You could say that getting into bed with Red China was a devil’s bargain and Satan has come to collect. Or that Beijing has finally decided to show everyone who’s boss. Either way, the central government played Big Gaming for fools yesterday, rolling out a series of new measures that sent casino stocks reeling. Six gaming stocks tracked on the Hong Kong bourse and New York Stock Exchange plunged 23% (for a 45% declivity this year), with Sands China leading the dive with 33%. And to think that Sands execs were just blowing sunshine up Wall Street‘s ass about how great their relationship with Macao was. Las Vegas Sands CEO Rob Goldstein ought to be facing some hard questions about why he cashed out of Las Vegas at a time it was keeping the company solvent and put almost all his chips on Macao, where the company already had the largest exposure in the market—and to the whims of the ChiComms. JP Morgan Chase, so sanguine 24 hours ago, put “hold” or—worst of all—”sell” ratings on the impacted gaming stocks, which should tell you how bad the news was.

The damage was hardly limited to Sands. Wynn Macau, MGM China and Galaxy Entertainment all lost at least 20% of their value in the stampede. Domestically, it wasn’t much better: Las Vegas Sands -14%, Wynn Resorts -14%, Melco Resorts & Entertainment -9%. Even MGM Resorts International, with very limited Chinese exposure, was punished by 5.5%. It was an $18.4 billion wipeout of equity, damage on the scale we’re rarely if ever seen in 25 years of covering casinos.

JP Morgan analysts, led by Joseph Greff, are touring Las Vegas ahead of Global Gaming Expo and seem to like what they’re hearing. For instance, they met with Station Casinos CFO Steven Cootey and were told that demand continues to be strong, with customer spend tracking above pre-pandemic levels. Why? Customers are of a more gaming-centric stripe these days. Station “has been able to sign up, and retain, first time typically younger customers at a nice pace, with these customers being 2x as valuable as the pre-COVID level.” Baby Boomers started coming back commensurate with any slowing of new Coronavirus cases and increase in vaccinations. An influx of refugees from California (50% of all drivers’ license surrenders) is also bolstering the demographics.

As for Durango Station, Cootey says the company is sticking to its knitting (i.e., no more Palms-style adventures) and will announce a project budget on the next earnings call. They’re really milking that narrative for everything it’s worth. Management still has “no immediate plans” to reopen Fiesta Henderson, Fiesta Rancho and Texas Station. Small wonder, given that the latter two are in North Las Vegas, where the recovery has been very soft. Besides, their core customers have be rechanneled into other Station properties, much to the casinos’ benefit since the players in question are high-value ones. Marketing is being done more selectively, in part to study its effectiveness. Cootey also said there’s been less promotional warfare due to consolidation within the industry and “noted it doesn’t seem like anyone has desire to return back to prior levels.” As for the aforementioned Palms, the sale to the San Manuel Band is still on track to close by year’s end. The proceeds will go towards lowering the company’s leverage to 2X or 2.5X equity. It all sounds good to us.

The NFL‘s rationing policy regarding sports book ads worked like a charm in Week One, allowing for a variety of content without blanketing the airwaves. Of the ones we saw, Caesars Sports Book took the palm for creativity. As for irritating and overloaded, there was one outright loser, by a vast margin. You guessed it, it was …

Count on Illinois to disappoint in an otherwise balmy August. True, it grossed a not-shabby $108 million but it was 8.5% down from 2o19, as business slipped 10% from July’s level. (We don’t want to say the gaming recovery is waning but it does appear to have peaked, judging by regional trends.) The preponderance of revenue came from northern Illinois and nearly half of that purely from Rivers Casino Des Plaines, which won $41.5 million, defying the odds to rise 10%. From there it was way down to Grand Victoria‘s $13.5 million (-6%) and Harrah’s Joliet‘s $13 million (-14%). Hollywood Aurora grossed $9 million (-12%) and Empress Joliet brought in $7 million, plunging 29%. Mid-state, Jumer’s Casino Rock Island, in its first month as a Bally’s Corp. property, plummeted 35% to $4 million—Bally’s CEO George Papanier will have his hands full—while Par-A-Dice slid 15.5% to $5 million.

In the southern tier, DraftKings Casino Queen was down 18% to $7 million while Argosy Belle tumbled 23.5% to $3 million. Harrah’s Metropolis slid 21% to $5 million. Mandatory mask-wearing was reimposed on Aug. 30, so we’ll have to wait and see if that put a damper on this month’s results. In the meantime, slot routes continue to spread, dimming the prospects of casinos new and old alike. Sports betting hit a lull in July, with $369 million in handle and some worry that the state’s in-person registration requirement could dampen a football-season rebound. Said PlayUSA‘s Joe Boozell, “Because in-person registration was reinstated in April at the beginning of the slow season in sports betting, the industry has skirted the most severe effects of the state rule. But there will be no hiding from it during football season.”