Gaming executives showed the flag this week for the J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum, being held this week on the Las Vegas Strip. We’ve covered Caesars Entertainment and Boyd Gaming for CDC Gaming Reports, but will deal with a couple of the other majors here. MGM Resorts International sent CEO Bill Hornbuckle and CFO Jonathan Halkyard to impress the assembled investors and stock boffins. As summarized by Morgan’s Joseph Greff, Hornbuckle and Halkyard (henceforth H&H) said they didn’t see any consumer pullback on the Strip, although there had been some “modest degradation” in the lower price tiers. Excalibur, beware! So much the better that Marriott Hotels had arrived in force and its new alliance with MGM was showing “significant progress … performing well ahead of internal expectations.” Good for Marriott, good for MGM, not so good for online travel agencies, who stand to be displaced.
Looking ahead, “MGM believes its relationship with Marriott can drive incremental convention activity to its properties as the annual national rotations between markets open up new opportunities.” Perhaps better still, the cash flow derived from the partnership is hoped to more than offset the margin erosion caused by the new, more lucrative Culinary Union contract. Speaking of forward glances, H&H were optimistic about the next iteration of the Las Vegas Grand Prix, for which they anticipates “profitability from this event modestly better as it tailors pricing more effectively to mid/low-end consumers and increases engagement outside of the main race event.” (Caesars CEO Tom Reeg said very similar things at his chinwag.) Adding to the good MGM news was the declaration that international travel was back up to 85% of pre-Covid-19 levels.
Overseas, MGM is keeping a watching brief on Abu Dhabi, where a lottery and i-gaming are in the works, with a casino (not MGM’s) to follow. If you wonder where MGM’s free cash flow is going, look there and to Japan (and to share buybacks, known to some of us as price manipulation). Now that MGM is licensed in Nippon—Uff da!—construction on its ultra-megaresort in Osaka begins this summer. H&H reported “momentum” in Thailand (see Jottings). They’re also sanguine about Macao, although MGM knows it needs to up its suite inventory there, having as few as 3% of the suites in the market. Domestically, the company is bracing for comments on the second round of questions, part of the unending pavane in New York City. Still, “MGM feels well positioned with its proposed Yonkers improvements if awarded a license and would hope to begin some form of construction by 2026.” Wanna bet?
Online, MGM was said to be “content” with BetMGM, even if they know it could stand to have more of those lucrative parlay options. More optimistic than us, by far, H&H foresee Internet casinos being legalized in Illinois (OK), Indiana (dicey), Georgia (unlikely) and even Texas (snowballs have better odds in Hell). We’ll have whatever H&H were drinking that day. They’re expecting to do even better in Brazil than in the U.S., garnering as much as 15% of market share.
Although it’s got casinos, most of what Penn Entertainment wanted to discuss was ESPN Bet, the hot topic of the season. CEO Jay Snowden reported that demand was very strong and that user share percentage was better than handle share (which sounds like a fancy way of saying ESPN bettors are pikers). Snowden is convinced ESPN Bet can close the (considerable) gap between it and the competition by NFL season, “as it rolls out new product iterations that improve the overall experience and betting functionality which should benefit retention and lead to higher spend per user.” Continuing to play coy with analysts, Snowden said he’s signed a new digital viceroy—but won’t name him (or her) yet. Greff noted that this person “is very experienced in building digital products and has a strong engineering background (note no mention of gaming experience).” Does that augur well?
Going into football season, ESPN Bet will be focused heavily on marketing and single-game parlays, with a secondary emphasis on refining its approach to the more difficult jurisdictions. It’s early innings in North Carolina, where ESPN Bet (and everyone else) just went live, but “management indicated encouraging results and noted they are seeing better share in newer states as users have less entrenched loyalty to their primary operator.” Which does augur well. Sometime this year one will also be able to log into an online Hollywood Casino portal, instead of having to traipse through ESPN Bet to get to the i-casino. Sort of like how you have to traverse the casino to get to your hotel room.
Back to terrestrial casinos—remember them?—Snowden said they’re snapping back from their January doldrums and that play is steady. “Meaningful” cash flow improvements were promised from Penn’s quartet of big capex projects, including that second hotel tower at M Resort. This year the big investments are going to be in the digital sphere, according to Snowden, so it’s nice to know that brick-and-mortar gambling hasn’t fallen completely off of Penn’s radar.
For the record, Boyd’s braintrust didn’t opine on F1 but did chart a pretty risk-averse course for the company going into 2024. Their emphases were on upgrading existing properties, increasing rated play and keeping debt at 2X cash flow. That all sounds extremely good to us. We need more executives like them.
Bay State casino winnings hopped upward last month, 2.5% higher as Massachusetts gambling houses raked in $22.5 million. No surprise, Encore Boston Harbor was way out front with $64.5 million (+3%), while MGM Grand Springfield continues to struggle, down 1% to $23 million. MGM Resorts International is just not getting much bang for that billion-dollar investment, having misread the market. Plainridge Park jumped 9.5% to $13 million, on the strength of slots alone. Sports betting operators grossed $54 million on $542.5 million in handle (we’ll let you guess the hold percentage). Homeboys DraftKings dominated with 59% market share compared to FanDuel‘s 27%, BetMGM‘s 6.5%, ESPN Bet‘s 4% and Caesars Sportbook‘s 3.5%. Failed WynnBet couldn’t even muster a percentage point, proving that having the best casino in the state only gets you so far.
Failed casino owner Donald Trump may have scored a rare victory this week in New York City. Manhattan District Attorney Alvin Bragg blinked first and asked for a month’s delay of the Stormy Daniels hush-money trial, slated to begin March 25. Legal scholars have questioned the strength of Bragg’s case and Daniels is not the most reliable of narrators (having recently changed her story on her liaison with Trump), although when compared to the orange buffoon she’s a paragon of veracity. ICYMI, Daniels and Trump did the nasty at Harrah’s Tahoe (and subsequently elsewhere) in what should be henceforth known as the Stormy Daniels Suite. (Think of all the MAGA types who’d want to stay there, following in their oversized leader’s footsteps; Caesars Entertainment is missing a marketing gold mine here.)
In our opinion, anyone who has sex with the repellent Trump isn’t playing with a full deck and Daniels’ motives, even by her own account, were somewhat opportunistic. (Full disclosure: We’ve actually bought and read her book Full Disclosure.) And she took hush money, then un-hushed. So there aren’t any sympathetic or wronged parties in the case, unless you count two-timed Melania Trump. We were looking forward to the entertainment value of the trial, even if Bragg really seems to be reaching in order to argue that the Daniels payola constituted election fraud. Hold your nose and stay tuned.
Jottings: Woe betide Nevada state Sens. Marilyn Dondero Loop (D) and Rochelle Nguyen (D). The Culinary Union has painted electoral targets on their backs for eviscerating the Silver State law that mandated daily hotel-room cleanings. Loop isn’t up for reelection yet but Nguyen is and the Culinary has endorsed Geoconda Hughes to take her down. S&G doesn’t endorse candidates but wouldn’t be sorry to see Nguyen become history … This won’t help the cause of slot routes in Chicago: Waukegan City Clerk Janet Kilkelly has been charged with misapplication of civic funds, having allegedly “provided thousands of dollars in financial support in the form of ‘credits’ to businesses that were applying for liquor or gambling licenses, but were not qualified to receive them.” … Century Casinos struggled a bit last quarter, losing $11 million on revenue of $148 million. The cost of expansion was fingered as the culprit … Despite rampant price gouging in Las Vegas, 87% of visitors pronounced themselves “very satisfied” by their trip. Then again, the data comes from the Las Vegas Convention & Visitors Authority, which brought you Formula One and the Oakland Athletics. The bottom line is that a Vegas visit will set you back $1,399 not including entertainment (at least $278 more), and air and car fares … A social-media influencer visited all 26 casinos in Arizona in 48 hours and for once it wasn’t slot king Brian Christopher. No, it was Twitter personality “Clue Heywood” was was in search of “fun and [a] stupid challenge.” Mission accomplished …
Late August is the expected time for the opening of the permanent Hard Rock Rockford, in Illinois. Promised casino President Geno Iafrate, “Certainly, you’re going to see Cheap Trick, you’re going to see Rick Nielsen.” … Silverton Lodge has come under the Derek Stevens umbrella, to the extent that its sports book is now Circa-branded. It’s Stevens’ fifth branded book in Southern Nevada. Way to go … A second study committee didn’t succeed in smothering the introduction of casinos in Thailand, a proposal that now goes to parliament. It appears that the Thais are, like Japan, going to go with the successful Singapore model of large resorts with small(ish) casinos. Paging Las Vegas Sands … Shares of Bally’s Corp. stock spiked 25% on the New York Stock Exchange after Bally’s Chairman Soo Kim proposed taking the company private via his Standard General hedge fund, which specializes in bankrupt casinos. The $15/share bid represents a 30% premium to Bally’s pre-offer stock price—but a steep discount from his previous, $38/share tender … Poker is making a comeback in Macao, where Venetian Macao held the enclave’s first tournament since 2018. Tourneys were effectively extirpated from the enclave after City of Dreams shuttered its poker room six years ago.
I didn’t know this is a political site. My bad.