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.
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!
November was another terrific month for Maryland casinos, as revenues picked up a bit from October, accumulating 14% more than in November 2019.. (If inflation is so bad, where do Marylanders find all this money with which to gamble, one wonders? But anyway … ) After a month out of the top spot, MGM National Harbor was back at #1, grossing $68 million, a 26% leap by the lion. Maryland Live was not quite so buoyant, up 10% to $58 million. Horseshoe Baltimore tumbled 15% to $16 million, remaining the problem child of Caesars Entertainment. Business was slightly slower at Rocky Gap Resort, up 11.5% to $5 million, while Ocean Downs cantered +22.5% to $6.5 million and Hollywood Perryville gained 22% to $7 million. Despite flat slot revenues, West Virginia casinos garnered 3% more last month, on the strength of robust (+18%) table win. Hollywood Charles Town Races was particularly fortunate, climbing 4% at the slots and 32% at the tables.
The City of Chicago unveiled the applications for its casino license late Friday, effectively burying it at the end of a news cycle, in another triumph for Mayor Lori Lightfoot (D) and her administration. The five submissions “are in line with our vision to develop a world-class experience in Chicago that will drive significant economic growth and employment opportunities for our communities,” said Lightfoot. The pitches break down alphabetically as follows:
Bally’s Corp. #1: To be sited at the Chicago Tribune Publishing Center, “an economic sleeping giant,” this $1.8 billion, two-phase project would include 100 hotel suites, 20,000 square feet of expo space, three restaurants—curated by Paul Kahan and Erick Williams—and rooftop “green space.” The casino would feature 95 table games and 2,700 slots. A “Best of Chicago” theme is planned. In a dig at its rivals, Bally’s wrote, “As our flagship property, Bally’s Chicago has no conflicting interest in the Chicago market. We don’t operate, own or partially own casino properties located elsewhere within the Chicagoland market. Simply put, Bally’s is conflict-free.” Even so, the company noted that it is already licensed in the Prairie State. Bally’s predicts a 20% ROI on the project (and if it doesn’t reach it, won’t build Phase II), which will have 25% Black and Latino ownership. This plan really needs to pencil out economically, as most of the amenities are in the second stage.
Headlines are still being made by Wynn Resorts this week. Shockwaves continue to reverberate from CEO Matt Maddox‘s surprise retirement, nearly one year ahead of schedule. His departure comes at a delicate point in negotiations with Macao (or should we say ‘dictations’?), where Maddox has been a key player. Also, it has been revealed that he was thoroughly investigated in 2020 by the board over an anonymously filed allegation of misconduct, phoned in over an employee hotline. Had Maddox failed to divorce himself from the boys-will-be-boys culture of Steve Wynn? We’ll never know and he seems to have been cleared of the charge. But still “It’s all very curious,” as Jefferies analyst David Katz said.
In other news, Wynn Resorts’ retrenchment on the i-gaming and online sports betting front began taking concrete shape. In a curt SEC filing, Wynn let it be known that a merger of Wynn Interactive with special acquisition company Austerlitz I is kaput. “While somewhat surprising, the tea leaves were present in the days leading up to the announcement … and WYNN announced that it was pivoting its strategy in sports betting and iCasino, given the irrational customer acquisition behavior they see taking place in the market,” wrote Deutsche Bank analyst Carlo Santarelli. “WYNN noted that it expected 4Q21 losses from the iGaming segment to be considerable ($103 mm 3Q21 loss), and we imagine, 4Q21 losses will exceed those experienced in the 3Q21, given programming of marketing and the busier NFL season.” Santarelli concluded that termination of the JV “could be construed favorably.” Especially for Craig Billings, CEO of Wynn Interactive, who wouldn’t have much to do were he not moving up to the top job at Wynn.
Wall Street analysts were frankly underwhelmed by Las Vegas Sands‘ third quarter. Now that the company is wholly reliant upon the afflicted Macao and Singapore markets that’s hardly surprising. JP Morgan analyst Joseph Greff was pretty blunt, calling Macanese cash flow “barely positive in September,” swinging from a negative August, while characterizing Marina Bay Sands as a “locals” casino these days. (Ouch!) At least Singapore shows signs of easing up on international travel. “In terms of when travel mobility between Mainland China and Macau eases, there is no visibility on when this occurs, given China’s seemingly zero COVID-19 case tolerance; our best sense is that the earliest this takes place is sometime after the Beijing Olympics in February.” It does not help that the Macanese vaccination rate is an unimpressive 50%. At least there were no signs of new regulations upon Macao’s casinos, which is some comfort.
Investment in digital gaming “will likely be small” at least until Pacific Rim cash flow improves. Ditto share repurchases. Sands has $5.6 billion worth of powder that it’s keeping dry. The future, as Greff sees it, is one of sequential improvements “but not a heroic one.” That means mass-market gaming reaching only 60% of 2019 levels next year and VIP play an anemic 35%. By 2023, mass play should be back to 95% of normal but VIPs will still be lagging at half their pre-pandemic level, further validation of Sands’ mass-market strategy.
Gaming revenues in Massachusetts were up 10% from September 2019, reaching $89 million. The lion’s share (65%) went to Encore Boston Harbor, leaping 17.5% to $57.5 million—$7 million more than Deutsche Bank analyst Carlo Santarelli expected. (Encore also disclosed some of its secret formulae for success today.) It won $1.9 million a day, to put that in perspective, $31.5 million from slots and $26 million from tables. To the south, Plainridge Park was in line with expectations, grossing $12 million for a 4% gain. MGM Springfield, however, continues to struggle for an identity, down 8% from 2019 and grossing $19.5 million. Slot play was solid, up 6%, but the casino took a whupping at the tables, plunging 48%. Table play is traditionally this property’s weak link and you wonder how much longer MGM can afford it.
Casinos along the Boardwalk continue to be impervious to the economic recovery that is prevalent in the gaming industry. Atlantic City was down 8% last month compared to 2019, grossing $262.5 million. Sports betting brought in $52 million (+32% from 2020) on handle of $646 million and Internet gambling generated $119 million (+29%). Terrestrial slot revenue was down 5% on 7% lower coin-in and luck was not with the house as regards table games, where revenues tumbled 18% on only 5% less wagering. Borgata got its clock cleaned (-28%), plunging 52% at the tables on 25% less drop, while slot win declined 20% on 23% less handle.
The Caesars Entertainment triumvirate slipped 13%, driven by 15% less win on 7% lower wagering, whilst slots were a bright spot, flat despite 12% less handle. Only Ocean Casino Resort and Hard Rock Atlantic City were revenue-positive for the month, with Hard Rock ($46 million) breathing down Borgata’s neck ($52 million). It gained 19% while Ocean was 38% higher than in 2019, grossing $33 million and grasping third place in the city. Caesars Atlantic City won $25 million, down 20%, Harrah’s Resort snared $28 million, off 10% and Tropicana Atlantic City ceded only 8.5% to finish at $29 million. Resorts Atlantic City did relatively well, just -2.5% down to $18.5 million, Golden Nugget swooned 23% to $16 million and Bally’s Atlantic City stumbled 17.5% to $15.5 million.
Pennsylvania was late to the casino-recovery party but it’s finally arrived, up 1% in July over 2019 for a gross of $310 million, of which $223 million was won at the slots. The good news may be short-lived, in that Hollywood York opened on August 12, contributing to the saturation of casinos we are seeing in the Keystone State. Parx Casino was way out in front of everybody else, grossing $58.5 million for a 14.5% gain. Elsewhere in the Philadelphia market, Rivers Philadelphia regained the edge on Philadelphia Live, winning $23.5 million, an 8% decline from 2019 but much better than in recent months. The Cordish Gaming competitor slipped to $22 million but bested Harrah’s Philadelphia‘s $17 million (-15%) while Valley Forge Resort Casino dipped 2% to $11.5 million.
In the Pittsburgh area, Pittsburgh Live garnered $10 million while Rivers Pittsburgh gained a percentage point to $33 million but The Meadows slid 10.5% to $18 million. Elsewhere, Mohegan Sun at Pocono Downs was up 7% to $20.5 million, Wind Creek Bethlehem slipped 6% but posted an impressive $42.5 million and Mount Airy netted $20 million in a 21% leap. Presque Isle Downs gained 7% to $12 million, Hollywood Penn National dipped 4.5% to $19.5 million and luckless Lady Luck Nemacolin fell 22% to $2.5 million.
Wynn Resorts released 2Q21 results yesterday and JP Morgan analyst Joseph Greff called them “strong” in both Las Vegas and Boston. In Macao, eh, not so much. He began by saying “results by region unsurprisingly reflect differences in vaccination rates and mobility/visitation availability.” Wynncore is gaining momentum as the temperature rises, posting the largest cash flow ever since except when it opened. Occupancy hovered around 95% on weekends and in the 80% neighborhood during midweek. “In Macau, limited mobility and small outbreaks continue to pressure travel, unsurprising and similar to 2Q commentary from” Sands China and Melco Resorts & Entertainment. As for WynnBet, it “expects to ramp up marketing ahead of the NFL season,” which seems to be a nice way of saying nothing much is happening right now. Wynncore generated $207 million in cash flow compared to a feeble (and worse than expected) $67.5 million in cash flow from all the Macanese properties. Wynn Macau and Encore Macau only contributed $14 million, while Wynn Palace has finally found its sea legs with a $53.5 million donation. Encore Boston Harbor was a little bit under certain projections at $47 million, though it improves month by month.
Due to a sharp decline in VIP play in Macao, Wynn Resorts is remarketing them as premium mass-market casinos, in order to get pre-Covid revenues without pre-Covid foot traffic. As Deutsche Bank analyst Carlo Santarelli put it, “Las Vegas & Boston shine as Macau remains a waiting game.” Word! “We don’t think we heard anything from management tonight that will meaningfully change the view on the resumption of normalized operations in Macau, with management acknowledging an uncertain timeline, while noting encouraging trend that resemble pent up demand at certain times,” he elaborated. “We expect the Macau names to continue to trade on virus headlines and policy decisions, things we, nor most, can truly opine on with any legitimate confidence.” Back in Vegas, business is fueled by slot fanatics, with coin-in up 37% and table wagering down 3%. Blame the latter on a lack of international players.
