Category: Casino News

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Maryland has best month ever; Rio reopens

Even with capacity restrictions still in place at MGM National Harbor and Horseshoe Baltimore, the Free State enjoyed an epic March with casinos posting an all-time-record $169 million. On March 12, MGM and Horseshoe were bumped up to 50% capacity (from 25%) and restrictions at the state’s four smaller casinos were lifted. (Last year, casinos were closed March 16-June 19.) As usual, MGM was out front with $66.5 million, 6% better than March 2019. It and Maryland Live dominated the market, with 39% and 36%, respectively. Maryland Live gained 9% to $61 million but while Horseshoe Baltimore grew sequentially (up $5.5 million from February), it was still the state’s lone disappointment, down 23% to $20 million. Ocean Downs was up 13% to $7.5 million, Hollywood Perryville vaulted 21% to $9 million and Rocky Gap Resort was up 8.5% to $5.5 million. The leading edge of a trend? We certainly think so. As America goes, so goes Maryland—only more so.

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Caesars looking good; Amtrak covets Vegas; Bally’s underwhelms

Joseph Greff and his fellow JP Morgan analysts looked at recent trends in Las Vegas and any place not named Atlantic City, and liked what they saw, raising their price target on the stock five bucks to $101/share. Positive factors include recovery in leisure travel (group business is seen as coming back late this and into next year), “legs to a recovery in U.S. drive-to, regional markets, with our anticipation of a return of the 55+ year old customer, which has lagged other customer segments such as a younger demographic,” as well as “permanently higher margins,” thanks to job cuts and other economies. The pending close of the William Hill purchase poises CZR to capitalize on the explosion of U.S. sports betting and growth of online gambling. So far the only consequential property sale on the horizon is that of Horseshoe Hammond, with Las Vegas Strip dispositions having faded into the hazy yon.

Greff espies “incremental evidence of a recovery in Las Vegas and a sequential pick up in most other regional markets.” The “quite strong” March results, however, don’t include meaningful numbers of Baby Boomers, evidently fighting shy of the Covid-opportunity zones that some Strip casinos present. As vaccinations continue to ramp upward, Greff expects this problem to abate. His estimates for 3Q21 and 4Q21 are unchanged “but we can see a scenario where our/Consensus estimates here may be too conservative.” Also, if people continue to behave carelessly and Covid-19 rates keep spiking, that’s going to kick the nascent gaming recovery into a cocked hat.

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Virginia sports betting debuts large; ‘CSI’ back in Vegas

Virginia has now had two full months of sports betting and February handle was an impressive $266 million—not quite the explosion that Michigan was but still noteworthy as the second-biggest debut in U.S. history. Reacted PlayUSA analyst Dustin Gouker, “The nation’s major operators have the resources to engage bettors in new markets in ways that were impossible in the early days of legalization, which benefits later-comers like Virginia. Ultimately, that will mean a market that goes through fewer growing pains than some of the earlier adopters.” Compared to other states, Super Bowl handle wasn’t bad: $19.5 million. Revenue was $12 million but books went overboard with promotional credits, ending up with a $3 million loss. The tax haul was a scant $300,593. FanDuel, DraftKings, BetMGM and BetRivers were all on the field, joined just before the Super Bowl by William Hill. This month brought the entry of WynnBet, which should reap some of the rewards of March Madness … to a degree. Virginia law forbids betting on in-state teams, which could mute interest in the NCAA tournament.

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Massachusetts gaming a success; Cuomo gains upper hand in NY

A University of Massachusetts Amherst panel led by respected academic Rachel Volberg has been studying casino gambling in Massachusetts and likes most of what it finds. It concluded that Bay State dollars had been significantly repatriated from neighboring states (the primary goal of legalization) and there was “no negative impact” on the state lottery. Citizens were fleeing the state in smaller numbers, going from 33% of cross-border business in 2013-4 to 16% in 2019. Bay Staters who were gamblers went up by 14% in the same period. 70% of study participants identified themselves as regular gamblers, while 3.5% admitted to being problem gamblers, with another 12.5% identified as at-risk. A fifth of them devolved into problem gambling while most pulled back into recreational gambling. Heavy ad blitzes “precipitated relapse. We can’t prove that but it’s very tantalizing,” said investigator Robert Williams. He added that “there is no ‘silver bullet’ to prevent problem gambling. Rather, a wide array of educational and policy initiatives is needed to address the multifaceted biopsychosocial” causes.

Low-income men were the likeliest to develop disordered-gambling habits, with substance abuse and mental ill-health cited as co-presenting morbidities. “Each problem gambler has a unique array of risk factors,” Williams said. “You need to tackle problem gambling from a multidirectional way as well.” Paradoxically, 9% of self-identified problem gamblers denied anything was wrong. The UMass teams recommendations include a cap on casino advertising, more education on problem gambling and active encouragement of disordered gamblers to seek treatment. Concluded Massachusetts Gaming Commission Chairwoman Cathy Judd-Stein, “There has been no other longitudinal study of gambling behavior of this scale in the United States. It shapes our understanding of gambling behavior in Massachusetts and contributes to the few comparable studies worldwide.” Agreed. Let’s hope it’s the start of a trend. Your turn, Nevada.

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Caesars Saints?; Mattress Mack returns

Don’t like the misshapen circles which now represent Caesars Entertainment? Well, get used to them, especially if you’re a New Orleans Saints fan. The casino giant is dickering with the Mercedes-Benz Superdome for naming rights, although Saints and New Orleans Pelicans Senior Vice President of Communications Greg Bensel grumps that “there is not a signed deal with any company at this time. We continue to have conversations with numerous interested companies.” Yes, but how many of them are as heavily invested in the New Orleans area as Caesars? Its Kate Whiteley demurred that “we have nothing to share beyond our current, valuable relationship with the teams.” There’s also the question of throwing tens of millions (at least $60 million) at naming rights at a time when Caesars casinos are snowballing a reputation as outdated, unkempt properties … something that company itself has obliquely acknowledged. (Former CEO Gary Loveman ran the company into the ground and successor Mark Frissora was mainly tasked with rearranging debt, er, deck chairs on this particular Titanic.)

At present, Harrah’s New Orleans is the subject of a $400 million renovation and expansion, which will culminate in its renaming as Caesars New Orleans. One thing that we like about CEO Tom Reeg is that, unlike Loveman, he’s not shy about deploying the prestigious Caesars brand name, previously reserved for really important destinations like … Windsor, Ontario. The Superdome would be the fourth, casino-affiliated stadium in major league sports, joining Gila River Arena (hockey’s Arizona Coyotes), Mohegan Sun Arena (home of the WNBA‘s Connecticut Sun) and Hard Rock Stadium, venue of the Miami Dolphins. The makeshift home of the Las Vegas Aces—Mandalay Bay Event Center—doesn’t count. While it might not be the highest and best use of CZR bucks, we see no reason not to have a Caesars Superdome, do you?

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Circa picketed; Sundry green shoots in Vegas; Sports book busted

If you cruise by Circa, you’re liable to see members of Teamsters Local 986 walking a picket line on behalf of the ‘Circa Seven,’ a group of unfortunate warehouse workers. The seven were employed by Derek Stevens‘ Three Corners company, which services Circa. What caused the Circa Seven to get the axe? According to the Teamsters, it discovered they were pursuing union membership and gave them the chop. “The Circa Seven came to work, informed that their jobs were ‘outsourced’ to [subcontractor] QLI and then fired without warning,” claims Local 986 Secretary-Treasurer Chris Griswold. “It is heartless of this company to displace its own workers during the worst health crisis in a century.” If you agree with the Teamsters, you can make your feelings known online. If you side with Stevens, you of course don’t need to do anything … except maybe cross a picket line.

Room rates on the Las Vegas Strip were tanking this time last year, so maybe improvement is in eye of the beholder but they continue to trend upward. For April 18-24 they’re 28% higher, averaging $129/night, including an encouraging 2% improvement in weekday rates (weekends are up an eye-popping 73%). Mind you, at that time last year the averages were -33% midweek, -56% weekend and -44% overall. Caesars Entertainment is seeing a 23% midweek climb and a 106% improvement on the weekend. Venelazzo leapt 185% weekends and 50% weekdays. Convention-dependent MGM Resorts International saw only a 1% midweek nudge, plus a 70% weekend uptick, while Wynncore tumbled 26% midweek, even on such an easy comparison, and bumped up just 12% on the weekend. Was it too soon for Encore to reopen?

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Strip sux but locals steadfast; Virgin LV loses its virginity

Things simply have to get better on the Las Vegas Strip. Not even a Feb. 15 capacity increase saved some casinos from perdition. Let’s hope February represented a bottoming-out of gaming revenues, as tourists starting flocking back this month. Strip gaming win was down a precipitous 41.5% to $348.5 million, led by slot winnings that were 34% down (to $189 million) on 27% less coin-in. Baccarat continues to be a black hole into which casinos plunged 58% on 58.5% less wagering. Players dropped 36% less on the green felt at non-baccarat table games but revenues suffered 43%, as punters bet less and won more. The Strip’s woes can be explained by a 54% falloff in visitation. 1.6 million arriving and departed airline passengers represented a 58% decline, including a measly 8,033 international travelers. Conversely, auto traffic was actually up at the California border by 1.5%. Hotel occupancy was a woeful 42%, depressing revenue per available room by 65% and room rates 26.5% (to $104/night). With no measurable convention business, midweek occupancy was 32% compared to 63% on weekends.

Las Vegas locals casinos were the bright spot, flat at $186 million, quite an accomplishment in a depleted Silver State economy. (Fortunately, employment numbers have been trending positively.) Tighter slots meant only 1% less win despite 6% lower coin-in. Perhaps the infusion of Circa eased Downtown‘s pain. It was only off 7% ($51.5 million), while North Las Vegas slipped 12% ($19 million), the Boulder Strip dipped 2% ($64 million) and Laughlin tumbled 31% ($33 million). Miscellaneous Clark County casinos were up 3.5% ($103 million) and Mesquite climbed 5% ($13 million). Upstate, Reno slid 14% to $50 million but Lake Tahoe leapt 16% to $20.5 million. Utahns shunned Wendover, down 9.5% to $17.5 million.

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Demand, prices way up on the Strip; Big casino push in Texas

Emboldened by a combination of new, 50% capacity limits in Nevada and $1,400 stimulus checks, visitors poured into Las Vegas and resorts were quick to profiteer, er, monetize the nascent demand. The Strat more than tripled room rates, from $50/night to $179, this at a place that was just breaking even a few months ago. Paris-Las Vegas vaulted from $55/night to $284. The Cosmopolitan of Las Vegas was even bolder, charging as much as $610 a night for a room. Prices were described as being “at pre-pandemic levels,” which is manna in the desert to hoteliers. Whether this bounce is sustainable—jobs, jobs, jobs—remains to be seen but if it is, it would mean a Vegas recovery much sooner than we (or the industry) expected. In this return to the Good Old Days, resorts reverted to some of their bad old ways: Bally’s was charging $13 for a bottle of Dos Equis. Really? If there’s one thing that can nip a recovery in the bud it’s price-gouging, although demand for Sin City could be so unabated that customers are willing to suffer anything for it.

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Packer out, Blackstone in at Crown?

Cosmopolitan of Las Vegas owner Blackstone Group threw a lifeline to troubled Crown Resorts, in the form of a $6.2 billion buyout offer. The rope comes with a substantial string attached—Australian regulators must preserve the (sleazy) Crown casino licenses. Without them, Crown isn’t worth that much, it seems. Heck, it’s not worth that much now: Blackstone’s offer was for $9.15/share, which is 20% higher from the pittance where Crown is trading. The company has already lost its Sydney license, and its ones in Melbourne and Perth are under investigation. Blackstone is quite the high roller at the moment, having just plunked down $6 billion for Extended Stay America (in tandem with Starwood Capital Group). In the meantime, Blackstone may not find it so easy to just demand three Australian casino licenses, given the depths of the problems at Crown, which has been found to have facilitated money laundering, among other sins.

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Las Vegas: Are happy days here again?; Sands dibs NYC

As we’ve often said, when the American economy gets the flu (literally, in this case), Las Vegas catches pneumonia. During the depths of the Covid-19 pandemic, unemployment in Vegas levitated to 34%. Today it is a still-unhealthy 10.5%. Nonetheless, the Wall Street Journal paid a visit to Sin City and found a spirit of optimism, whether manifested in full classes at dealer schools or the $6.25 billion paid for Venelazzo. As one dealer-school manager put it, “You have to invest in the idea that Vegas always comes back bigger and better.” As the WSJ noted, Las Vegas may be attempting to diversify economically but it lives or dies with tourism.

“An all-time high of 42.9 million people visited Las Vegas in 2016, and convention attendance reached a record-setting 6.6 million meeting attendees in 2019,” reports the WSJ and while Vegas is recovering perhaps faster than anticipated, the brain trusts with whom reporters spoke don’t expect pre-pandemic numbers to return until sometime in spring 2022 or later. It’s a long climb back from 2020’s perigee of 55% fewer visitors (numbers not seen since 1991) and 43% less Strip gambling revenue, after all. A state budget overly dependent on gaming revenues and entertainment taxes is looking at a recovery not before 2023 at the earliest. Room rates have yet to recover their January 2020 average of $153/night. Hopefully, for the average Las Vegan, the road back will not be as long as after the Great Recession, when inflation-adjusted personal income didn’t return to normal until 2014.

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