Bullish on its international prospects, Wynn Resorts revealed yesterday that, for $200 million, it has bought another 155 acres on Al-Marjan Island in the United Arab Emirates, site of an in-progress casino megaresort. Wynn CEO Craig Billings called it “a sizable land bank for potential future development opportunities for Wynn Resorts or for selected third parties complementary to Wynn Al Marjan.” Billings is keeping his powder dry as to what the company will do with the additional acreage but needn’t be in any hurry either. He added, “the UAE is the most exciting new market for our industry in decades and are confident in the demand and EBITDA potential of Wynn Al Marjan as it continues to grow.” Since casinos in Macao are so 2003, Billings isn’t slighting that mega-market with his “in decades” comment. Besides, you’ll never get that much land, nor nowhere near so cheaply, in Sin City.
He also waxed enthusiastic on Thailand, which continues to pursue a sensible course toward a legalized casino industry. MGM Resorts International and Las Vegas Sands are expected to plant Thai flags but Wynn isn’t going to be shut out. “We need to see more details on the regulatory licensing structure but the market is an attractive market. It is probably conducive to meaningful investment pending a deeper understanding of the regulatory licensing structure,” Billings said, sounding a note of caution. But he added, “we are active on the ground there.” Glad to hear it.
Despite low hold at the tables, Wynn reported a 2Q24 that exceeded Wall Street‘s expectations. Punters at Wynncore played the tables less, too, and slots more. (A tightening of consumers’ belts?) But J.P. Morgan analyst Joseph Greff deemed hotel rates and other non-casino streams “relatively strong.” If there was a disappointment it came from Macao, where cash flow was short of anticipation. Even so, Macanese table play was at 120% of pre-Covid levels and the company was believed to be keeping a lid on promotions. Saying that the UAE’s potential was insufficiently appreciated, Greff opined that Wynn’s stock price “takes into account ho-hum 2024 expectations in Macau as well as macro global consumer concerns and China geopolitical ones.” He lowered his price target from $110/share to $101. Deutsche Bank counterpart Carlo Santarelli also knocked nine bucks off his price target, taking it to $122/share, which is still a very upbeat valuation.
In Las Vegas, Wynn generated $629 million in revenue where The Street had forecast $592 million and cash flow of $230 million, well above analysts’ $214 million. The gambling floor was down 6% from 2Q23 but room rates were 16% higher. Rooms averaged an eye-popping $422/night and occupancy ran 95.5%. With casino gambling so ubiquitous in the United States, it only stands to reason that customers would come to Wynncore at least as much for the resort experience as the one-armed bandits.
A pessimistic view of Wynn was taken by Jefferies stock boffin David Katz, who complained that “Weakness in Macau overshadowed earnings as operators attempt to maintain market share in a heavily promotional environment.” He added that management “remains focused on developing its minority interest project in Al Marjan Island, which could generate strong ROI over the long term … the persistent macro concerns in Macau and time and new market risks on the UAE temper valuation upside in the shares.” Katz’s price target was $87.
His concerns with Macao focused on legacy casino Wynn Macau, where poor VIP table action pulled it down to $337 million in revenue from an expected $362.5 million, erasing gains at fugly Wynn Palace ($548 million rather than the anticipated $544 million). Encore Boston Harbor, across the globe, also disappointed, delivering $212.5 million rather than the hoped for $219 million. Its rivals in Massachusetts should be so disappointing. It was victimized by low hold, despite boffo slot volume.
Wynn execs remain optimistic about the Las Vegas Grand Prix, unlike their opposite numbers at MGM. The remainder of the year should see all-time highs in convention business, with an even-better 2025 to come. Still, Katz remained discouraged by the lack of a “direct catalyst” to further propel revenue. Wynn bosses, for their part, continued to wax optimistic on New York City, despite mounting opposition to their Big Apple plans. Could that be the catalyst for which Wall Street years.
On our pilgrimage to Shore Leave in Pennsylvania, we couldn’t help but drive past (it’s brilliantly unavoidable) MGM National Harbor. And it is huge, a behemoth even by Las Vegas Strip standards. The property is so sprawling that Mrs. S&G half-sarcastically wondered if MGM Resorts International provides shuttles to ferry guests around the complex. Either way, it’s been a huge revenue engine for MGM and it produced $72 million last month, flat with July 2023. Main rival Maryland Live was closely behind with $62.5 million, also flat. Horseshoe Baltimore did dismally with just $13 million, down 17%. Hollywood Perryville slipped 3% to $7 million and Ocean Downs slid 4.5% to $9.5 million. Century Casinos continues to struggle with Rocky Gap Resort, falling 13.5% to a state-least $5 million. Golden Entertainment, come back! Nothing need be forgiven!
Casino takings nudged up a point in Ohio, reaching $196 million. Slots-only MGM Northfield Park galloped 6% ahead to $26 million, continuing to prevail against full-service casinos. Hollywood Columbus was flat but second best with $23.5 million. In a real upset, Miami Valley Gaming squeaked a decimal point past Hard Rock Cincinnati ($20 million apiece) into third place, up 5.5% while Hard Rock lay becalimed. Jack Cleveland tumbled 9% to $19.5 million, while Scioto Downs (+2%) bested Hollywood Toledo (+3%), $19 million to $18 million. Then came Hollywood Mahoning ($14.5 million, +7%) nosing past Jack Thistledown ($14.5 million, -8%). We have to guess Jack Entertainment doesn’t know jack about the Cleveland market, judging by June’s poor showing. Hollywood Dayton‘s 10% surge carried it to $13 million whilst Belterra Park (below) brought up the rear with $7 million, down 2%.
Sports betting roared, with winnings of $50.5 million, up 58% from last year. Handle was $516 million. DraftKings had the most handle but was bested yet again by FanDuel, $22.5 million to $15 million. Bet365—recently disciplined in New Jersey for renegade activity—brought in $4.5 million, BetMGM made $2.5 million, ESPN Bet $1.5 million and Caesars Sportsbook fell below the Mendoza Line, making half what Fanatics ($1.5 million) did. Promotional allowances were a George $15.5 million.
Superficially, casinos were up 2% to $136 million in Illinois last month. However, once saturation is taken into account, they were down 8%. Rivers Des Plaines tumbled 12% but stayed well on top with $41.5 million. It lost business to The Temporary at American Place, up 13% to $9 million but still shy of the $10.5 million that CFO Lewis Fanger covets—and that Bally’s Casino in Chicago made. The outmoded Penn Entertainment riverboats fared variously: Hollywood Aurora was stable at $9 million but Hollywood Joliet fell 10% to $7 million. Harrah’s Joliet got thwacked 10.5% to slide to $11 million and third place, just behind Grand Victoria ($11 million+, -10%). Seems like Full House Resorts was eating almost everybody’s lunch in July. Outside of Chicagoland, the waning temporary at Hard Rock Rockford slipped 2% to $6 million. DraftKings Casino Queen grossed $7 million, down 3.5% but bested the likes of Harrah’s Metropolis ($4.5 million, -24% [!]), Argosy Belle ($3 million, -6%) and Golden Nugget Danville ($3 million, -3.5%). Newbie Walker’s Bluff Casino eked out $2.5 million and Bally’s Quad Cities was down a point to $5 million.
Jottings: Although MGM Resorts International is keeping mum for the time being, its long a-borning MGM Osaka is facing yet another delay, according to city fathers. To hear them tell it, a requested construction pause to allow for Expo 2025 could cause construction to lag past 2030 and further inflate a whopping $8.5 billion price tag. Expo backers are worried about construction-related noise and eyesores. Good luck with that … Yesterday, one of the two major U.S. political parties nominated its vice presidential candidate. But you wouldn’t know that by reading the online edition of the Las Vegas Review-Journal, which continues to burnish its reputation as the nation’s worst major metropolitan newspaper … Richard Schuetz has been on a roll lately. In his latest column, he contends that regulators can fine Big Gaming’s miscreants until they’re blue in the face and it won’t make a difference. Agree? … Casinos in Las Vegas and California were veritable laundromats for the money made illegally by bookie Mathew Bowyer, some of which was filched from Shohei Ohtani‘s bank account. Thanks to the peregrinations of convicted felon Scott Sibella, both MGM Grand and Resorts World Las Vegas are now under suspicion. Bowyer was also in the habit of gambling at The Venetian, a former haven for money laundering. Pechanga Casino Resort has also been fingered as a Bowyer hangout. Whoever “Casino A” in Bowyer’s plea deal is, it’s in a whale of trouble with Uncle Sam.