Las Vegas Advisor

Posted on May 5, 2021September 14, 2023 by David Mckee — Leave a comment

Hail Caesars; Durango Station green-lit

“Solid … very encouraging … impressive momentum.” Those were some of the things JP Morgan analyst Joseph Greff had to say about Caesars Entertainment‘s 1Q21 numbers. Cash flow of $548 million well exceed Greff’s expected $429 million, to say nothing of the Wall Street consensus of $408 million. The report continued, “we think stronger group volumes, incremental entertainment revenues, banquet/F&B, and overall hotel room pricing will drive continued growth in Las Vegas and the regionals recovery will continue, with, for CZR, a more acute recovery in Atlantic City and New Orleans, which have lagged.” Despite the struggles of Caesars in the latter two markets, Greff believes that the Roman Empire will record $3 billion in cash flow this year, up from his projected $2.4 billion. It looks like CEO Tom Reeg‘s euphoria about the second half of 2021—and Las Vegas in particular—was well-founded. Due to the exceptional strength of January and February 2020, Caesars’ year/year numbers were actually down. Deutsche Bank analyst Carlo Santarelli reports that Las Vegas was 39.5% lower ($497 million in revenue), regionals were off 17.5% ($1.1 billion) and managed/international properties were 30% lower ($94 million). So it wasn’t all sunshine and roses.

Posted on May 4, 2021August 24, 2023 by Bob Dancer — 13 Comments

A Fuller Explanation

Richard Munchkin and I regularly get “how do you do it” questions which we periodically answer on our podcast. Sometimes I have to give a briefer answer than I want on the air because a more complete answer requires that people see things written down. Plus, my blog is read primarily by players who understand the basics of video poker. The podcast is geared more towards players who play a variety of games with an advantage.

So today we’ll look at two recent questions I received at [email protected].

Posted on May 4, 2021September 26, 2023 by David Mckee — Leave a comment

Palms brings $650 million; Murphy flirts with smoking ban

Earlier today, Station Casinos finally confirmed the worst-kept secret in town. It has sold the Palms Casino Resort to a subsidiary of the San Manuel Band of Mission Indians in an all-cash, $650 million transaction. Thus closes a fairly disastrous chapter in the Station history book—and probably renders moot the question of whether the Palms will reopen under current management, depending on how quickly the deal closes. (San Manuel will be subject to Nevada regulatory approval.) San Manuel is already a familiar name in Las Vegas, having been one of the first ‘official gaming partners’ for the Las Vegas Raiders, as football fans will discover when they finally set foot in Allegiant Stadium this fall. Although the Raiders have cross-pollinated a relationship with M Resort, we fully expect San Manuel to monetize its connection to the Silver & Black when it takes over the Palms.

It’s a deep-pocketed tribe (as the cash-on-the-barrelhead deal indicates), one that’s currently wrapping up a $550 million expansion of its home casino in SoCal. High rollers should still be welcome at the new-look Palms (San Manuel knows high-limit play) but there will be plenty for the bread and butter player on offer. Also, starting next year San Manuel will be operating a California event center to complement The Pearl, which should set up some nice operational synergies. Retail expansion will probably be in the cards, along with a spinoff of the Serrano Vista Café, a viable candidate to replace the defunct Hooters. San Manuel is accustomed to operating on a big scale, so it should be ready for the Vegas spotlight.

Posted on May 3, 2021September 26, 2023 by David Mckee — 1 Comment

Las Vegas rates rebound; Kentucky Derby brings out crowds

In another sign of a faster-than-expected Las Vegas comeback, room rates on the Strip for the May 23-29 period are reported to be flat with 2019. Midweek numbers are mildly down (-17%) but counterbalanced by higher weekend rates (+18%) than two years ago. This is a big achievement and a rapid one. Only Wynncore is missing out on the bounty, -2% weekdays but -45% on the weekend. MGM Resorts International is just 2% off the midweek pace and +22% on weekends. Caesars Entertainment is down 36% weekdays but 28% higher on the weekend, while Venelazzo is not feeling the midweek love (-27%) but rebounding +63% on weekends. The midweek numbers at MGM and Wynn may have been goosed by the fact that there’s finally a convention in town but it looks like the window may have closed in Sin City for travelers seeking a room-rate bargain.

Vital Vegas is doubling down on its insistence that the Palms Casino Resort has been sold to the San Manuel Tribe, despite an absence of confirmation from either Station Casinos or the analyst boys on Wall Street. A sale would be a plus for Station investors, as it would remove a dead weight from Station’s balance sheet, provide a one-time cash infusion and accelerate the company’s refocus on what it does best: build quality locals casinos. (Will Durango Station ever be constructed?) Scott Roeben reports that the San Manuel got the Palms for $660 million, which wouldn’t even cover the $690 million Station put into renovating the place, although it would recoup the $312.5 million purchase price. So, capex aside, the Palms is now worth considerably more than when Station got it for a fire-sale markdown. That’s the glass half-full perspective.

Posted on April 29, 2021September 26, 2023 by David Mckee — 2 Comments

MGM “roaring back”; LV recovery accelerates

That’s what Credit Suisse analyst Ben Chaiken had to say about MGM Resorts International, citing strength in regional casinos, Las Vegas and sports betting (in that order). First-quarter cash flow exceeded 2019 levels, aided in part by “strong demand reaching ’19 levels … Las Vegas is accelerating, with growth supported by easing government restrictions, an improving event calendar, and pent-up demand. March was one of the best gross booking months in the company’s history.” Non-gaming amenities have lagged gambling and room revenues as recovery metrics, which could be crucial, as they account of 75% of revenues and are at the mercy of capacity restrictions. Elsewhere sports betting and Internet gambling “look very promising.” Nationally, BetMGM has 25% i-gaming market share and 17% of OSB. “Benefits appear to be flowing both ways, with 10% of BetMGM’s new customers coming from MGM, while 44% of new MLife signups coming from BetMGM.” Management was even upbeat on Macao, seeing positive customer trends—as did Melco Resorts & Entertainment—ahead of critical Golden Week.

Chaiken’s opposite number at JP Morgan, analyst Joseph Greff, bumped his stock-price target from $37/share to $45 (it currently trades at $42). He called the 1Q21 numbers “solid, with impressive momentum in Las Vegas. Momentum here commenced in mid-February and has continued thus far into April.” Occupancy on the Las Vegas Strip is running at 73%, which is pretty darned impressive in light of zero convention activity. Weekends are seeing 90%-plus occupancy “indicating strength in the leisure segment and MGM’s efforts to tap into its casino database to fill rooms at present gaming capacity.” Further helping the comeback is an anticipated return to 93% of pre-pandemic airlifts into Sin City in June, escalating to 99% in July. “This airlift support bodes well for the return of group business, which, with what’s on MGM’s books for 2022 and 2023, is at pre-pandemic levels,” Greff wrote. Cash flow on the Strip is expected to achieve 90% of 2019 metrics by next year.

Posted on April 28, 2021September 18, 2023 by David Mckee — Leave a comment

Nevada recovery skips Strip; Boyd buoyant

Silver State casinos grossed $1 billion last month, with the Las Vegas Strip down 9% from 2019 to $501.5 million but locals-derived win vaulting 23%, leading to a 4% statewide increase on pre-Coronavirus numbers. The silver lining for the Strip was that win was 44% higher than in February, while locals improved 38%. The numbers were undoubtedly helped by a March 15 increase to 50% capacity in casinos, with further improvements likely in May (80%) and June (100%). Strip slot win was “flattish” which is actually impressive considering that coin-in plunged 29%. Slots kept $239 million on tighter holds. Probably the best news for Strip casinos was that baccarat is back, as win grew 32% on 29% more wagering and an exponentially higher hold. Other table games sucked wind, down 33% on 27% less handle.

Downtown casinos grossed $71 million, a 21% gain, while North Las Vegas nudged up 2% to $26 million. The Boulder Strip leapt 37% to $96.5 million, while miscellaneous Clark County hopped 19% to $133.5 million. Laughlin was modestly down, -4%, grossing $48 million, Reno jumped 18% to $59 million and Lake Tahoe rocketed 51.5% to $26 million. As for those Strip results, they can be chalked up to still-anemic visitation. Tourism was down 40% from March 2019. Hotel occupancy was 55.5%, compared to 2019’s 91.5%. Average daily rates fell 27% to a wallet-friendly $104, while revenue per room was $58. Thanks to a dearth of conventions, midweek occupancy stood at 48%. Air traffic still has a long way to go, down 42%, but highways saw as much as 7% more vehicles heading into and out of Nevada. There’s a ways to go but we’ll take numbers like these when we can get them.

Posted on April 27, 2021 by Bob Dancer — 6 Comments

Backgammon Then and Now

Author’s Note: I played backgammon professionally for almost 20 years, then gave it up completely. I reached the high intermediate level, but most of the players that were interested in gambling with me were better. That was a prescription for disaster. I needed to get a job because I was not a winning player anymore. Today’s blog has nothing to do with video poker, but it does have to do with gambling.

I played most of my backgammon at the Cavendish West, which was in the West Hollywood section of Los Angeles, from about 1974 to 1993. Some of the regulars back then who are still active in tournament backgammon are Bob Glass, Jim Pasko, Steve Sax, Joe Russell, and Bob Wachtel. (There are likely others I don’t know are still playing.) They were all better than me back then, and they’ve kept studying the game while I’ve devoted my attention to other things.

Posted on April 27, 2021September 26, 2023 by David Mckee — 1 Comment

MGM hits paydirt; Palms sold?; Atlantic City underwhelms

Remember the Harmon Hotel? That Sir Norman Foster-designed tower that had to be amputated at half the intended height in 2008 because of incompetent construction? The only Las Vegas resort ever to be dismantled without having hosted a single guest? MGM Resorts International would probably prefer that it be forgotten. All that remains is a two-acre patch of bare ground. But MGM has cleverly monetized the Harmon site, selling it for $40 million/acre to a partnership led by Brett Torino. If that’s not a record for Las Vegas Strip real estate it’s pretty darn close. And the $80 million will buy a lot of salve for the $348 million wound left by building—and then unbuilding—the Harmon.

Torino’s plan for the site is a retail mall, crowned with a giant video screen, such as the one that makes nearby Harmon Crossing such a standout and an ad-revenue magnet. Evidently the Strip is not so glutted with retail that it can’t support another mall, although the owners of adjacent Crystals must be looking askance at this latest turn of events. Should the Torino project generate foot traffic, though, the most likely beneficiary will be The Cosmopolitan of Las Vegas, just a pedestrian bridge away.

Posted on April 26, 2021September 14, 2023 by David Mckee — Leave a comment

Big win for Seminoles?; Parx the deadliest track of all

Florida Gov. Ron DeSantis (R) succeeded where predecessor Rick Scott failed, inking a pact with the Seminole Tribe that would unlock the $35o million a year that the Seminoles have been holding in escrow. In return, the tribe gets a pretty ‘george’ gambling expansion: three new casinos, craps and roulette (Take that, blackjack-offering racinos!), Internet gambling, and both retail and online sports betting. For his part, DeSantis was able to get the Seminoles to up their annual ante to the state to as much as $600 million a year over a period of 30 years, with $2.5 billion guaranteed by 2026 and $6 billion by 2031. So everybody wins.

Or do they? The Seminoles could yet be hoist on their own petard, having teamed with Disney to pass a constitutional amendment that puts any expansion of gambling in the hands of the voters. Which means the new compact is certain to face a court challenge. Then there’s the butter-fingered Lege, which has managed to fumble every significant piece of gaming legislation within memory. When last seen, lawmakers were trying to sneak through a sports-betting bill on the excuse that it wasn’t ‘casino gambling.’ Excuse us while we fall down laughing. At worst, however, legislators could disapprove or try to f-up the DeSantis compact with add-ons of their own.

Posted on April 23, 2021 by David Mckee — 2 Comments

Sands blitzes Texas; Las Vegas “swarming” with tourists; Oscars suck

Starting last week, Las Vegas Sands has been blanketing the Texas airwaves with a barrage of pro-casino ads. Faced with a loss of traction in the Lege, Sands is turning to the court of public opinion. Going in drag as the Texas Destination Resort Alliance, Sands is using the ads to tout the virtues of a bill currently before lawmakers that would (among other virtues) establish $1 billion-$2 billion ‘destination resorts.’ The TV and radio spots highlight the amount of Lone Star State money being siphoned off by Oklahoma and Louisiana, saying, “Let’s boost our economy, create tens of thousands of jobs and help fund vital services like schools and public safety.” Both the state House and Senate versions of the casino bill are stuck in committee, and Sands is obviously hoping to budge them with an ad blast. Responding to criticism that this was a made-in-Vegas legislative push, Sands lobbyist Andy Abboud responded that Golden Nugget CEO Tilman Fertitta was being consulted on the proposed law.

Unsurprisingly, the problem-gambling issue was raised in committee. To this, state Rep. Charlie Geren (R) replied, “We already have negative social impact. Go no further than our borders than those with an addiction can drive less than 20 minutes and then return home to our state with no resources in place for them. Go no further than your smartphone, where illegal bets are bing placed on illegal bookie apps every day.” Well put.

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