The mathematical analysis in this blog was done by Rick Percy. I do not have the tools to do that analysis myself. Thank you, Rick!
My personal goal is to learn the best strategy for every game I play. Not everybody shares that goal. Some people want to minimize their work, or don’t have the time, or have trouble keeping the differences between strategies straight.
Continue reading Using One Strategy for Two Games
More than 23 million Americans are expected to bet legally or otherwise on the Super Bowl, according to the American Gaming Association, which predicts $4.3 billion in handle. 7.5 million punters will be doing their wagering online, 63% more than last year. The action leans heavily (56%) toward the Kansas City Chiefs—sorry, GOAT—with 12 million citizens betting against friends, as opposed to 1.5 million using retail sports bookies, down 61% from last year, before Covid-19 struck. Action with Lefty in the back alley will be patronized by nearly two million Americans, down 21%, a sign of progress. Speaking of progress, the AGA says, “34 percent of Americans remember seeing responsible gaming messaging in the past year, up five points from 2020. Super Bowl bettors were even more likely to see responsibility content, with 53 percent seeing responsible gaming messaging in the past year.” As AGA prexy Bill Miller puts it, “Responsible gaming is core to legal sports betting’s long-term success, and this is borne out by continued demand for consumer protections only available in the legal market.”
More Illinois sports betting data is out, with $41 million in revenue realized on $449 million in November handle. Surprisingly, the #1 revenue spot was not held by DraftKings Casino Queen but “DFS Operator #2,” otherwise known as FanDuel, with $14.5 million. DraftKings was second with $12.5 million, followed by BetRivers‘ $11.5 million, while PointsBet made the board with $2 million. For handle, DraftKings led market share with 37%, then BetRivers’ 29.5%, followed by FanDuel’s 25% and PointsBet’s 6%, way down from its October 14%.
Continue reading Case Bets
No, we don’t mean the Reddit/GameStop scandal, which has everyone from Sen. Ted Cruz (R) to Rep. Alexandria Ocasio-Cortez (D) up in arms. Instead, we’re looking at a downgrade of revenue estimates for a slew of projections by JP Morgan analyst Joseph Greff, who adds that “[We] prefer to buy on pullbacks, generally.” So it’s not exactly bad news. Noting a rise in Covid-19 infections and corresponding “impact of casino restrictions on regional gaming visitation and spend,” Greff trimmed his estimates and rethought his price target for a who’s-who of regional gaming: Churchill Downs, Boyd Gaming, Caesars Entertainment, Golden Entertainment, Penn National Gaming, Station Casinos and Scientific Gaming. While lowering his forecast for 1Q21, Greff said 2Q21 would be “modestly better.” This doesn’t jib with the optimistic picture painted yesterday by American Gaming Association President Bill Miller, whose advocacy body does its own revenue tracking.
Greff elaborated that “vaccination hopes (which we share theoretically) allow for a more pronounced and sustainable consumer spend recovery starting in the 3Q21; we also know what marketing and staffing changes have been made—some of which are permanent—and have conviction that forward-year margins should be decently higher than pre-COVID-19 levels.” He added that gaming had been bolstered through a soft brick-and-mortar period by gains in sports betting and Internet play. He stuck with his price target for Station ($31/share) and added two bucks to his Boyd goal (to $54). The reasons have been well-rehearsed in this space, so we’ll skip them for now. He really likes Caesars, upping his target $6 to $89/share, noting that its William Hill purchase and i-gaming strategy are firming up nicely. “Additionally, CZR is attractively positioned for the return of the 55+ customer base to its casinos (we think this gains momentum along with vaccine distribution). During this period of COVID-19 related lockdowns/limited discretionary spend, many 55+ Caesars Rewards members have benefitted from increased savings and record-high home values and stock prices.”
First, the bad news. Las Vegas emerged from a December that was just plain awful, as discretionary income continues to dry up. Las Vegas Strip win plummeted 51% to $292 million. Statewide, gambling revenue toppled 35.5% for $684 million, an even poorer showing than we expected. The closest thing to a bright spot was the play of Las Vegas locals, who left ‘only’ 17% less year/year in the slots and on the tables. Heck, it would have been worse had November not ended on a weekend, thereby carrying some late-month income into December when the slots were tallied. This occurred at the same time that various amen corners are saying the future’s so bright we’re going to need sunglasses. Perhaps so, but the December numbers give us an idea of how far we have to go to get back to ‘normal.’
Looser hold didn’t help Strip casinos, whose slot winnings fell 55% on 43% less coin-in. Table-game win ($141 million) fell 46% on 44% less wagering. It’s worse than it looks because the Strip had a relatively good month at baccarat, winning 16% less despite 50% lower play. Not even Circa could save Downtown, off 28% to $45.5 million, whilst North Las Vegas slipped 34% to $19 million. The Boulder Strip stumbled 24.5% to $62 million, Laughlin dipped 19.5% to $26.5 million and miscellaneous Clark County was down 6% to $100.5 million. Utahns came to the rescue of Mesquite, flat at $11 million. Upstate, things looked slightly better. Reno slid 16% to $44 million and volatile Lake Tahoe was relatively mild, down 14% to $15.5 million. Wendover was off 10% to $16 million. Maybe that last-minute Trump administration economic-diversification won’t be so bad for Wendover Will after all. And with that we draw the curtain on a year that Nevadans would heartily prefer to forget.
Continue reading Las Vegas recovery: A definite maybe; Woe at Sands“If you have this amenity and there’s sports betting at the card rooms, you might add 250 jobs and the secondary effect of those jobs. We have over 2,200 employees in the state. They’re great-paying jobs with an average salary above $75,000. They’re able to support their families, and they’re needed in this state.”—Maverick Gaming owner Eric Persson on ending tribal exclusivity to offer sports betting in Washington State.
We were sure this was a story from The Onion or the Babylon Bee but, no, it’s really a thing. Rodney Baker has resigned as CEO of Great Canadian Gaming Corp. after bringing disgrace upon it with a vaccination caper that made international headlines. He and his Russian trophy wife Ekaterina (young enough to be his daughter) flew to Yukon then—allegedly—chartered a private plan to the remote town of Beaver Creek. Once there, Baker, who makes $10.5 million a year, and his princess passed themselves off as employees of a local motel (allegedly) in order to qualify for high-priority Covid-19 vaccinations. Once they got what they wanted, they decided to skip town ASAP. Being afflicted with stupidity as well as an overweening sense of entitlement, they made the mistake of asking for a ride to the airport. Red flags went up and pretty soon the Mounties were on the case … and they always get their man.
It would be great to see Canadian authorities throw the book at these two freeloaders but it’s a light book: $1,150 in fines (already levied) and an optional six months in the clink, which seems highly unlikely. Needless to say, public outrage is running high. “We are deeply concerned by the actions of individuals who put our Elders and vulnerable people at risk to jump the line for selfish purposes,” remarked White River First Nation Chief Angela Demit. “Effectively what they did was they put our community and our isolation team at risk,” added Yukon Community Services Minister John Streicker. “I’m pretty angry at the whole thing.” Great Canadian did not comment on Baker’s precipitate departure but perhaps we should give the last word to Mrs. Baker, whose public posture earlier in the pandemic was, “I stay home to be part of the solution. Everyone, stay home. It’s the right thing to do.” Right then, wrong now.
Continue reading Profile in cowardice; Sheldon Adelson’s ghostThere are some excellent video poker opportunities to be found from time to time in Las Vegas. When these are found, good players rush in to take advantage of them. After a few days or weeks of getting pounded, casino slot directors decide that they are tired of this, so they remove the promotions, the machines, or sometimes, the offending players.
For a promotion to work, good and bad players need to play. If the casinos do not make money, the promotion will not last. When good players hog all of the machines, the casino cannot make money, and so the casino makes adjustments.
Continue reading Killing the Golden Goose
Taking a business-as-usual approach, Las Vegas Sands reported 4Q20 earnings and JP Morgan analyst Joseph Greff wasn’t blown away, writing that “we, like most investors, see the quarter and any outlook commentary offering little in the way of positive developments for Macau … given recent COVID-19 infection spikes in China and ensuing tightened control over tourist visa issuance for mainlanders to visit Macau.” Given the rampant nature of Coronavirus, Greff foresees but a “modest” boost from Chinese New Year. Mass-market tables and slots were down 64% year/year and VIP win fell 76%. Still, that’s a big improvement from 3Q20, when business was negligible. Greff pegs 3Q21 as the time Macao will come back. He recommended buying Macao-centric stocks, citing Melco Resorts & Entertainment, as well as “fatigue” about the pace of Macao’s comeback and that they are “under-owned in general.”
Continue reading Life after Adelson; Super Bowl odds revealed
Does reporting bad news get tedious? You bet! But it comes with the turf. Louisiana casino winnings declined 23% last month, in keeping with the national average. Penn National Gaming casinos got off easiest, slipping 11%, while Boyd Gaming ones tumbled 25% and Caesars Entertainment plunged 38%. The latter wasn’t helped by the continued closure of Isle Grand Palais, a hurricane victim. The statewide gross was $162 million. Capacity limits (50%) and reductions in gaming positions (-75%) remain severe, though a larger economic malaise appears to be in play.
Baton Rouge got off by far the easiest, down 7%, led by L’Auberge Baton Rouge (pictured) with $12.5 million, a 1% gain. Casino Rouge was 11.5% off the pace at $4 million, while ancient Belle of Baton Rouge deservedly plummeted 44% to $1 million. In Lake Charles, market share was best defended by Golden Nugget, grossing $24 million and down 8%. L’Auberge Lake Charles slid 19.5% to $23 million and Delta Downs shed 18% to $12 million. New Orleans suffered the most of any market, with Harrah’s New Orleans emaciated 37.5% to $16.5 million. Runner-up was Boomtown New Orleans, down 14.5% to $8 million, while Treasure Chest notched $6 million, a 28% spill, and Fair Grounds racino eked out $2.5 million, a 33% dive. Amelia Belle scraped up $2 million, down 32.5%.
Continue reading Louisiana doldrums; Philadelphia Live sparkles