Las Vegas Advisor

Posted on April 12, 2021September 26, 2023 by David Mckee — Leave a comment

It’s DraftKings’ world, we just live in it; Musk tunnel panned

While Coronavirus and the ensuing shut-ins were very good for DraftKings by virtually every metric, CEO Jason Robins says the fun is just beginning. He told the Boston Globe that the pandemic has ratified his business model, which presumed the widespread acceptance of i-gaming. The stock market has also been good to DKNG, which is riding a market capitalization of $24 billion. It’s a reward for those who bought into Robins’ strategy, which was predicated on patience, prioritizing expansion over profits. Indeed, DraftKings lost $855 million last year and could be a billion in the red this year. However, DraftKings has secured a monopoly in two states (New Hampshire and Oregon) and appears juiced into a duopoly in another (New York State). Although daily fantasy sports, DraftKings’ early signature business, has taken a back seat to real-life sports betting, the DFS experience built valuable brand equity. PlayUSA analyst Dustin Gouker calls the DraftKings and FanDuel customer wellsprings “better than a regular casino’s database.”

It didn’t hurt that DraftKings was well-suited for its employees to work offsite as Covid-19 surged. “We adjusted faster than I would have thought to the working environment talking to each other over computer screens, and I think we’ll adjust to whatever comes next,” Robins told the Globe. However, he has to catch FanDuel in the OSB sphere. FanDuel posted $645 million over the last three years compared to DraftKings’ $501 million. And Robins isn’t laughing off new-is competition from Big Gaming. However, DraftKings may have to temper its brash advertising approach. “There’s always got to be a tieback to responsible gaming, and not an oversaturation of advertising and marketing and being in too many people’s faces,” industry consultant Sara Slane told the paper. Ironically, DraftKings remains a prophet (if not profit) without honor in its home state. Sports betting is still illegal in Massachusetts and the Lege is getting nowhere fast on the issue.

Posted on April 9, 2021September 26, 2023 by David Mckee — 1 Comment

Vegas hears wedding bells; Sahara upscales; Mega-Jottings

All-important Baby Boomer customers are ‘trickling‘ back to Las Vegas, according to the Las Vegas Review-Journal. That’s the latest positive augury for Sin City. Better still, the destination-wedding biz is “bursting,” per Forbes, and what place is more synonymous with a getaway nuptial than Vegas? Almost 50% of couples surveyed who were planning to tie the knot in 2020 are now looking at either renewing their vows this year or at least holding the receptions they couldn’t last year. Throw in family and college reunions, and all the arrows are trending upward. At the risk of stating the obvious, “Wedding parties can drive a lot of business to hotels and resorts, including booking ballroom or outdoor event space, having food and beverage offered throughout the celebration, which often takes place over a couple of days, and of course the room reservations for the wedding party and guests.”

4Q20 hotel business was at only at 56.5% of pre-Coronavirus levels but, two rounds of stimulus later, those numbers are certain to be burgeoning. Even business travel is looking better, expected to rise 21% this year. Of course, conferences and trade shows require a considerable outlay, and the shift to virtual meetings will not entirely recede. Business travelers aren’t expecting a return to normal until 2022 or ’23, maybe never. We’ve seen this in Las Vegas, where Las Vegas Strip hotel rates are rebounding dramatically on weekends (along with occupancy levels) but continue to languish midweek. Still, if you’re in a REIT, as much of the gaming industry now is, it’s a good time for you. Writes economist Calvin Schnure, “Lodging/resort REITs have fully recovered their losses from the early months of the pandemic, and the improvements in the fundamentals for leisure and business travel are encouraging for future gains as the economy—and the wedding business—gets back to normal.”

Posted on April 8, 2021September 26, 2023 by David Mckee — 2 Comments

Illinois improves but Ohio sets record; Is Cuomo on crack?

Criticizing Illinois‘ casino performance is usually like tripping a dwarf: much too easy. But the Land of Lincoln posted some surprising results last month. Yes, it out performed March 2020 (+122%) but we’re comparing a full month of business with the onset of the Great Shutdown. Measured, apples to apples, against March 2019, Illinois was only -16% and that’s with casinos currently operating at 50% capacity. Think what they could do if completely full. One casino posted standout results, Harrah’s Metropolis, gaining 86% to $5.5 million. Best of the rest was (you guessed it) Rivers Casino Des Plaines, down 11.5% to $38 million. Harrah’s Joliet slipped 13% to $14 million and Grand Victoria (above) was 13.5% down to $12.5 million.

Others were less fortunate. Empress Joliet tumbled 31% to $7.5 million, Hollywood Aurora slid 25.5% to $8 million and Argosy Belle was down 31.5% to $3 million. Maybe a rebrand to Bally’s will help Casino Rock Island. Something needs to, as it toppled 44% to $4 million. Par-A-Dice shed 19.5% to finish at $6 million, while Casino Queen ceded 23.5% to $7 million. The total statewide gross was $1o6 million, not great but a good deal better than what we’ve seen in quite a while.

Posted on April 7, 2021September 14, 2023 by David Mckee — Leave a comment

“In a word, messy”

That’s how JP Morgan analyst Joseph Greff described the online sports-betting bill enacted by the New York State Lege. The latter essentially caved to Gov. Andrew Cuomo (D), giving control of OSB to the state lottery. Instead of the one-operator solution proposed by Cuomo there will be … wait for it … two. Big whoop. Those two casinos will be enabled to host four ‘skins’ on their Internet platforms. So, as we predicted, somebody (maybe a lot of somebodys) are going to be left out in the cold. The ‘Net platform providers will each pay Albany $25 million for a 10-year concession plus an annual levy of $5 million to the host casino “to alleviate the constitutional requirement that sports wagers are placed at casinos.” No tax rate has been announced but both Greff and Credit Suisse‘s Ben Chaiken anticipate it will be steep, probably in the 50% range, another Cuomo object of desire.

The cure may be worse than the disease. Greff, for one, finds himself with more questions than answers. For instance, what’s the difference between a platform provider and an OSB operator (Cuomo tipped his hand here by taking a meeting with DraftKings)? The bill calls for a minimum of four skins but what’s the maximum? Who gets to choose the skins, the state or the private sector? Will Native American tribes be eligible to compete? Will they sue the state and how might this delay the launch? Greff foresees the Empire State going live by the start of NFL season, as the bid process will begin July 1 with a truncated, 30-day RFP period. Regulators, says Chaiken, have five months to decide, which kind of shoots that NFL-kickoff target in the keister. The New York Gaming Commission gets to play King Solomon, depending on how much Cuomo tries to interfere.

Posted on April 6, 2021August 24, 2023 by Bob Dancer — 30 Comments

A Further Look at Double Up

Anthony Curtis and Andrew Hunt have a YouTube podcast called “In the Wild,” where they address Las Vegas Advisor-kinds of questions. Basically, straight talk about the basics of things gamblers want to know.

Recently, they addressed the Double Up feature in video poker seen here. Other than once confusing the term ‘Double Up’ with ‘double down’ (a term in blackjack), what they said was correct.

Posted on April 6, 2021September 14, 2023 by David Mckee — Leave a comment

Maryland has best month ever; Rio reopens

Even with capacity restrictions still in place at MGM National Harbor and Horseshoe Baltimore, the Free State enjoyed an epic March with casinos posting an all-time-record $169 million. On March 12, MGM and Horseshoe were bumped up to 50% capacity (from 25%) and restrictions at the state’s four smaller casinos were lifted. (Last year, casinos were closed March 16-June 19.) As usual, MGM was out front with $66.5 million, 6% better than March 2019. It and Maryland Live dominated the market, with 39% and 36%, respectively. Maryland Live gained 9% to $61 million but while Horseshoe Baltimore grew sequentially (up $5.5 million from February), it was still the state’s lone disappointment, down 23% to $20 million. Ocean Downs was up 13% to $7.5 million, Hollywood Perryville vaulted 21% to $9 million and Rocky Gap Resort was up 8.5% to $5.5 million. The leading edge of a trend? We certainly think so. As America goes, so goes Maryland—only more so.

Posted on April 5, 2021September 26, 2023 by David Mckee — 2 Comments

Caesars looking good; Amtrak covets Vegas; Bally’s underwhelms

Joseph Greff and his fellow JP Morgan analysts looked at recent trends in Las Vegas and any place not named Atlantic City, and liked what they saw, raising their price target on the stock five bucks to $101/share. Positive factors include recovery in leisure travel (group business is seen as coming back late this and into next year), “legs to a recovery in U.S. drive-to, regional markets, with our anticipation of a return of the 55+ year old customer, which has lagged other customer segments such as a younger demographic,” as well as “permanently higher margins,” thanks to job cuts and other economies. The pending close of the William Hill purchase poises CZR to capitalize on the explosion of U.S. sports betting and growth of online gambling. So far the only consequential property sale on the horizon is that of Horseshoe Hammond, with Las Vegas Strip dispositions having faded into the hazy yon.

Greff espies “incremental evidence of a recovery in Las Vegas and a sequential pick up in most other regional markets.” The “quite strong” March results, however, don’t include meaningful numbers of Baby Boomers, evidently fighting shy of the Covid-opportunity zones that some Strip casinos present. As vaccinations continue to ramp upward, Greff expects this problem to abate. His estimates for 3Q21 and 4Q21 are unchanged “but we can see a scenario where our/Consensus estimates here may be too conservative.” Also, if people continue to behave carelessly and Covid-19 rates keep spiking, that’s going to kick the nascent gaming recovery into a cocked hat.

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

Virginia sports betting debuts large; ‘CSI’ back in Vegas

Virginia has now had two full months of sports betting and February handle was an impressive $266 million—not quite the explosion that Michigan was but still noteworthy as the second-biggest debut in U.S. history. Reacted PlayUSA analyst Dustin Gouker, “The nation’s major operators have the resources to engage bettors in new markets in ways that were impossible in the early days of legalization, which benefits later-comers like Virginia. Ultimately, that will mean a market that goes through fewer growing pains than some of the earlier adopters.” Compared to other states, Super Bowl handle wasn’t bad: $19.5 million. Revenue was $12 million but books went overboard with promotional credits, ending up with a $3 million loss. The tax haul was a scant $300,593. FanDuel, DraftKings, BetMGM and BetRivers were all on the field, joined just before the Super Bowl by William Hill. This month brought the entry of WynnBet, which should reap some of the rewards of March Madness … to a degree. Virginia law forbids betting on in-state teams, which could mute interest in the NCAA tournament.

Posted on April 1, 2021September 14, 2023 by David Mckee — 5 Comments

Massachusetts gaming a success; Cuomo gains upper hand in NY

A University of Massachusetts Amherst panel led by respected academic Rachel Volberg has been studying casino gambling in Massachusetts and likes most of what it finds. It concluded that Bay State dollars had been significantly repatriated from neighboring states (the primary goal of legalization) and there was “no negative impact” on the state lottery. Citizens were fleeing the state in smaller numbers, going from 33% of cross-border business in 2013-4 to 16% in 2019. Bay Staters who were gamblers went up by 14% in the same period. 70% of study participants identified themselves as regular gamblers, while 3.5% admitted to being problem gamblers, with another 12.5% identified as at-risk. A fifth of them devolved into problem gambling while most pulled back into recreational gambling. Heavy ad blitzes “precipitated relapse. We can’t prove that but it’s very tantalizing,” said investigator Robert Williams. He added that “there is no ‘silver bullet’ to prevent problem gambling. Rather, a wide array of educational and policy initiatives is needed to address the multifaceted biopsychosocial” causes.

Low-income men were the likeliest to develop disordered-gambling habits, with substance abuse and mental ill-health cited as co-presenting morbidities. “Each problem gambler has a unique array of risk factors,” Williams said. “You need to tackle problem gambling from a multidirectional way as well.” Paradoxically, 9% of self-identified problem gamblers denied anything was wrong. The UMass teams recommendations include a cap on casino advertising, more education on problem gambling and active encouragement of disordered gamblers to seek treatment. Concluded Massachusetts Gaming Commission Chairwoman Cathy Judd-Stein, “There has been no other longitudinal study of gambling behavior of this scale in the United States. It shapes our understanding of gambling behavior in Massachusetts and contributes to the few comparable studies worldwide.” Agreed. Let’s hope it’s the start of a trend. Your turn, Nevada.

Posted on March 31, 2021September 14, 2023 by David Mckee — Leave a comment

Caesars Saints?; Mattress Mack returns

Don’t like the misshapen circles which now represent Caesars Entertainment? Well, get used to them, especially if you’re a New Orleans Saints fan. The casino giant is dickering with the Mercedes-Benz Superdome for naming rights, although Saints and New Orleans Pelicans Senior Vice President of Communications Greg Bensel grumps that “there is not a signed deal with any company at this time. We continue to have conversations with numerous interested companies.” Yes, but how many of them are as heavily invested in the New Orleans area as Caesars? Its Kate Whiteley demurred that “we have nothing to share beyond our current, valuable relationship with the teams.” There’s also the question of throwing tens of millions (at least $60 million) at naming rights at a time when Caesars casinos are snowballing a reputation as outdated, unkempt properties … something that company itself has obliquely acknowledged. (Former CEO Gary Loveman ran the company into the ground and successor Mark Frissora was mainly tasked with rearranging debt, er, deck chairs on this particular Titanic.)

At present, Harrah’s New Orleans is the subject of a $400 million renovation and expansion, which will culminate in its renaming as Caesars New Orleans. One thing that we like about CEO Tom Reeg is that, unlike Loveman, he’s not shy about deploying the prestigious Caesars brand name, previously reserved for really important destinations like … Windsor, Ontario. The Superdome would be the fourth, casino-affiliated stadium in major league sports, joining Gila River Arena (hockey’s Arizona Coyotes), Mohegan Sun Arena (home of the WNBA‘s Connecticut Sun) and Hard Rock Stadium, venue of the Miami Dolphins. The makeshift home of the Las Vegas Aces—Mandalay Bay Event Center—doesn’t count. While it might not be the highest and best use of CZR bucks, we see no reason not to have a Caesars Superdome, do you?

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