Las Vegas Advisor

Posted on May 18, 2021September 14, 2023 by David Mckee — 1 Comment

Massachusetts strong; Casino boycott announced

Massachusetts almost reached 2019 levels, coming up 4% shy with an April gross of $84.5 million. The commonwealth’s three casinos did this despite having to operate at 40% of capacity (all capacity limits will be lifted May 29). Plainridge Park brought up the rear, down 11% with a gross of $12.5 million. MGM Springfield was flat, which is good news considering how it has struggled, posting $22 million win despite an unlucky month at the tables (-32.5%). Encore Boston Harbor (which wasn’t operational in early 2019) rang up $50 million, $29 million from slots and $21 million at the tables. Except for Wynn, JP Morgan analyst Joseph Greff still has gloomy forecasts for Plainridge and MGM Springfield this quarter, down 14% and 12% respectively. Encore is predicted to be boffo, +35%.

Slot addict and social influencer Brian Christopher has announced that he’s going to start boycotting casinos that permit smoking … 18 months from now. Or as Americans for Nonsmokers Rights put it “he will prioritize smokefree casinos.” (Does that make it a non-smokers’ non-story?) Christopher visits an average of 40 casinos a year, so he’s going to have to be pretty selective and more or less boycott Las Vegas. He’ll be in a particular quandary when it comes to the Plaza Hotel, which features a Christopher-branded slot lounge filled with his favorite games. Plaza CEO Jonathan Jossel told us, “We have nothing to add. It’s not something we are considering right now; however in his area it will go smoke-free on June 1.” So Christopher has already wielded some influence in Glitter Gulch after all.

Posted on May 18, 2021August 24, 2023 by Bob Dancer — 17 Comments

Sequential Royal

I recently hit a sequential royal flush. I was seated near a husband and wife who were playing for lower stakes than I was. The man especially was in full mumble about how bad his luck was that day. (Complainers are common among video poker players. I’m sure you’ve sat next to a guy just like this.)

We had not shared a word with each other before the royal, but they both congratulated me on it. I said, “Yes, a sequential royal is pretty rare.” He hadn’t noticed it was sequential before I mentioned it, and then he told me what bad luck it was that the game didn’t pay extra for sequentials.

Posted on May 17, 2021September 14, 2023 by David Mckee — 3 Comments

Hard Rock, Ocean drub Borgata; Caesars massacres shows

Casinos in Atlantic City grossed $189.5 million last month, 9% behind their 2019 pace. Slots were off 5% and tables 17%. Regular top-grosser Borgata had a terrible month, falling 28%, spurring by lackluster table-game winnings (-34%), with slots tumbling 25%. The Caesars Entertainment threesome fared almost as poorly, sliding 20% as table win plunged 40% and slots were down 11%. Borgata’s $38.5 million gross put it within striking distance of hard-charging Hard Rock Atlantic City, which won 35% for a 51% leap in revenue. Also soaring was Ocean Casino, vaulting 45% to $22 million and elbowing aside Harrah’s Resort ($21 million, -24%) for third place. Caesars’ much-vaunted $400 million capex may not be enough to prevent a permanent change in the pecking order.

Caesars Atlantic City, despite its reputation for volatility, was a relatively stable -14.5%, grossing $19 million, while Tropicana Atlantic City closed out the portfolio, slipping 20% to $19 million. There was a surprise among the grind joints, with Resorts Atlantic City up a percentage point to $13 million. Little Golden Nugget won $11 million but that was a 29% plummet, while Bally’s Atlantic City also grossed $11 million, down 22.5%.

Posted on May 14, 2021September 26, 2023 by David Mckee — 3 Comments

Station: No more buffets, less free play; Covid? What Covid?

Said JP Morgan analyst Joseph Greff “not to worry, money losing buffets are not coming back” to Station Casinos. We can take this as gospel, since he got it from CEO Frank Fertitta III, Vice Chairman Lorenzo Fertitta and CFO Stephen Cootey. He added, “Lower promotional activity is here to stay, per management, and is going back to the basics.” So it’s kind of a bum deal for locals. During the Covid-19 closedown, management tinkered with marketing strategies and will eliminate those thought to have little or no traction with customers. “It feels this pivot away from promos is permanent and is focusing more on social/digital marketing and more player development touches for higher end /spend customers and far less on print, ads, billboards, and free play.”

The other headline item was concrete news on Durango Station. Responding to what Greff described as “investor skepticism” about the project (well-earned, we might add), management busted out details of the $400 million-$500 million casino, which should break ground in early 2022 and be finished by late 2023. The project will be funded entirely from cash flow—i.e., no new debt—including the proceeds of the Palms sale. Reasons to like Durango Station’s prospects include a high Asian-American demographic in the area and the absence of significant competition within a five-mile radius. Furthermore, Greff said that the player base within a three-mile radius will be higher than that for billion-dollar-plus Red Rock Resort, giving him confidence of a 15%-20% return on investment. Way more bang for the buck! Station owns 73 acres at the site but intends to sell 23 of them off to a residential developer. (One of the mistakes that dogged Aliante Station was building it where the population wasn’t.)

Posted on May 12, 2021September 26, 2023 by David Mckee — 1 Comment

MGM dumps Springfield; Gaming recovery a proven fact

MGM Resorts International isn’t quitting Springfield but it’s taking a bath on its eponymous casino in order to reduce its exposure to the (disappointing) market. MGM spent $960 million on the resort, which has never performed up to expectations, and is selling it to affiliated REIT MGM Growth Properties for $400 million, a serious writedown of what was once a trophy asset. MGM will pay $30 million a year to lease the property from MGP and will continue operating it. All involved were at pains to save face. MGM CEO Bill Hornbuckle said the “has exhibited strong financial performance as it emerges from the pandemic, and the property delivered record EBITDA in the first quarter of 2021.” Which leaves hanging the question of why ditch the place now and at such a bargain price? Were we MGM shareholders we’d be hopping mad and the stock did indeed dip 2%. Looking for a silver lining, JP Morgan analyst Joseph Greff wrote, “for MGM, it improves its already strong liquidity position, enhancing its ability to invest in its land-based casinos or BetMGM and return capital to shareholders.” $400 million in sale revenue may be a quick way to manufacture a dividend but this is an ignominious retreat, no two ways about it. (In one bit of unambiguously good news for MGM, its Strip resorts got green-lit by the Nevada Gaming Control Board this morning to go to 100% capacity.)

Perhaps MGM can make up some of that forfeited $560 million on the Las Vegas Strip, where paid self-parking and paid event parking are making an unwelcome return. Locals are exempted—provided that they vamoose within three hours. Four hours costs you $15, then it escalates to $18/day at CityCenter and Bellagio. Other MGM properties are $3 cheaper. Not so coincidentally, the re-introduction of paid parking takes place on May 19, the same day that the Las Vegas Golden Knights begin NHL playoffs at T-Mobile Arena. Customers of Caesars Entertainment casinos continue to enjoy a paid-parking holiday … until October. Enjoy it while it lasts.

Posted on May 11, 2021August 24, 2023 by Bob Dancer — 16 Comments

Did You Notice?

I wrote the following article (minus the epilogue which I added later) and then passed it by South Point management for a fact check. As a sponsor of my podcast and the place where I teach my free classes, I have a special relationship with that casino, and I don’t want to screw it up by getting things wrong.

Turns out, I did get a rule wrong. At the end of what I originally wrote, I’ll explain how that rule change affected my behavior.

Posted on May 11, 2021September 14, 2023 by David Mckee — Leave a comment

Wynn gaining steam; Miami Beach casino juice job dismissed

First-quarter results for Wynn Resorts were worse than expected in Macao but better than anticipated in both Las Vegas and Boston, while the company posted a revenue chasm around Wynn Interactive. To shore up the latter, Wynn is merging it with Austerlitz Acquisition Corp., which taps a new source of funding for the venture, among other virtues. They will form a publicly traded company under the Wynn Interactive banner, ticker symbol WBET. Currently in 15 states, WynnBet is confident of reaching 77% of the American public in the near term. Wynn Resorts will have 58% ownership and 72% voting rights in the new entity. In an ironic twist, Greff lowered his 2021 cash flow projections for the parent company due to relative weakness in Macao (when was the last time you heard that?), despite newly elevated ones for Las Vegas and Boston. Yes, American operations are carrying Chinese ones for the time being.

By 2022, Greff expects Las Vegas Strip cash flow (i.e., return on investment) to be 27% higher than banner-year 2019 while Macao limps along at 77% of 2019 levels. Blame it on casino-shy VIP players. The silver lining for Wynn is that Wynn Palace is finally pulling something close to its weight, drawing 1Q21 cash flow of $27.5 million to Wynncore Macau‘s $16.5 million. In order to get pre-Covid revenues without pre-Covid-sized visitation, Wynn is recalibrating its marketing toward premium-mass customers. Mass-market wagering remained 55% below 1Q19 and VIPs played 80% less.

Posted on May 10, 2021September 26, 2023 by David Mckee — 2 Comments

Illinois’ surprise; Scandal at Churchill Downs; Palms complications

Gambling revenue of $108 million out of Illinois last month looks pallid at first glance. But consider this: It was only 6% off April 2019’s pace, when casinos were at full capacity and last month they did it at 50% capacity. So the demand is the definitely manifesting. One of the stars of the market was Grand Victoria (pictured), up 1% to $13.5 million. Of course the marquee performer was Rivers Casino Des Plaines, grossing $41 million for a 7.5% lift. Nearby rivals Empress Joliet and Harrah’s Joliet were down 16% and 17% respectively, grossing $7.5 million and $12.5 million. Hollywood Aurora slipped 9.5% to $8.5 million. Mid-state, the tailspin continues for Casino Rock Island, spiraling -37.5% to a meager $3.5 million. Par-A-Dice, meanwhile, dipped 6% to $6 million. In the St. Louis area, Argosy Belle slipped 20% to $3 million while DraftKings Casino Queen was down 23% to $6.5 million. Harrah’s Metropolis was steady as she goes at $6 million.

Sports betting continues to lag casino reporting by a full month, so we are only now getting the March numbers. Handle was $633.5 million, from which $50 million in revenue was derived, including a tax haul of $6.5 million. Noteworthily, Illinois was just a few whiskers behind Nevada ($641 million handle). Silver State, look to thy laurels! The prohibition of bets on University of Illinois and Loyola College may have put a damper on March Madness action ($177 million), with professional basketball engendering $366 million in wagers. “March Madness helped deliver a huge month for Illinois, but March is essentially a ‘last hurrah’ for the state’s rapid growth,” warned PlayUSA analyst Joe Boozell. “Illinois will still be one of the largest U.S. markets because of the population of the state, but it will be difficult to maintain its current status as the U.S. No. 3, much less catch Nevada. No matter how appealing a market, there isn’t any easy way to overcome the inconvenience of in-person registration.”

Posted on May 7, 2021September 14, 2023 by David Mckee — 1 Comment

DraftKings’ mixed results; Penn waxes, Iowa wanes

DraftKings exceeded analysts’ expectations with its 1Q21 revenues, leading Credit Suisse‘s Ben Chaiken to boost his 2021 revenue projection by $100 million, to $1.1 billion, in part “reflecting strength in new states such as Michigan.” Wall Street anticipated $239 million in first-quarter revenue and DKNG delivered $312 million but posted a return-on-investment loss of $139 million. Recent launches in Virginia and Michigan (and maturing markets elsewhere, no doubt) drove revenues up 175% year/year. JP Morgan analyst Joseph Greff exercised caution when looking ahead, projecting $226 million in second-quarter revenue and a cash-flow loss of $116 million. As ever, DraftKings’ pot of gold remains somewhere at the end of the rainbow. A pullback in the share price to $49.50 from the $70s seems to echo that view, with Greff writing that “we think the risk-reward is getting more interesting. However given its valuation versus peers, we’d wait for lower levels and/or more confidence in its path to profitability before becoming more positive on the name.”

Posted on May 6, 2021September 26, 2023 by David Mckee — 1 Comment

Recovery has legs; Resorts World LV impresses

Maryland didn’t just do well in April, it posted its third-best month ever. Gaming win grew 11.5% from 2019, to $162 million. That’s with 50% capacity constraints at MGM National Harbor and Horseshoe Baltimore (all other casinos are operating at 100%). MGM still took 38.5% of market share with a $62.5 million gross, up 2.5%. Maryland Live was second with 36% market share, hauling in 22% more than in 2019 and grossing $58 million. Horseshoe was flat with 2019, cantering in a distant third (12% market share) with $20 million. Speaking of cantering, Ocean Downs crossed the finish line with $8 million, a 30% boost. Hollywood Perryville leapt 36.5% to $8.5 million and Rocky Gap Casino gained 19% to $6 million. Even West Virginia is looking a little better. Over a three-week period ending April 24, it was down only 14%, with slots (-14%) propping up tables (-18%). Hollywood Charles Town underperformed the state, as slots declined -21%, tables were off 24%, averaging a 22% decline overall.

While on the subject of Penn National Gaming, it reported 1Q21 results yesterday. JP Morgan analyst Joseph Greff described it has having a “very strong regional casino top line,” similar to its peers. Although the quarter saw partial casino closures in New Mexico, Illinois and Pennsylvania, revenues were down only 6% from 2019, while cash flow grew 7% (no doubt due to operational economies). Furthermore, the company “indicated that strength has continued into April and May, with strong spend per visit continuing but now experiencing improved visitation relative to earlier in the pandemic, with a return of the important 55 year-old plus demographic.” Whereas Wall Street consensus had Penn achieving $1.1 billion in revenue and $394 million in cash flow, the company delivered $1.3 billion and $447 million respectively. Revenues from Penn Interactive helped shore up the year/year comparison, while numbers were boosted especially in the South, where dining and casino capacity restrictions have been lifted the most. As for revenue comparisons with last year, they were—as might be expected—all positive, except the West region (Las Vegas and New Mexico), down 24%.

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