Author: David Mckee

Posted on by — Leave a comment

DraftKings flexes its biceps; New names, same players

Probably in reaction to a precipitous plunge in DKNG shares, DraftKings hosted an investor day in which it told Wall Street analysts that everything is coming up roses. Its lead point was that its ‘total addressable market’ (translation: potential bettors) is $26 billion, up from $22 billion a year, that Internet gambling is now worth $48 billion rather than last year’s $40 billion and that Canada is a $6 billion market. As Deutsche Bank analyst Carlo Santarelli discreetly pointed out, these figures are way out of whack with what online sports betting and i-gaming are actually realizing in terms of revenue. True, DraftKings has greatly increased its Internet-casino market share—especially in New Jersey—but by dint of purchasing Golden Nugget Online. Santarelli headlined his report, “If It’s All Like New Jersey; It’s All Good… We Doubt it Will Be.”

Continue reading DraftKings flexes its biceps; New names, same players
Posted on by — 1 Comment

Boardwalk bulletin; George gesture from Apollo

Pressure to end smoking in New Jersey casinos continues to ramp up on legislators. Said former governor Richard Codey (now a state senator), “When I was governor, we passed smoke-free legislation that covered almost all of our state. Restaurants complained their businesses would suffer, but, in fact, the opposite happened — customers loved the smoke-free environment. The same will happen with the casinos.” The latter, of course, are resorting to Chicken Little tactics that have little basis in reality. Heck, industry publisher Roger Gros will be happy to tell you how much gaming executive complain (privately) about the costs, especially in wear and tear on their properties, caused by smoking. But in public they tie themselves to the mast of a sinking ship.

Continue reading Boardwalk bulletin; George gesture from Apollo
Posted on by — 1 Comment

IGT: Biz as usual; Borgata ups the ante; Mega-Jottings

Wall Street analysts were rather ho-hum about International Game Technology‘s 4Q21 earnings announcement. The company’s cash flow from lotteries were almost exactly as predicted ($335.5 million, revenue of $687 million) while gaming brought in $66 million (on revenues of $321 million). The digital segment was a relative disappointment: $9 million instead of the predicted $16 million in EBITDA, while corporate costs overshot the mark, $24 million rather than the expected $19 million. Yawned Credit Suisse analyst Ben Chaiken, “We think 4Q numbers are likely good enough, with important segments (Lotto and Gaming) inline, and we think the miss on digital and corporate should be looked over.” Management continues to project as much as $4.3 billion in 2022 revenues—and why not? By and large they’re hitting their numbers. Chaiken did think it imperative that “new CEO Vincent Sadusky … establish a narrative of extrapolating hidden/underappreciated value in IGT.”

Continue reading IGT: Biz as usual; Borgata ups the ante; Mega-Jottings
Posted on by — 2 Comments

Twin Spires collapse; The Great Buffet Battle

Online sports betting has claimed its second victim. First it was Wynn Interactive. Now it’s Churchill Downs subsidiary Twin Spires. Too much competition and too little profitability were the reasons cited by CEO Bill Carstanjen. CHDN will also cease its Internet-casino operations. It will, however, retain its four retail sports books, including Rivers Casino Des Plaines, as they are all performing in the black. “We had high hopes for the potential to build a profitable business in this space … We have profitable retail sports books in four of our casinos. However, the online sports betting and online casino space is highly competitive, with an ever-increasing number of participants that the states have licensed,” Carstanjen said, adding that he did not see a path to profitability in OSB “for at least several years.” Which was too much red ink for Churchill Downs to stomach.

Continue reading Twin Spires collapse; The Great Buffet Battle
Posted on by — 2 Comments

Mega-January on the Strip; Much ado about Caesars

January’s Nevada gambling-revenue numbers are out and the Silver State topped $1 billion yet again, a 41.5% boost over last year. However, some jurisdictions manifested slight declines, a sign that casino activity may be “normalizing” after a heated 2021. To get that out of the way, the Elko area was flat, with Wendover ($21.5 million) down 2%, while Lake Tahoe dipped 4% to $17 million. Nearby Reno gained 8% to $74 million. The Las Vegas Strip vaulted 76.5% to $587 million while Downtown climbed 38.5% to $68 million. Strip numbers were clearly aided by a 109% increase in passengers passing through Reid International Airport, some 3 million strong. International travel, while slim (94K passengers) was up 337.5%. North Las Vegas eked out a 6% gain to $22 million and the Boulder Strip jumped 28.5% to $85 million. As for drive-in (or would that be ‘drive by’?) markets, Laughlin made $42 million (+26%) and Mesquite was up 11% to $14.5 million, while miscellaneous Clark County brought in $130 million, a 15% uptick.

Continue reading Mega-January on the Strip; Much ado about Caesars
Posted on by — 3 Comments

By the seaside

We’re just back (and exhausted) from dealing with a harrowing family emergency. Fortunately, our East Coast correspondent has been busy during our absence and files the following photo essay …

Ocean Resort: “I asked for a small piece” at the Avila Lounge, “and I got a large one.” George!

The casino was “well attended” and a promotional hoodie giveaway could hardly have hurt.

Continue reading By the seaside
Posted on by — Leave a comment

Louisiana levels off, DraftKings sucks wind, Golden gilded

Harrah’s New Orleans (Courtesy: Shutterstock)

Gaming analysts have been cautioning us to expect “difficult comparisons” between 2022 and previous high-water years late 2019 and 2021. Indeed, Louisiana‘s January was flat with 2019, if up 8% from last year. Sports betting was weak: $49 million in handle, boiling down to $5 million in revenue. Harrah’s New Orleans wasn’t exactly a bastion of strength either, falling 22% to $18 million. Boomtown New Orleans picked up 23% to finish at $11.5 million while Treasure Chest ceded 1% for $8 million and Fair Grounds racino slipped 7% to $3.5 million. Out in Lake Charles, victory went to L’Auberge du Lac, leaping 24.5% to $30 million. Golden Nugget gained 18% to finish with $26 million and Delta Downs was off 14.5% to $12.5 million. In Baton Rouge, decrepit Belle of Baton Rouge eked out $1 million in a 58.5% plunge. Hollywood Baton Rouge slipped 5% to $4 million while L’Auberge Baton Rouge exercised its usual dominance with $17 million, a 61% moonshot.

Continue reading Louisiana levels off, DraftKings sucks wind, Golden gilded
Posted on by — Leave a comment

Wynn steals its own thunder; Atlantic City hits a downer

Leave it to Wynn Resorts to squelch news of a bad 4Q21—losing $256.5 million—with an, oh by the way, announcement that it was selling Encore Boston Harbor for $1.7 billion (essentially breaking even on construction costs) and leasing it back. The move is out of character for Wynn, which likes to own its real estate. The company will be renting über-lucrative Encore for $100 million a year, which seems a fair price to pay for such a phat asset. The buyer is San Diego-based, generically named Realty Income Corp. CEO Matt Maddox and CFO Craig Billings insisted this was a one-off for Wynn, with Billings saying, “In Boston, we were able to achieve both an attractive cost of capital and that asset is based on the stability of revenues in the regional markets and the much lighter CapEx burden relative to say Las Vegas made it a logical financing source for us, which is really what it was.” The nearly $2 billion will be sunk mostly into the United Arab Emirates, where Wynn plans a casino-based destination resort.

Continue reading Wynn steals its own thunder; Atlantic City hits a downer
Posted on by — 3 Comments

MGM boffo; Establishment freaks out over sports betting

“Viva Las Vegas” was the headline on Credit Suisse analyst Ben Chaiken‘s recap of 4Q21 earnings from MGM Resorts International. Wall Street expected $2.8 billion in revenue and $705 million in cash flow. MGM delivered $3.1 billion and $821 million, respectively. With Aria and Circus Circus backed out of the picture, revenue was up 4% and cash flow shot up 36%. “It sounds like trends in Vegas are recovering again following some Omicron related weakness in January, particularly in the group business,” wrote Chaiken, adding that management saw positive trends building toward the Grammy Awards (at the Green Monster) and NFL draft. Regional casinos performed as expected, delivering $309 million worth of cash flow. BetMGM was projected to generate $1.3 billion in net revenue this year, as it expands to Illinois (March) and Ontario (April).

Making the best of a bad situation in Macao, MGM brass noted that Chinese New Year visitation was up 30% over last year and mass-market play was solid, with MGM’s Macanese market share hitting an all-time high of 14%. Little was said about Japan, but Chaiken observed that the lion had $9 billion “in dry powder” that he expected to go into BetMGM and New York City (“potential high ROI projects”). BetMGM lost $211 million last year and will not be ROI-positive until 2023.

Continue reading MGM boffo; Establishment freaks out over sports betting
Posted on by — 3 Comments

Casinos continue to thrive; Crooks, liars and losers

There’s no “supply chain” issue when it comes to dollars flowing into American casinos. Take Missouri, for instance. Casino revenue sprang 15.5% over 2019 last month, for a statewide take of $145.5 million. Actual visitation was down 2o% but per-visitor spend rose 44% (!). The prime beneficiary was Bally’s Kansas City ($9 million), rocketing 90.5% above its 2019 numbers under its new moniker and management. Statewide leader was, as ever, Ameristar St. Charles, jumping 28% to $24 million, while neighboring Hollywood St. Louis ($19 million) climbed 15.5%. River City was up 17% to $19 million but downtown’s Lumiere Place (above) fell 14.5% to $11 million. This latter news comes just as Caesars Entertainment announces plans to rebrand it as Horseshoe St. Louis. Whether that will be sufficient remedy is unclear but some desperate measures are in order.

Continue reading Casinos continue to thrive; Crooks, liars and losers