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.

Continue reading Vici foresees blue skies; Ruffin + Athletics?; Phil the Shill

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.

Continue reading Peace in Atlantic City; Storm over Vegas

“No gaming consumer slowdown, at least not yet.” That was the headline of JP Morgan analyst Joseph Greff‘s appraisal of Boyd Gaming‘s 2Q22 earnings call. Loyalty players and core customers remain steadfast, as Boyd grew revenues 4% “despite a tough year-over-year comparison.” Unrated players are the Achilles heel, although Greff (rightly) theorizes that their 2Q21 gambling spree “was likely goosed up from stimulus checks.” While unrated play is as much as 40% of overall win, it’s not very profitable in the final analysis. Greff ratcheted his price target on BYD from $83/share down to $71 “despite limited evidence that the U.S. regional gaming consumer is slowing in any meaningful way.” Why? He predicts a 10% revenue decline next year, with serious consequences for the bottom line.

Even so, Greff likes Boyd’s regional diversity “which generates attractive free cash flow.” He’s (not unreasonably) factoring in a “mild” recession, which may be already here, and which he freely admits could be worse than modeled. Fortunately for Boyd, it is not in a position where debt reduction is necessary. Or as CEO Keith Smith put it, “We’re dealing in an uncertain environment and economy, but everything we see says the business is pretty stable. If something were to happen, given our current financial strength, we’re not losing sleep.”

Continue reading Boyd outperforms; Vegas airport sets record, joblessness drops

You know it’s a slow news week when today’s front-and-center lead story in the Las Vegas Review-Journal is that a Lotus of Siam will open in a refreshed Red Rock Resort. With nothing of pressing urgency in the press these last few days, we’ll update you with various odds and ends, such as … Cirque du Soleil‘s Love has received a one-year stay of execution at The Mirage, extended into and perhaps through 2023. All bets are off once Hard Rock International consummates the purchase. Only CEO Jim Allen knows for sure and he ain’t talking, including addressing the bigger question of whether The Mirage proper will remain open during the massive rebranding of the resort. Love‘s marquee is conspicuously missing from the Hard Rock rendering above …

Continue reading Jottings for a Tuesday

Despite attenuated revenues of $1.2 billion in the second quarter, Las Vegas Sands was the beneficiary of what one analyst termed “creeping expectations” on Wall Street. Or, as Deutsche Bank‘s Carlo Santarelli put, “we continue to believe LVS represents one of the more compelling medium- to longer-term risk-reward stories in our coverage universe.” How come? Managed expectations, in large part. Losses in Macao were not as bad as feared and Marina Bay Sands in Singapore (55% of the company’s equity now) is prompting higher forecasts, as the city-state loosens its Covid-19 restrictions. Regarding Macao, “management had little to say” but numbers were “soft” and the company expects to lose $110 million a month in cash flow and rents as long as the current shutdown persists.

Continue reading “Standout” at Sands; Station challenges South Point