Category: Las Vegas Advisor

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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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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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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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Florida: Phhhhht …; Crackdown in Macao; Scandal at Parx

That hissing sound you hear is the air going out of DraftKings‘ and FanDuel‘s electoral balloon. Florida Education Champions, their front group for bringing online sports betting to the Sunshine State, folded its hand, conceding that it can’t get enough signatures to qualify for the November ballot. It says it’s “reassessing long-term options, still hoping one day to get voter approval for legal online sports gambling in Florida.” FEC says it collected over a million signatures, but only 471,536 could be verified. “While pursuing our mission to add sports betting to the ballot, we ran into some serious challenges, but most of all, the COVID-19 surge decimated our operations and ability to collect in-person signatures,” FEC complained, failing to add that the dog ate its homework. All gambling-related signature drives, had they made the ballot, might have faced serious voter backlash, given the in-your-face petitioning tactics alleged, which included encroachment upon private property.

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Bally’s we hardly knew ye; IGT bets big on lotteries

Shares of Bally’s Corp. sprang to $36.76 apiece yesterday on the news that the company’s largest stockholder wants to take Bally’s private for $2 billion. Hedge fund Standard General—founded by Bally’s Chairman Soo Kim—is offering $38/share for the mini-major and selling the idea as a way of ameliorating risk (not that we thought of BALY as a particularly perilous play). Standard General already owns 21% of Bally’s.

Normally we would frown upon such a proposal, as private equity has a mostly disastrous record in the casino industry. However, the presence of Kim in both camps is reassuring. He put the current Bally’s management team into place and is likely to keep giving them his ear. The LBO would be financed by the sale and lease-back of unspecified assets. Jefferies Equities analyst David Katz said Bally’s would go for cheap, as the offer didn’t price in the value of the Gamesys acquisition: “With the current market context for dismissing value on North American digital opportunities, the offer is opportunistic.”

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Sports betting claims first casualty; “Scam” at Caesars?

Online sports betting has evidently proven too rich for Wynn Resorts‘ blood. The New York Post reports that Wynn “is looking to unload its online sports-betting business at a steep discount as the fledgling niche faces painful losses from stiff taxes and costly promotions needed to lure customers.” Wynn Interactive, valued at $3.2 billion, is being peddled for $500 million. This will come as bad news to Shaquille O’Neal, who unloaded his share of the Sacramento Kings in return for becoming a “brand ambassador” for Wynn, which also built a ritzy Las Vegas broadcasting studio to showcase its product. There were rumblings from the top that Wynn and OSB were an uncomfortable fit. CEO Matt Maddox had told investors, “The market is really not sustainable right now. Competitors are spending too much to get customers. And the economics are just not something that we’re going to participate in.”

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Weekends without Adele

As all of Christendom now knows, one Adele Atkins of Tottenham has been forced to cancel/reschedule 13 weeks of shows at Caesars Palace. When Adele signed for this gig, in early December, it was regarded as the showbiz coup of the year. Well, it’s still the biggest story going but not in a way that Caesars Entertainment intended. As the timeline makes obvious, Weekends with Adele was hurried into production, despite being envisioned on a scale (100 backup singers) for which the word ‘lavish’ seems inadequate. So the events of the last 72 hours should be a surprise to very few outside the Caesars C-suite. Maybe you can get away with this in Reno, but this is the big time now.

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Adele fiasco at Caesars; Trouble for Sands in Florida

Resorts World Las Vegas, we’ll see your Celine Dion health-scare postponement and raise you an Adele cancellation at Caesars Palace. The British megastar’s team has, like so much of the human race, contracted Covid-19 and is not physically capable of grinding out a Vegas residency at this point. We wish them a speedy recovery—and a contract extension. There are skeptics about the matter, asserting that the show simply wasn’t ready and that there would have been empty seats galore (we blame the greedy secondary market). Indeed, nixing 13 weekends of shows on account of Covid-19 seems an extreme reaction. Did Caesars Entertainment rush this show to market to one-up Resorts World? It kinda looks that way. Tickets sellers seem to have sensed this, judging from a precipitate, last-minute drop in prices.

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Warm breeze in Atlantic City; Indiana heats up

December brought an acceleration in most forms of New Jersey gambling revenue. Atlantic City casinos managed a 1.5% increase over the end of 2019 but sports betting revenue dropped 11% year/year, blamed on low hold. Sticking close to home, Internet gamblers lost 34% more than last year, the brightest spot on the horizon (unless you were a player). Boardwalk grosses were $212 million, i-gaming yielded an impressive $133 million and sports betting engendered $59 million. Slot revenue was flat at $150.5 million on 2% less coin-in while table games captured $59.5 million (+5%) on 10.5% less wagering. Borgata stabilized at -1% or $54 million, too late to save Melonie Johnson‘s presidency. Hard Rock Atlantic City vaulted 37% to $35.5 million while Ocean Resort climbed 27% to $26.5 million.

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Borgata behaving badly; Headless body in topless car

On the “george” side of the ledger we find Bally’s Atlantic City, which is offering room rates starting at $29/night through February 28, albeit on “select nights.” Hey, it’s a terrific way to raise awareness of the new-look Bally’s. As for the Stiff of the Week, the winner is Borgata. Let our Atlantic City correspondent tell it: “MGM Borgata is getting cheaper by the day. [My wife] has reservations for a Christmas show this Wednesday night, but we now have a family night out scheduled. When she called MGM yesterday, she was told next week was ‘fully booked’ for comp tickets, and the host she spoke with told her to contact Ticketmaster to buy her own tickets. With 75,000++ tier points (my estimate is somewhere between $7 to $9 per point). She told the host the tickets were only $12 each (seems like a ‘high quality’ show), and she already had tickets for this week. Didn’t matter to them (she doesn’t have any assigned host at MGM).” Bad Borgata!

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