Las Vegas: Are happy days here again?; Sands dibs NYC

As we’ve often said, when the American economy gets the flu (literally, in this case), Las Vegas catches pneumonia. During the depths of the Covid-19 pandemic, unemployment in Vegas levitated to 34%. Today it is a still-unhealthy 10.5%. Nonetheless, the Wall Street Journal paid a visit to Sin City and found a spirit of optimism, whether manifested in full classes at dealer schools or the $6.25 billion paid for Venelazzo. As one dealer-school manager put it, “You have to invest in the idea that Vegas always comes back bigger and better.” As the WSJ noted, Las Vegas may be attempting to diversify economically but it lives or dies with tourism.

“An all-time high of 42.9 million people visited Las Vegas in 2016, and convention attendance reached a record-setting 6.6 million meeting attendees in 2019,” reports the WSJ and while Vegas is recovering perhaps faster than anticipated, the brain trusts with whom reporters spoke don’t expect pre-pandemic numbers to return until sometime in spring 2022 or later. It’s a long climb back from 2020’s perigee of 55% fewer visitors (numbers not seen since 1991) and 43% less Strip gambling revenue, after all. A state budget overly dependent on gaming revenues and entertainment taxes is looking at a recovery not before 2023 at the earliest. Room rates have yet to recover their January 2020 average of $153/night. Hopefully, for the average Las Vegan, the road back will not be as long as after the Great Recession, when inflation-adjusted personal income didn’t return to normal until 2014.

Still, while the recovery may not be immediate, that is no reason for gloom, according to economist Jeremy Aguero. “We would be just as wrong to give up on our core competency today as we would have been” in the past, he told the Journal. “The underlying economics, in terms of what brings people here, haven’t changed.” Or, as Apollo Management‘s Alex van Hoek put it, explaining the big-ticket Venelazzo buy, Our view is, both for the consumers and for corporate customers, the city’s relevance has really never been higher.” Let’s hope so.

Another day, another dismal revenue report, this time from Louisiana. Although 25% of gaming positions remain off-limits and casinos are restricted to 50% of capacity, that’s pretty much par for the course nationwide right now. Poor weather may have also factored into the 29% revenue decline. Keep in mind that the state has two fewer casinos than it did a year ago, Diamond Jacks and Isle Grand Palais having closed. (At least the latter will eventually be replaced.) Statewide gross was $151 million, with the Baton Rouge market faring best, down only 14%. Casino Rouge was off 8.5% to $4 million and L’Auberge Baton Rouge slipped 10% to $12 million. Belle of Baton Rouge lost 47% of business to muster $1 million. Lake Charles casinos were down 27% but led the state in revenue. L’Auberge du Lac was down 5% but dominated with $22 million while Golden Nugget tumbled 27% to $20 million. Delta Downs fell 24% to $12 million.

Better to be in Lake Charles than New Orleans. There, Harrah’s New Orleans plunged 41% to $16 million, while Treasure Chest fell 35% to $6 million. Boomtown New Orleans conceded only 17% for $9 million while Fair Grounds racino fell 34.5% to $3 million. Amelia Belle sank 38% to $2.5 million. Outlying Evangeline Downs cantered 14.5% more slowly, to $5.5 million. Up in Shreveport/Bossier City, market share was defended best by Margaritaville, off 6.5% to $13 million. Main rival Horseshoe Bossier City slid 32% to $11 million. As for the rest, Eldorado Shreveport fell 41% to $5 million, Boomtown Bossier slipped 28% to $3 million, Sam’s Town plummet 50% to $3 million and Harrah’s Louisiana Downs slid 31.5% to $3 million. It will be interesting to see how the pent-up demand operators are reporting this month manifests itself in the March numbers.

While Spectacle Entertainment‘s Terre Haute casino project remains ensnarled in scandal, Hard Rock International is proceeding apace with its new Gary casino. (This should surprise you?) Built for a thrifty $300 million, the new venue will contain a sports book of course, five restaurants and an entertainment hall. Said property President Matt Schuffert, “We should be announcing an opening date pretty soon.” Hard Rock is recruiting most of its workforce from the waning Majestic Star riverboats but is also hiring newcomers. The casino will have an inventory of 80 tables and 1,637 slots, and Schuffert promises it will outdo the casinos to found in Chicagoland. “When you see the facility and the quality of the finishes and the quality of work that is being done, arguably there’s not much competition from that perspective in this market.” The decor will be particularly focused on the Jackson musical clan, who got their start in Gary. Hard Rock is in the catbird seat, being alongside the I-80/94, artery for 200,000 vehicles per day. Success seems inevitable.

“We are eager to bring our expertise and resources to New York—a move that could bring needed revenue, thousands of jobs and help rebuild the state from the devastating effects of Covid. And we don’t need any subsidies to do it,” said Las Vegas Sands CEO Rob Goldstein, as the Empire State’s Lege ponders moving up the downstate casino expansion by two years. “While we are prudently keeping our options open, we have been approached by a wide range of real estate interests from basically every borough. They all understand the huge potential economic benefits.” Those boroughs include Nassau County, a new field of opportunity. Sands is expected to spend between $2 billion and $4 billion, as is Wynn Resorts. Wannabe rival Bally’s Corp. has never shown any evidence of having such deep pockets. Gov. Andrew Cuomo (D), eager for any form of distraction these days, is supportive of the accelerated timeline.

“I think Manhattan is a no-fly zone. I think Westchester and Nassau will be politically challenging,” said a New York Post source. Instead, the focus is on the area near the Belmont racetrack, on Willets Point (adjacent to Citi Field) and the St. George’s part of Staten Island, close to the ferry terminal, strategic locations all. “Political heft” is said to be the deciding factor but it won’t hurt Sands that it has 24 times the market capitalization of puny ($2 billion) Bally’s.

Jottings: Japan can barely legalize casinos. So it should come as no surprise as the addiction-phobic government declares Internet gambling off-limits … Sports betting came to North Carolina this week. Harrah’s Cherokee Casino Resort in Cherokee and Harrah’s Cherokee Valley River Casino & Hotel in Murphy opened sports books. William Hill is the operator and there are no limits on what games can be bet upon … Luxor is doubling down on its Egyptian theme, with renovated rooms that “now include a modern bathroom” (!). The company calls the re-do “a fresh take on the authentic Egyptian theme found throughout the property.” … Henderson‘s erstwhile Eldorado has finished rebranding as The Pass and will reopen for business April 1, presuming owner Joe DeSimone gets a license—and there’s no reason he shouldn’t. The Pass’ debut returns 350 slots to the market … Embattled Crown Resorts, which could use some good PR, announced that its casinos will be smoke-free by the end of next year. The ban is immediately effective in Perth and Melbourne, while other resorts will be build outdoor smoking venues, tailored particularly toward VIPs … Competition between Sacramento-area tribal casinos continues to heat up. Thunder Valley Casino Resort has broken ground on a $1oo million concert hall. “The intent here is to always be many steps ahead of any competitor,” explained tribal spokesman Doug Elmerts. “No other casino in this region has anything like this.” Thunder Valley has been in talks with Stevie Wonder, Jimmy Buffet, Chicago and others … U.S. hotel occupancy keeps trending in the right direction. For Feb. 28-March 26 it was 49% with an ADR of $98.30. That’s still 20%+ off last year’s occupancies and prices. Miami led the pack (67%) while Boston brought up the rear with 32%.