Boyd Gaming leaked January data, what Wall Street calls “offered an encouraging commentary,” to help put an upbeat spin on its 4Q20 numbers. It worked like a charm. JP Morgan analyst Joseph Greff moved his price target up $8 to $62/share. He was motivated by news of “improving gaming customer spend trends thus far in the 1Q21 relative to its results in the 4Q20 … this is despite the older casino patron demographic not really returning to any great extent, which is something that could serve as upside or a cushion to the presently strong/growth trends from younger, non-rated players.” He liked a business plan structured around a “favorable localized/regional footprint predominantly focused on a drive-to, leisure gaming customer.” Greff also raised his cash flow estimates based on strength in the Midwest and South regions of BYD and on its strong sports-betting prospects, thanks in part to FanDuel (“DFS Operator #2” in Wall Street code).
Fourth-quarter revenues were a better-than-expected $636 million (Greff anticipated $608.5 million), despite being 24% down from 2019. But the Midwest and South were only 15.5% off the pace, bringing home the bacon to the tune of $456 million. This enabled the company to shrug off the temporary closures of Par-A-Dice and Valley Forge Casino Resort. In Las Vegas, support from locals was somewhat undone by lackluster tourist biz, particularly at The Orleans. Vegas numbers overall were down 28%, a $161.5 million take. Downtown needs a defibrillator, generating just $18 million, a 74% collapse “pressured by weaker tourism to southern Nevada, especially from the core Hawaiian customer base.” In other words, Main Street Station isn’t coming back any time soon and no reopening date was floated for Eastside Cannery on the Boulder Strip. Greff forecast a recovery in locals biz (good for Cannery) but only “modest” improvement in Downtown numbers.
If you wonder why someone like Greff is so grim about tourism, consider a survey done by ROKK Solutions, which finds that 50% of Americans definitely plan to get a Covid-19 vaccination—but 23% don’t. “Continuing hesitance regarding COVID vaccinations is just another illustration of the challenge we face in getting back to normal,” is how Jon Last put it. Unfortunately, the news doesn’t get any better. 60% of Americans surveyed were unconvinced that the vaccine(s) is safe and 40% doubt its efficacy. 32% are concerned about new mutations of Coronavirus undermining any vaccine and 25% believe the pandemic “is blown out of proportion.” (How many hundreds of thousands of people have to die for these latter cretins to get the message?) On the upside for travel marketers, 14% believe they are at low risk and 13% say getting the disease is “no big deal.” Travel agencies, there is your new customer base.
Talk about putting two and two together and coming up with five. Americans for Nonsmokers Rights saw MGM Resorts International‘s decision to reopen Park MGM midweek and leapt to the assumption that “MGM indicates strong visitor demand for smokefree resorts.” Nothing of the kind. If so, MGM’s resumption of operations at The Mirage would be a vindication of smokers. MGM is clearing the decks for an expected uptick in visitation, although recent room-rate numbers would seem to contradict what VitalVegas calls “a surge in demand.” We’ll believe it when we see empirical evidence but the MGM move, coupled with Virgin Las Vegas‘ long-awaited opening, is indicative of optimism in the resort community. So too, in a perverse way, is Caesars Entertainment‘s increase in resort fees. In any event, it would be more newsworthy if MGM weren’t reopening Park MGM at the same pace as other Strip properties.
Speaking of Leo the Lion, BetMGM has announced “an integrated sports betting and entertainment experience” with TopGolf Entertainment Group. The press release is exquisitely vague about whether this entails sports betting at TopGolf facilities (“unique and interactive entertainment options, which our loyal BetMGM users can now access through a variety of exclusive and customized packages”) but cross-marketing is explicitly promised. Considering that TopGolf streams live sports feeds for its duffers, we’d be not the least bit surprised were it enabled as a venue from which to place MGM bets in states where it’s legal.
As for states where it’s not legal to wager, foremost among them may be Georgia. State Sen. Ron Stephens (R) has long been aiming to fix that and he’s gaining allies. The business strategy is somewhat unusual: Capture gamblers on their way through the state. But it’s not as crazy as it sounds. The second-largest city, Augusta, is pretty sleepy and could probably support no more than a modest, Boyd-style property. But put a megaresort in Atlanta and a couple on the interstates, and it’s a whole different ballgame. Anyway, that’s what developer Rick Lackey thinks. So too does Atlanta Motor Speedway President Ed Clark. The latter has contracted with Foxwoods Resort Casino to conceptualize a destination resort encompassing a driving range, water park, theme park, 700-room hotel, cineplex, e-sports arena, nightclub, concert hall … everything including the kitchen sink (gambling).
Other mooted locations are Hartwell on the South Carolina border (a three-casino cluster is being pitched) and Midway, 30 miles south of Savannah but square on the main drag to Jacksonville. Nor is the Alabama drive-in market being neglected, with Columbus proposed as a potential casino site. Now comes the hard part. Stephens needs a two-thirds majority in the Lege, regardless of what package ends up being proposed, enough to both get it past Gov. Brian Kemp‘s ready veto pen and onto the next election ballot. Going in his favor is that the Georgia Lottery is flagging, $300 million short on its contributions to the Hope Scholarship fund. With that fact in his bandolier and by premising casino gaming on out-of-state dollars, Stephens might have a winning argument this time.
There goes the neighborhood. Tony Hsieh having died without a will (note to self: make a will), his family is putting the whole Downtown Project kit ‘n caboodle up for sale, including the Zappos HQ building. That’s almost 100 Downtown parcels on the sale block (a plentitude sure to drive down prices). We’ve not seen a fire sale like this since Jackie Gaughan and Mel Exber liquidated damn near everything to Tamares Group in the wayback. Visit the Container Park and reinvented Gold Spike while you still can.
The Alabama Legislature is in session and is considering a lottery and casinos bill. https://www.al.com/news/2021/02/gambling-bill-tops-list-of-tough-issues-when-alabama-legislature-returns-to-work.html
Its hard to believe so many Americans tell pollsters they won’t take or doubt the vaccines, and at the same time the demand among those who are eligible is crazy high… Millions have had it, no deaths so far, only a tiny amount of allergic reactions that were immediately controlled. The vaccines are the only way we beat the pandemic, if another path exists, I am not aware of it. The very people who rail against public health precautions to supposedly “protect businesses” are the ones who put those same businesses at risk for failure. There is a disconnect going on, some actually think everything should be opened up immediately to full capacity, and that would supposedly solve the economic problems. It certainly will not. We will heal when we beat the virus with the vaccines, if people won’t take the vaccine the virus will mutate horrifically and we will be back at square one…
I’m puzzled that the stock analysts quoted always seem so high on BYD, particularly it’s regional properties. My main Boyd experience was with their acquisition of Belterra Resort in southern Indiana. Belterra had been a great regional destination. After the Boyd takeover, they drove away most of the loyal high-rollers and began competing for the local tobacco farmer market (not that there is anything wrong with being a tobacco farmer). Belterra seems to be a shell of its former self.
Is Belterra an aberration in the BYD family? Or is Belterra doing fine and my perception is way off? Or was the BYD plan to drive away business but offset the lost revenue with cost-cutting, layoffs, etc.?