This week’s Global Gaming Expo gives Wall Street analysts plenty of time to sniff around the big gaming operators and manufacturers, trying to suss out trends. Credit Suisse analyst Cameron McKnight, the new kid on the block, says that 3Q18 
weakness was “a blip … driven by a ‘perfect storm’ of: (1) Very tough comps from two ‘supercharged’ Summers in 2016 and 17, (2) Much higher mix of Leisure and price sensitive [online travel agency] customers, (3) Mid-week July 4 holiday, and (4) Continued impact of October 1.” He also notes “continued rate pressure at the lower end of the market, especially from lower rates at Park MGM and continued weakness in the vicinity of Mandalay Bay.”
On the other hand, “Regional operators are bullish, given record low unemployment, tightest labor market in 20 years, consumer confidence at 20-year highs, and continued strength in house prices. Operators’ views on the impact of minimum wage increases were mixed, though generally the view is positive, given the strong correlation between gaming and unemployment.” On the downside, at least for consumers, is an anticipated rollback in promotional spending (i.e., comps and offers): “it’s not just a product of a strong economy, and – importantly – the reduction of promotional spending has multiple drivers, notably technology investment.”
JP Morgan analyst Joseph Greff came away with similar conclusions about the regional marketplace after meeting with several companies that included Eldorado Resorts and Boyd 
Gaming. The Tropicana Entertainment purchase “closed a few months earlier than expected and ERI feels good about opportunities to improve [cash flow] there, noting that at best, Tropicana was run similarly to Isle [of Capri],” leaving plenty of room for synergies. Eldorado is also confident it can achieve “meaningful” improvement at Grand Victoria (pictured), in Elgin, newly acquired from MGM.
Boyd CFO Josh Hirsberg told Greff that the Las Vegas locals market looked to be growing at a 3%-4% pace and “Competition from Palms/impact on Gold Coast has been limited thus far, though BYD notes it has seen increased promotional activity there … At Blue Chip, BYD believes the effectiveness of Four Winds’ (new competitor in market) promotional activity has diminished over time, and that elsewhere, there is no major new competition on its radar.”
Station Casinos rolled out the red carpet for Greff, giving him a tour of the new, improved Palms. Locally, “trends look to be improving, with August better than July and September better than August.” There could be some budget creep at the Palms, due 
to “cosmetic” changes in the upgrade, although Greff thinks lower-than-expected maintenance costs at Palace Station provide an offset. He observed that “construction at the property’s west side entrance has made it less appealing for locals, and [Station] sees disruption at this side of the property likely continuing into mid-2019. Subsequently, access to/from the parking garage will be significantly improved and there will be more parking spaces.” However, Station is in a quiet period where promotion is concerned, waiting until it has a full suite of food, beverage and entertainment offerings, including a massively upgraded pool area. (Think spring 2019.)
Greff also got a property tour of the Stratosphere, courtesy of Golden Entertainment. Execs from the latter told him they expect to considerably improve Strat cash flow through a $140 million makeover of the old Bob Stupak brainwave. Golden “aims 
to reduce the property from being used as a ‘dormitory’ for the LV Strip,” where an average of 25% of OTA-reserved rooms are booked on very short notice. The newer hotel rooms are driving a $30 improvement in room rates but, not stopping there, Golden is looking to increase its convention bookings. As for gamblers, they’re less than 5% of hotel guests and fewer than 50% of rated players. Golden also has 61 taverns under its umbrella and looks to continue growing that revenue base. Gaming & Leisure Properties didn’t have much of interest to say, other than its initial declaration that it would branch out beyond gaming is now looking like so much Peter Carlino hot air.
The majors sang pretty much from the Boyd/Eldorado hymnal, reporting that “the outlook remains favorable with 2019 group bookings pacing up mid- to high-single digits.” MGM expects 
higher room rates for the rest of the year “driven by higher occupancy and a strong event and convention calendar.” Also, it has 80% of its rooms booked for 2019, ahead of last year’s pace. “Looking further out, the Raiders stadium and MSG Sphere bode well for increased LV Strip visitation. Having now anniversaried [sic!] the tragic October 2017 shooting, Mandalay Bay is running at ~80-85% of normalized levels and is pacing to be up y/y in 2019.” The company also hopes to achieve $170/night room revenues at Park MGM. As for Macao, new MGM Cotai continues to creep into the market, having opened its first two VIP rooms.
In a macro way, Caesars Entertainment didn’t have anything to say that MGM hadn’t already uttered, the Roman Empire having 70% of its Las Vegas Strip room nights for 2019 booked. It used Total Rewards more aggressively this fall, trying to recoup in 4Q18 what it didn’t make in 3Q18. Regional business was described as “reasonably good … As for sportsbetting, early signs in [Mississippi] and [Atlantic City] are encouraging as it relates to visitation.”
As for Penn National Gaming, it said “monthly results can be choppy, 3Q trends will likely be similar to prior quarters with one 
good, one mediocre, and one soft month. PENN is still seeing modest increases in unrated play (a bellwether).” Penn’s way to curb promotional costs is to focus on “profitable player reinvestment.” Tropicana Phase II remains on hold, although Penn has been nibbling around the fringes, engaging in some room renovations. As for sports betting, that’s been “within expectations.” At least no one reported any disappointment along that front.
* Clark County Commissioner Steve Sisolak (D) wants to be governor of Nevada so bad he can smell it. Sisolak’s going to be 
hanging out with the stoners at Enclave, where he’ll be holding a “cannabis town hall.” The purpose of the occasion (other than to get votes) is to hear about Sisolak’s “commitment to growing our recreational and medical marijuana sectors, how we can protect patient & consumer rights, and why your voice matter.” If Sisolak proves aforesaid “commitment” by lighting up a spliff, now that would *really* be news.
