Category: Las Vegas Advisor

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.

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

Boyd Gaming leaked January data, what Wall Street calls “offered an encouraging commentary,” to help put an upbeat spin on its 4Q20 numbers. It worked like a charm. JP Morgan analyst Joseph Greff moved his price target up $8 to $62/share. He was motivated by news of “improving gaming customer spend trends thus far in the 1Q21 relative to its results in the 4Q20 … this is despite the older casino patron demographic not really returning to any great extent, which is something that could serve as upside or a cushion to the presently strong/growth trends from younger, non-rated players.” He liked a business plan structured around a “favorable localized/regional footprint predominantly focused on a drive-to, leisure gaming customer.” Greff also raised his cash flow estimates based on strength in the Midwest and South regions of BYD and on its strong sports-betting prospects, thanks in part to FanDuel (“DFS Operator #2” in Wall Street code).

Fourth-quarter revenues were a better-than-expected $636 million (Greff anticipated $608.5 million), despite being 24% down from 2019. But the Midwest and South were only 15.5% off the pace, bringing home the bacon to the tune of $456 million. This enabled the company to shrug off the temporary closures of Par-A-Dice and Valley Forge Casino Resort. In Las Vegas, support from locals was somewhat undone by lackluster tourist biz, particularly at The Orleans. Vegas numbers overall were down 28%, a $161.5 million take. Downtown needs a defibrillator, generating just $18 million, a 74% collapse “pressured by weaker tourism to southern Nevada, especially from the core Hawaiian customer base.” In other words, Main Street Station isn’t coming back any time soon and no reopening date was floated for Eastside Cannery on the Boulder Strip. Greff forecast a recovery in locals biz (good for Cannery) but only “modest” improvement in Downtown numbers.

Continue reading Boyd better than expected; Marching through Georgia

Between Covid-19 capacity restrictions (33%) and statewide curfews (9:30 p.m., when the night owls are just getting rolling), Massachusetts casinos were between a rock and a hard place last month, with revenues falling 40% to a meager $50 million. If there was a silver lining for anybody, it was at Plainridge Park, whose slots collected an above-average win/slot/day of $247 and whose market share was 18%, closing the gap with MGM Springfield‘s 23%. Encore Boston Harbor remained dominant with 59%. Encore revenue plummeted 46% to $29 million, MGM made $11.5 million (-40%) and Plainridge Park won $9.5 million, only 10% off the pace on 10% less coin-in. (They must have some pretty loyal customers.) MGM saw 33% less slot handle (an anemic $118/win/slot/day) and a disastrous 60% plunge in table game revenue. Where JP Morgan analyst Joseph Greff had predicted a 15% decline in the fourth quarter, MGM delivered -34%.

At Encore, it was the opposite story. Greff expected a 50% 4Q20 decline and Encore managed -34%, a victory of sorts we suppose. Slot handle fell 29% and so did revenue from the one-armed bandits. Table game win was $2,972/table/day (contrast that to MGM’s $543). But even tightening the hold on the slots didn’t help that department. Plainridge Park is obviously doing things right, Encore somewhat the same but a serious rethink of MGM’s gaming product appears in order. Connecticut tribes who feared competition from Springfield can sleep easily at night.

Continue reading Massachusetts hit hard; NFL playoffs a tossup