Category: Casino News

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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.”

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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Atlantic City revisited; Oscars: Year of The Dog

Bally’s Atlantic City and Golden Nugget traditionally jockey for last place in Atlantic City monthly gaming grosses. Indeed, a midweek visit to Bally’s by our East Coast correspondent found the place practically deserted (and in need of more capex $$). But he went back last weekend and found a “decent number of people.” It surely did not hurt that Bally’s—seen above—was being ‘george’ with promotions (reversing an A.C. trend), crossing customers’ palms with everything from $50 gift cards to 32-inch LCD TV sets. Room rates that start at $19/night and whiskey-tasting promos can’t be harmful, either. Concurrently, at the Nugget, business was also moderate, perhaps having settled down after a big chicken-wing dining promo. Nonetheless, the Nugget (below) “had a much more vibrant vibe than Bally’s.” We hope the mayor’s office in Chicago is taking a look at Bally’s A.C., since there’s a serious chance it could pick Soo Kim‘s underachieving company over Hard Rock International and Rush Street Gaming, improbable as that may seem.

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Everybody wins; ‘Adele’ debuts; Ohio and Maryland prosper

Let’s start the day with a rare, feel-good story about an invalidated jackpot. Normally, these things go the way of the house. But not this time. On January 8, at Treasure Island, a player named Robert Taylor was playing the slots and hit a $230K bonanza. But the machine goofed and didn’t go wild, as it’s supposed to do. Give credit to Treasure Island staffers for noticing the mega-glitch and informing the Nevada Gaming Control Board. To our eternal gratitude (and that of Mr. Taylor, no doubt), “gaming officials combed through hours of surveillance videos from several casinos, interviewed witnesses, shifted [sic] through electronic purchase records and even analyzed ride share data provided by the Nevada Transportation Authority.” Eventually Taylor, an Arizona tourist, was located and remunerated.

The whole thing took two weeks but jackpot delayed was not jackpot denied. Last week the NGCB did the wrong thing by approving Apollo Management to take over Venelazzo. In the Treasure Island affair it very much did the right thing (as did the casino), an instance of fair-mindedness that is rightly garnering Las Vegas an armful of good publicity that no PR campaign can buy.

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