In an escalation of its not-so-cold war with Resorts World Las Vegas, Local 501 of the Operating Engineers is deploying the Commie card against Genting Group. The latter has been playing dirty pool in Local 501’s attempt to organize at Resorts World. In retaliation, the former sent an open letter to Gov. Steve Sisolak (D), highlighting Genting’s chumminess with Red China. “Genting Group has unique relationships with Chinese SOEs that appear to be unprecedented among Nevada gaming licensees. This level of political and economic exposure can adversely influence the operations of Genting, its subsidiaries, and its ownership group,” it warned. Continuing, the union said it had “discovered ties” between Genting and the Chicomms in the form of partnerships with a state-owned enterprise, SDIC Power Holdings, to exploit petroleum and natural gas in the Pacific Rim.
After a somnolent Tuesday, all heck has erupted in the gaming universe and we’ll try to cram at least some of it into today’s dispatch. Gaming revenues continue to flicker here and there, while remaining high heavens above 2019’s outstanding numbers. Missouri casinos grossed $169.5 million last month, 1% higher than last year, as gambling fever continues to level off, albeit at an elevated level. A nice problem to have. Gamblers visited 5% less but spent 7% more in Show-Me State casinos. Starting in Kansas City for a change, Ameristar Kansas City (above) led the market with $18 million (flat). Rebranded Bally’s Kansas City continues to devour market share, up 11.5% to $10.5 million. One of its victims was Harrah’s North Kansas City, down 7% to $15 million, while Argosy Riverside was flat at $16 million.
A gambler friend, Al, and I were on the phone talking about something related to vitamin supplements, and then he said he had a video poker question that he was embarrassed to ask me.
“Go ahead,” I prompted. “If it’s too awkward, I just won’t answer.”
Cynicism, thy name is Big Gaming. Whereas its chips were all in with Nevada Gov. Steve Sisolak (D) the last time around, now it has a dampened finger held upwards, testing which way the wind is blowing. The Las Vegas Review-Journal has done some digging through public records, and found some surprising Sisolak backers and opponents in the C-suites. Numero uno is Venelazzo, which has flung $250,000 into the Sisolak coffers. It’s followed by Caesars Entertainment, which has chipped in another 90 grand. True believers in Sisolak’s opponent, former Clark County sheriff Joe Lombardo (R) mostly represent smaller fry, like Golden Entertainment ($90,000), perhaps to punish Sisolak for his financially costly (but necessary) 78-day shutdown of Nevada’s signature industry, in an effort to squelch Covid-19. Then you have the cynics, foremost among whom is Boyd Gaming, sending $40K to Sisolak but $30K to Lombardo, enabling it to claim it’s on the winning side regardless of what happens in November. Phil Ruffin, the El Cortez, Ellis Island and Longhorn Casino are comparable bet-hedgers.
“No Recession yet, just all time records,” reported Truist Securities analyst Barry Jonas of MGM Resorts International‘s 2Q22 earnings call. Better-than-ever Las Vegas Strip and regional revenues beat the pants offWall Street‘s expectations, outweighing “weakness” in Macao, where gaming revenue is all but nonexistent, leading to a $52 million negative return on investment. CEO Bill Hornbuckle basically swore off any further capital investment in the Chinese enclave, turning his gaze toward Thailand instead. He hedged his commitment on a long-term renewal in Macao, adding, “Sports entertainment is a big push—they would love to see more of that activity case in that market—and I think we’re ideally positioned to be able to do that as well.”
Recorded Jonas, “bookings in Vegas continue to show growth in 2H:22, and are up double digits vs. 2021 in each month. [Management] did note that they would be monitoring for signs of slowing, and would pivot quickly in the event consumer demand slows.” Strip occupancy ran at 92% and is improving during the current quarter, with more rooms booked per day than ever during July. Average room rates are a lofty $225/night and climbing. International travelers are anticipated to achieve 80% of pre-pandemic levels this summer.
MGM’s regional properties, gradually being winnowed down to a handful of trophy properties (sayonara, Gold Strike Tunica), contributed $960 million, a 12% jump from 2021. “[Management] highlighted the strength of MGM’s differentiated regional portfolio, noting that its higher end properties are seeing the same strength as Las Vegas, while 2/3 of the regional consumer database had a household income over $110K,” wrote Jonas. Even that regional haul was dwarfed by the Strip, where MGM banked $2.1 billion in revenue, a 112% moonshot from last year.
Caesars Entertainment formally took the Flamingo off the sale block yesterday, at least for the foreseeable future. CEO Tom Reeg cited ‘market conditions‘ (odd when the Las Vegas Strip keeps breaking records). There is also the complication that Vici Properties has right of first refusal on a sale, throwing a cock-block on any big spender the Flamingo might attract. Chances are, having knocked the price down from $2 billion to $1 billion to $800 million, Reeg is still having trouble finding takers for the property. Planet Hollywood theoretically remains in play but Reeg’s preposterous insistence on keeping the conjoined Zappos Theater (Or have they changed the name again?) is a serious deterrent. “There are plenty of interested parties,” Reeg claimed, blaming his inability to cut a deal on “the financing environment is what it is. If that’s going to impact what someone will pay, there’s a level I’m not going to chase, and I’m very happy to just clip the free cash flow and come back later.”
I recommend you get started with this article by reading last week’s post first. I’ll be happy to wait for you while you do that.
On Day 7 of my trip, a Monday, I showed up in my lucky shirt, hoping to take another big bite out of the casino’s assets if the game was still around. If it had been removed, I’d go back to the $5 game for as long as I was there.
Vici Properties is sanguine about the U.S. economy, at least as it pertains to gambling. It can afford to be. Vici owns the real estate of 11 Las Vegas Strip casinos, which are sitting pretty these days. True, Vici lost $58 million last quarter, but that’s a big improvement on $301 million in red ink in 2Q21. We certainly don’t hope for a repeat of the Great Recession but find Vici CEO Ed Pitoniak short-memoried when he says that “The gaming customer has proven to be more resilient through both garden-variety recessions and full-blown crises than just about any other discretionary consumer out there. That was proven through both the great financial crisis and throughout the COVID-19 pandemic.” Well, the last time we had a “great financial crisis,” in 2008-9, Las Vegas imploded. So we hope for Vici’s sake that the mild recession currently underway doesn’t morph into something worse or else Pitoniak might be rudely awakened.
In a truly doleful sign of the times, Philadelphia Live has reinstated metal detectors at its entrance. Also, in a nod to Covid-19, aka The Disease That Couldn’t Be Cured, it is handing out free face masks to patrons. Good on Cordish Gaming. So what is the struggling casino like these days? Our East Coast correspondent paid a visit. And things are improving, “It was the most crowded I’ve ever seen Philly Live.” The bar band also earned kudos. Plus there’s a gift promotion for August that, for a change, doesn’t require playing $500 (a nod to declining discretionary dollars?).
Along with Resorts Atlantic City, the Golden Nugget (seen above in its Trump Marina days) has inked a new labor pact with Unite-Here, bringing to an end any uncertainty about a strike on the Boardwalk. Workers get substantial pay increases, as they desired, and casino bosses get four years of peace. Union local prexy Robert McDevitt called the negotiations “long and difficult” but everyone is making nice in the wake of the deal. “We were one of the final casinos that was approached for negotiations and we are proud it was a swift and amicable agreement,” remarked Nugget General Manager Tom Pohlman. Resorts’ durable President Mark Giannantonio echoed Pohlman: “We’re really thrilled for the employees. They’ve been working really hard for us, and now we’re happy we can put this behind us and move forward with our business.” Only that remains is formal ratification of the contract, which should be a slam dunk.
