Category: Casino News

After a long bout with the flu, we’re back with our usual persiflage. One of the stocks that was on the sickbed last week was Las Vegas Sands, bedridden from proposed new restrictions on Macao casinos. Deutsche Bank analyst Carlo Santarelli put pen to paper to assure readers that the worst is behind us. His analysis “provides us with confidence that downside risk from current levels should be fairly limited, though we acknowledge, valuation in the current environment has seemingly been a function of the latest stock price, plus or minus the interpretation of the next headline, and as such, we don’t deny that the near term could be choppy.” Santarelli outlined several caveats: “we aren’t pretending to know or display confidence around our view of the potential outcomes of the Gaming Law process in Macau … we recognize the situation in Macau is uncertain, though we believe the market has taken a fairly draconian view on the potential outcomes [and] we recognize incremental investment into the Macau centric names at this time of the calendar year and with this level of uncertainty is challenging.” Still, “we believe, the medium to longer-term risk-reward is skewed favorably in LVS at current levels.”

Editor’s Note: Yours truly is still on vacation, so today you’re in the capable hands of Jeff Leatherock, who ponders Las Vegas‘ emergence as a major league sports town. Enjoy!

I have been a big sports fan for 50 years. I also wound up being a fan of the business of sports for about as long. I read The $4000,000 Quarterback for the first time around 1972. 

The 1960s-70s were a great time to be a young sports fan because new leagues and teams were popping up all the time and everywhere. From 1960-80 there was, on average, more than one new team added each year to the “big four” North American sports  (baseball, football, basketball and hockey). Two football leagues, one basketball league, nine MLB teams. The NHL doubled in one Swell Foop in 1967, going from 6 to 12 teams, and by 1980 had 21 (!) teams. The NFL had endured the best shot of the AFL being formed and had a merger agreement with them by 1967. The attempt by the WFL to get in on the action in the early 70s was an abject failure. The ABA  began their decade long war of attrition with the NBA in 1967 and ultimately staggered into the league with the Nets, Nuggets, Pacers and Spurs “allowed” to buy their way into the NBA.

You could say that getting into bed with Red China was a devil’s bargain and Satan has come to collect. Or that Beijing has finally decided to show everyone who’s boss. Either way, the central government played Big Gaming for fools yesterday, rolling out a series of new measures that sent casino stocks reeling. Six gaming stocks tracked on the Hong Kong bourse and New York Stock Exchange plunged 23% (for a 45% declivity this year), with Sands China leading the dive with 33%. And to think that Sands execs were just blowing sunshine up Wall Street‘s ass about how great their relationship with Macao was. Las Vegas Sands CEO Rob Goldstein ought to be facing some hard questions about why he cashed out of Las Vegas at a time it was keeping the company solvent and put almost all his chips on Macao, where the company already had the largest exposure in the market—and to the whims of the ChiComms. JP Morgan Chase, so sanguine 24 hours ago, put “hold” or—worst of all—”sell” ratings on the impacted gaming stocks, which should tell you how bad the news was.

The damage was hardly limited to Sands. Wynn Macau, MGM China and Galaxy Entertainment all lost at least 20% of their value in the stampede. Domestically, it wasn’t much better: Las Vegas Sands -14%, Wynn Resorts -14%, Melco Resorts & Entertainment -9%. Even MGM Resorts International, with very limited Chinese exposure, was punished by 5.5%. It was an $18.4 billion wipeout of equity, damage on the scale we’re rarely if ever seen in 25 years of covering casinos.

There are signs that the regional gaming recovery is cooling (Missouri was up just 1% last month) but Indiana‘s August numbers, while not as hot as July’s, were a balmy 10% higher than 2019 as casinos grossed $203 million. Horseshoe Hammond lost a percentage point but retained the top spot with $33 million. Closing fast is Hard Rock Gary, with $30 million, while Ameristar East Chicago gained 9% to hit $21 million. Blue Chip, off to the east, sagged 11% to $12 million. Further to the south, Boyd Gaming saw even greater misfortune at Belterra Resort, plummeting 29% to $7 million. Also hard-hit was French Lick Resort, falling 26% to $6.5 million. Other revenue-negative performers were Rising Star, minus 6% to $4 million and Hollywood Lawrenceburg, down 11% to $14 million. In its last month as a Caesars Entertainment property, Caesars Southern Indiana was up 5.5% to $19 million, while Indiana Grand jumped 13% to $24 million and Harrah’s Hoosier Downs grew 12% to approach $19 million. Bally’s Corp. had a good first month at Tropicana Evansville, up 5% to $13.5 million.

As for sports betting, $215.5 million in handle boiled down to $17 million in revenue. FanDuel garnered $5 million and 30% market share against DraftKings‘ $4.5 million and 26% share. BetMGM was third with $2.5 million and 15%. Also in the game were William Hill ($2 million/11%) and Barstool Sports ($1 million/7%). In terms of getting the most bang per handle, FanDuel (25% of handle) skunked DraftKings (34%). Barstool also maximized its share of handle, which was 4%. William Hill had 13% and BetMGM 12%.

Count on Illinois to disappoint in an otherwise balmy August. True, it grossed a not-shabby $108 million but it was 8.5% down from 2o19, as business slipped 10% from July’s level. (We don’t want to say the gaming recovery is waning but it does appear to have peaked, judging by regional trends.) The preponderance of revenue came from northern Illinois and nearly half of that purely from Rivers Casino Des Plaines, which won $41.5 million, defying the odds to rise 10%. From there it was way down to Grand Victoria‘s $13.5 million (-6%) and Harrah’s Joliet‘s $13 million (-14%). Hollywood Aurora grossed $9 million (-12%) and Empress Joliet brought in $7 million, plunging 29%. Mid-state, Jumer’s Casino Rock Island, in its first month as a Bally’s Corp. property, plummeted 35% to $4 million—Bally’s CEO George Papanier will have his hands full—while Par-A-Dice slid 15.5% to $5 million.

In the southern tier, DraftKings Casino Queen was down 18% to $7 million while Argosy Belle tumbled 23.5% to $3 million. Harrah’s Metropolis slid 21% to $5 million. Mandatory mask-wearing was reimposed on Aug. 30, so we’ll have to wait and see if that put a damper on this month’s results. In the meantime, slot routes continue to spread, dimming the prospects of casinos new and old alike. Sports betting hit a lull in July, with $369 million in handle and some worry that the state’s in-person registration requirement could dampen a football-season rebound. Said PlayUSA‘s Joe Boozell, “Because in-person registration was reinstated in April at the beginning of the slow season in sports betting, the industry has skirted the most severe effects of the state rule. But there will be no hiding from it during football season.”