Churchill Downs pwns Caesars; Kentucky covets casinos

Cold weather helped chill Indiana casino revenues last month, down 6%. The Hoosier State’s casinos and racinos grossed $154 million. Horseshoe Southern Indiana continues to bleed business to Churchill Downs‘ Derby City, hemorrhaging 10% to $16.5 million. Full House Resorts had a bad month at Rising Sun, sinking 9% to $3 million. Boyd Gaming and Eldorado Resorts were stagnant at Belterra and Tropicana Evansville respectively, grossing $7.5 million and $11 million. Hollywood Lawrenceburg lost a percentage point to bring home $12 million while Hoosier Park slipped 2.5% to $13 million and Indiana Downs gained 2% to finish at $18.5 million. French Lick Resort gained 9% to finish near $7 million. Northward, the effects of severe cold weather are hard to measure. Both Horseshoe Hammond ($28.5 million) and Ameristar East Chicago ($16 million) were battered, shedding 15% and 12.5% respectively. However, Majestic Star I lost only a percentage point, finishing with $6.5 million. Majestic Star II grossed $4 million, a 6% decline and Blue Chip dipped 5% to finish at $10 million.

Sports betting may be coming to Indiana. The state Senate Public Policy Committee has voted to approve in-person and mobile sports betting on virtually everything except high-school sports and e-sports. The Indiana Gaming Commission would have to approve prop bets and could yank any sporting event where there’s evidence of untoward activity. Reversing a Mike Pence stipulation, the bill would allow Caesars Entertainment‘s two racinos to immediately have table games instead waiting two more years. The Majestic Star license would be bisected, with one facility remaining in Gary and the other going to Terre Haute. Both Tropicana Evansville and French Lick Resort are receiving compensation for the Gary-to-Terre Haute move, and Ameristar and Horseshoe Hammond are making loud noises about the relocation of Majestic Star I closer to their casinos. The bill’s next stop is the Senate Appropriations Committee followed by the full state Senate and the House of Representatives. Still, it sounds judicious to us.

Kentucky is casting an envious eye to its neighbors to the north. How else to explain a swarm of gambling bills in the Lege’s hopper. H190 authorizes four brick-and-mortar casinos (for $50 million apiece), plus racinos with slots only ($25 million each). Four bills would permit sports betting. S23 would create a Kentucky Gaming Commission to oversee sports wagers administered by the lottery and horse tracks, taxed at 25%. H12 freezes out the tracks, making the lottery the sole purveyor of sports betting. H171 would do much the same, but restrict the betting to pro sports. Then there’s H175 which includes daily fantasy sports and online card games under its remit. Horse tracks and “professional sports venues” would have the skins, taxed at 10.25% and 14.25% respectively. We’ll see if 2019 is finally the year Kentucky gets something done.

* Tilman Fertitta‘s possible sale of the Golden Nugget chain is a fast-moving story. The casino owner’s record-making, $2.2 billion purchase of the Houston Rockets is catching up with him. Bond debt is the problem. Bonds that were worth $102 now trade for $98 and are the obligation of Golden Nugget Inc,. So Tilman could have a bit of a problem. Still, Wall Street has faith in him. “He has a very, very good reputation and track record in the bond market,” says one Street CEO. “We’ve done a lot of deals with him, and the lenders have made a lot of money.” Let’s hope that continues.

* Is there really a market for skill-based slots? This article argues that there is but buries the lead: major layoffs in Gamblit‘s skill-based-games division. “Because skill-based gaming is still in its early days, and without comprehensive analysis of metrics, it’s difficult for some [casinos] to give it valuable floor space,” argues Synergy Blue CEO Georg Washington. Still, a new report by Washington’s company says that 70% of 100 casinos surveyed have added, plan to add or are considering SBS machines.

* MGM Resorts International has closed its purchase of Yonkers Raceway. No surprise there. MGM Springfield President Michael Mathis issued a statement that read, in part, “The Empire City Casino acquisition in Yonkers is designed to tap into the underserved [New York] market, which will complement the MGM Springfield market.” If so, why does MGM need Bridgeport? Other than it’s CEO Jim Murren‘s birthplace. We pause, not long, in little hope of an answer.

* Gambling only accounted for 34% of Las Vegas Strip casino revenue. That may help explain why the Strip booked $18.3 million in gambling revenue but still posted $1.7 billion in losses. Most of the was driven by the fallout from the Caesars bankruptcy, with the company driving a $27 billion loss by Nevada‘s 289 casinos. Reno fared well, with its casinos grossing $1.7 billion for a $97.5 million profit.

* One company that saw costs outdrawing revenues was Wynn Resorts. While this is propelled by the cost of Encore Boston Harbor, events in Macao were also to blame. “As Macau’s gaming market changes, so should investor expectations for the company’s casinos,” warned The Motley Fool. In 4Q18, revenue at Wynn Palace shot up 13% (to $740.5 million), outpacing Macao’s overall 9%. Mass-market play was primarily credited with the growth. Higher room rates help drive that department, which grossed $103.5 million. Wynn Macau, however, saw 6% less gambling revenue, for a $479 million gross as VIPs fled en masse. No wonder management is shifting its focus to premium-mass players. “Wynn Palace is on its way to a $1 billion EBITDA run rate, and should be the company’s cash cow going forward,” concludes The Motley Fool. “That’s where investors’ focus should be now that it’s one of the most profitable casinos in the world.”