Category: Casino News

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Are the good times over?

A sobering report on the economic future of Caesars Entertainment and, by extension, Big Gaming in general, appeared (aptly enough) on Halloween. Deutsche Bank analyst Carlo Santarelli penned gloomily that “What was once an outlook/bull case … has given way to concerns around the impact of a looming recession and a deteriorating U.S. consumer. We have believed and continue to believe that the cyclical peak for CZR, and others exposed to the LV Strip and domestic drive to markets, has passed …” Santarelli swiftly dismissed the Roman Empire’s 3Q23 results as not “overly meaningful,” as they merely confirmed that regional casinos are challenged but Las Vegas “remains resilient.” He chopped his price target on the stock from $70/share to $60 but kept a “Buy” rating on CZR.

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Las Vegas: Locals gamble less; Boardwalk notebook

Casino revenues for September are in and they bode well for Las Vegas Strip casinos and rather concerningly for everyone else. The Strip carried the state to a 2% increase to almost $1.3 billion for the month. Strip gambling palaces grossed $741 million, a 7% jump. Baccarat winnings vaulted 88% on high hold, despite 2% less play. That more than made up for less slot play (- 4%), which brought in $383 million. Table wagering was off 7% win was 3% higher, to $211 million. “If we normalize both the low hold in September of 2022 and the high hold in September of 2023, [gross gaming revenue] would have been down ~3.2% Y/Y, though, given the cyber security event, this should not be surprising,” argued Deutsche Bank analyst Carlo Santarelli. Isn’t nice how an MGM Resorts International/Caesars Entertainment cyber catastrophe can be normalized as a mere “event”?

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Trop’s doom sealed; Bally’s Chicago delayed

Enjoy those lounge chairs while yet ye may. All that stands between the Tropicana Las Vegas and a late-2024 implosion are the owners of Major League Baseball. If 75% of them vote to move the Oakland Athletics to the Las Vegas Strip, it’s goodbye Trop, thanks to avaricious Bally’s Corp. Speaking of avarice, MLB Commissioner Rob Manfred has waived the A’s relocation fee, which may get other teams’ noses out of joint. Let’s hope so. Nevada taxpayers would foot a $380 million bill for a baseball stadium on the Trop site and get nothing in return save for MLB’s worst franchise. OK, Southern Nevada would get a measly $2 million “financial” commitment—or 1% of A’s ticket sales, whichever is larger. (Our money is on the $2 million, so to speak.)

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SCOTUS whiffs, big time; Political roundup

Our august Supreme Court had the chance to decisively outline the parameters of the Indian Gaming Regulatory Act—and blew it. SCOTUS had been petitioned by parimutuel owner West Flagler Associates to block implementation of Florida‘s compact with the Seminole Tribe, one which gives the Seminoles exclusive rights to sports betting in the Sunshine State. The highest court voted 8-1 against hearing West Flagler’s appeal, made after activist appellate judges redefined “tribal lands” in IGRA as extending throughout cyberspace, which neatly turns the Act on its head. Only Justice Brett Kavanaugh realized that there were bigger issues at stake and was acutely aware of the IGRA contradiction. Would that he was not alone. The compact, he wrote, also “raises serious equal protection issues.” We’d like to hear those litigated and there’s a chance that West Flagler will get another bite at the SCOTUS apple, although the chances seem bleak. The Seminoles have been green-lit to start taking sports wagers and once that particular ship has sailed it will be difficult to sink it.

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Tough quarter for Boyd

Third quarter results are out for Boyd Gaming and they could have been a good deal better. J.P. Morgan analyst Joseph Greff minced few words, headling his investor note “Revenue upside more than offset by higher costs.” Ouch. He ratcheted his price target on the stock all the way down to $72/share from $79 (it’s currently trading at $55). Third quarter cash flow of $321 million was just 1% below what Wall Street expected but the disappointment was palpable. Weaker results at the core casinos were largely mitigated by strong ones at tribal Sky River, near Sacramento, and by online operations, which include an invaluable alliance with FanDuel.

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Jottings for a slow news day

It’s business as usual in Atlantic City. For example, it’s no wonder that the Golden Nugget (pictured) is at the bottom of the burg’s casino pile. Our man on the Boardwalk visited the Nugget recently and was charged a steep $90 in resort fees—for a comped room, no less … MGM Resorts International needs to be more George with its Las Vegas Grand Prix guests. It recently sent out an offer for four-day race tickets, free Wolfgang Puck food, opening-ceremony access—but only $40 in free play. That’s not going to attract the big spenders. Maybe event barkers are succumbing to their own hype that gambling revenue is going to triple (we’re not making that up) during Formula One weekend … Bally’s Corp. has quickly redubbed short-term Bally’s Casino as Bally’s Chicago. They’re promoting it to their customer base via Bally’s Vicksburg fliers mailed to Philadelphia customers. As though Vicksburghers are going to fly up to Chicago, especially when no special offers are on the table.

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Seeing red; Cancer good for biz in South

Talks are resuming, albeit with an apparent lack of urgency, between the Culinary Union and the Big Three of the Las Vegas Strip. True, MGM Resorts International sits down with the Culinary on Monday. But Caesars Entertainment doesn’t meet with the union until a week from today—and Wynn Resorts not until Oct. 30. Wall Street thought the labor negotiations would be resolved by now. It thought wrong. Golden Entertainment execs look damned prescient for predicting a mid-November resolution. It will take the oncoming prospect of the Las Vegas Grand Prix to focus everyone’s minds—and maybe not even then. Yesterday, someone predicted on X that Formula One spectators would be greeted by the sight of picketing. We replied that it was too close to the truth to be funny. It would certainly get Big Gaming’s attention in a grave way.

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Sands outperforms; Strike!; Clueless in PA

Beating the expectations of the boys on Wall Street was Las Vegas Sands, which reported boffo cash-flow numbers from Macao and Singapore. In the former it did $631 million where The Street anticipated $600 million. In the latter, Sands’ EBITDA number was $491 million. Wall Street expected about $450 million. With 20 bucks a share to make up to hit analysts’ price targets by year’s end, Sands reverted to that tried and true form of price manipulation: share buybacks and $2 billion of them. Wall Street boffins predictably did cartwheels at the news. The bottom line is that the Miriam Adelson clan is going to scarf up 15% of the shares it doesn’t currently hold.

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Atlantic City dip; Another strike in Motown?

Atlantic City dip; Another strike in Motown? 2

Last month saw a slight decline in Atlantic City casino revenues, down 2% to $246.5 million. Before we break out the crying towels, note that this is 10% better than the casinos were doing at the same point in 2019. Meanwhile, Internet gambling (+21%) and sports betting (+13%) marched upward. Only two casinos, however, were revenue-positive. Ocean Casino Resort leapt a whopping 29% to $39.5 million and Hard Rock Atlantic City gained 7% to gross $47 million. Borgata retained its top spot with $54 million but plunged 13%, a worrisome number. Despite a much-vaunted spate of renovations, the Caesars Entertainment threesome is settling into second-class status, perhaps the consequence of trying to hang onto too much gambling inventory. The trio was all bunched closely together, led by Harrah’s Resort‘s $22 million (-4%), followed by Caesars Atlantic City (-4.5%) and Tropicana Atlantic City (-8%), both around $21.5 million.

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Revenue roundup; Jottings for a Monday

Casino winnings are definitely lagging in Indiana, where they were down 5% last month from 2022 and 4% below where they were in 2019, thanks to Hard Rock Northern Indiana having diluted the market. Hoosier State casinos grossed $190 million. Hard Rock, no surprise, continued to reign supreme, despite being down 7% (business lost to Bally’s Casino in Chicago, perhaps?).

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