Category: Casino News

Gaming & Leisure Properties Inc. hosted JP Morgan analysts last week and tried to get them all hot and bothered with talk of a Tropicana Las Vegas sale. It said it felt one would happen sooner, not later, adding that it “feels like it is signing one [non-disclosure agreement] per day.” Before we get our panties wet, let it be known that GLPI then admitted that it’s only “a handful of serious buyers that have capital to effectuate a transaction.” Talk is cheap and so are NDAs, it would appear. The Trop would have to endure yet another market repositioning, whoever buys it and GLPI confesses that a sale will be easier said than done (it “has heard a broad range of prices, it notes the devil is in the details to finalize a deal”). A bigger opportunity would appear to be the eruption of sports betting, which “should help crossover play to table games.” It also makes casino operators more credit-worthy, which GLPI can exploit by purchasing their real estate.

Station Casinos dispatched Executive Vice President Rodney Atamian to meet with JP Morgan analysts last week. According to Joseph Greff, he reported, “solid/improving visitation and spend per visit trends.” A possible increase in Nevada casino-capacity limits to 50% should propel that further, one presumes. As with other regional gaming companies, the under-40 crowd is providing the momentum as core Baby Boomers stay on the sidelines. “However, as vaccination trends have improved, this core customer has begun to return as well.” Management doesn’t anticipate promotional wars but expects some upward creep in labor costs. While undecided on the future of the Palms, Station is persuaded that whether by a sale or a reopening under “an improved cost structure/market strategy” it can be successfully monetized, although the potential new market was unspecified. As for its undeveloped real estate, Station noted strong expressions of interest both from industrial developers as well as residential builders. The fates of three closed locals casino remain hazy, however.

As for Station’s archrival, Boyd Gaming, CEO Keith Smith and CFO Josh Hirsberg showed the flag, and teased the 1Q21 numbers by disclosing “strong” January performance with “momentum continuing into February and March.” Visitation and consumer spending are higher, albeit in the 25-to-55 age stratum. Boyd expects older customers to return in 2Q-3Q21. “Of note, BYD has seen a positive uptick in business as stimulus checks get mailed, and thus expects future benefit in the coming weeks.” Indeed. Also, the wider popularity of cashless gaming appears to be increasing the slot manager’s Holy Grail, time on device.

JP Morgan analysts conducted a pilgrimage to Las Vegas to meet with the top brass of Big Gaming. First up was MGM Resorts International, represented by CEO Bill Hornbuckle, CFO Jonathan Halkyard and BetMGM CEO Adam Greenblatt. They see positive movement toward Vegas with bookings “continually improving” and with much hope placed on World of Concrete expo coming off in June, which would be a major inflection point where conventions are concerned. Despite “minimal” international traffic, execs think 2019 levels could be achieved a year ahead of schedule, by late this year. Vacation bookings were described as near 2019 levels and “MGM is seeing an uptick in more spring/summer bookings and a shortening booking window.” Airlines are being very cooperative in adding capacity in anticipation of bigger airlifts, while occupancy at MGM properties may be 40% or so midweek but double that on weekends.

Tunica and Biloxi were described as still challenged, but drive-in resorts in Maryland, Ohio and Detroit are “faring well,” according to analyst Joseph Greff. Since the average age of the regional customer is in the early sixties, MGM is looking forward to a return of the risk-avers 55+ demographic. MGM brass thinks the regional properties can notch 80% to 90% of pre-Coronavirus levels if capacity limits continue to lifted over the next three months. Macao was praised with faint damns, January being said to be “broadly break-even” and Chinese New Year “decent.” MGM China is hopeful that the renewal of its concession will be considered this year or next but the government is—surprise!—keeping everyone in the dark. As for BetMGM, management is confident as it sees momentum from 4Q20 being continued early this year. It’s a useful tool for recruiting new players and at a lower cost (always a plus for gaming execs). Migration of sports bettors into i-gaming also looks promising.

What will prompt recovery in gaming? Stimulus money, yes, but we got a strong indicator of something else out of Maryland last weekend. Overall, casino revenues were down 16.5% but the story is more complicated than that. At facilities restricted to 25% of capacity (MGM National Harbor, Maryland Live and Horseshoe Baltimore), the decline was 18%. But at (smaller) facilities bumped up to 50% of capacity, revenues grew 8%. So are capacity constraints keeping players at home? Based on the Maryland numbers one would have to say yes. The statewide gross was $126 million, with MGM reporting 15% less slot revenue and 19% less win at the tables. National Harbor held the top spot with 40% market share compared to Maryland Live’s 35.5%. Horseshoe has fallen so low that JP Morgan analyst Joseph Greff no longer breaks out its market share.

Speaking of Horseshoe, it eked out $14 million, a 20% decrease. MGM booked $51 million, -17%, and Maryland Live won $45 million (-18%). Nobody was revenue-positive but Ocean Downs‘ $6 million was only a 3% dip. Rocky Gap Resort made $4 million (-17%) and Hollywood Perryville was good for $6 million, down 5.5%. Over in West Virginia, revenues slid 34%, with Hollywood Charles Town tumbling 39%, thanks in large part to a -50% wipeout at the tables. (Slots were -35%, almost on par with statewide average.)