are up considerably and driving the entirety of the growth relative to 2019.” And why not? With no buffets to patronize, spend more time at the slots. By contrast, the Strip was described as “more challenged” but trending positively. What with international play “meaningfully depressed,” the Strip lags 2019 revenues by 23% so far. Nor will the return of baccarat play be a panacea, for Santarelli points out that it has been a diminished piece of the larger picture since 2013.
Major operators Caesars and MGM Resorts International are running leaner, if not significantly meaner, casinos after slashing workforces by 32% and 40% respectively. Santarelli expects only a fifth or a fourth of those axed workers to return. That means a 30% reduction in the cost of labor for operators and God knows what in terms of the customer experience. Sens. Brian Schatz (D) and Jacky Rosen (D) are at least trying to do something about that, proposing grants and tax credits that would incentivize rehiring. According to the Las Vegas Review-Journal, “The legislation would also provide tax credits to promote worker safety and help pay for safety equipment, cleaning materials and safeguards for housekeeping workers.”
On other fronts, World of Concrete was not the hoped-for curative, bringing in only 10,000 attendees (one-sixth of the historical norm) which could augur, Santarelli opined, “potential leakage” for other major trade shows. On the other hand, Las Vegas may pick up business from other convention-hosting cities that are comparatively locked down. “Accordingly, we believe there are some operators whose 2H21 book of group business will exceed their 2H19 group results.”
One Vegas segment that is definitely strong is F&B. Santarelli experienced long wait times and lines at fast-food emporia, restaurants and even amusement-park rides. Not only that, patrons are spending 15%-20% more than two years ago. Yet “operators remain steadfast that the vast majority of their buffets will be repurposed and will not return in their prior form.” Sorry.
Ferment was, however, evident in real estate, both in terms of sales of existing casino assets, and of raw land both on and off the Las Vegas Strip. “We believe buyers, which we believe are both traditional and financial, are comfortable with the pace of the recovery, and could be keen to transact given equity multiples and low borrowing costs.” Look for a lot to happen six to 12 months down the road. Finally, casino operators (Phil Ruffin, take note) are considering selling off their Covid-19 insurance claims to third parties in exchange for some quick cash on the barrelhead, “thereby allowing the 3rd party to buy a discounted claim and take on the challenges of collection on their own.”
On the other side of the country, our Atlantic City bureau has been busy. Borgata‘s idea of “Wow” entertainment is Brian Newman (Aug. 27), Boyz II Men (Sept. 3) and Get the Led Out (Sept. 18). Tribute bands? Seriously? Bart Blatstein, meanwhile, is packing some real “wow” with the East Coast’s purportedly largest Juneteenth event at Showboat. Less salubriously, the City Council voted 7-2 to repeal free needle exchanges within the tourist district. More happily, idle Bader Field was repurposed to host a food drive for unemployed casino workers and, in a bit of movement, Bally’s Atlantic City started replacing all of its windows with pink glass. Any change at Bally’s is welcome.
Getting back to Bader Field, Mayor Marty Small (D) has been up to a bit of mischief. Seems he announced a secret 99-year plan of unknown purpose in tandem with as-yet-unknown entity. Quoth the Press of Atlantic City, “a red flag went up that should be visible from Trenton.” When not concocting sub rosa deals, Mayor Small has been leading from behind on crime in the streets. Last Sunday, four people were shot on Atlantic Avenue. “Two town council members contacted Gov. Murphy asking for help from NJ State Police to try and curb the violence, which was on all the Philly TV stations. Mayor Small stated that was ‘political’ and the State Police weren’t needed. The mother of one of the victims said: ‘Black lives only matter when the police kill you. Black lives don’t matter when it’s Black people killing other Black people.'” Are you listening, Mayor Small? No wonder the New Jersey Lege passed an extension of state control over Atlantic City and sent it to Murphy for his (expected) signature.
Jottings: Buffets on the Las Vegas Strip continue to cautiously reopen. Latest is Excalibur‘s, which returns July 1 with limited hours (8 a.m.-3 p.m.) … In a proclamation by MGM China strongwoman Pansy Ho, venerable Sociedade de Jogos de Macau has let it be known that henceforth it will be SJM Resorts Ltd. Unfortunately, Grand Lisboa Palace is still butt-ugly … Perhaps in anticipation of full-fledged casino status, MGM is putting $500K into Yonkers Raceway. The capex investment is the first the track has received in 15 years and will go to making racing safer. The racino won $58.5 million at the slots last month … Rather than lash out at Richmond, jilted Cordish Gaming is taking Norfolk, Virginia, to court for not choosing it over the Pamunkey Tribe. Cordish wants $100 million in return for ceasing to be a nuisance. There be talk of lies and defamation … Catawba Two Kings Casino Resort in North Carolina presently consists of 23 prefab buildings cobbled together with some slot machines hastily trucked in. It will have to do until the real casino opens at an unspecified date. At least smoking is banned … Unlike Illinois, slot routes in Pennsylvania are not a material threat to brick-and-mortar casinos. They cleared only $3.5 million last month.
Great news on Horseshoe Indiana. Was never really sure why that was on the market to begin with.
I was in AC this past weekend and it was PACKED! Did not make it to Borgata, but HR and Ocean were rocking. And YES the pink glass is back in place at Ballys! I noticed it from a friends boat from the back bays. Hopefully a sign of good things to come.