Gaming revenues in Massachusetts were up 10% from September 2019, reaching $89 million. The lion’s share (65%) went to Encore Boston Harbor, leaping 17.5% to $57.5 million—$7 million more than Deutsche Bank analyst Carlo Santarelli expected. (Encore also disclosed some of its secret formulae for success today.) It won $1.9 million a day, to put that in perspective, $31.5 million from slots and $26 million from tables. To the south, Plainridge Park was in line with expectations, grossing $12 million for a 4% gain. MGM Springfield, however, continues to struggle for an identity, down 8% from 2019 and grossing $19.5 million. Slot play was solid, up 6%, but the casino took a whupping at the tables, plunging 48%. Table play is traditionally this property’s weak link and you wonder how much longer MGM can afford it.
In Michigan the big news was online as sports betting handle shot up 90% from August. That translated into 49% more revenue for OSB operators—but what came in the door went out the window, as promotional giveaways catapulted 184%. “On a net basis, the OSB revenues [$24 million] were effectively zero revenues for the month,” wrote JP Morgan analyst Joseph Greff, substantiating the fears of those who find the current OSB business model unsustainable. BetMGM captured an additional 13% of market share, mostly at the expense of DraftKings, while only Barstool Sports held the line on promotional outlays. Handle just exceeded $354 million, divided between DraftKings (30%), FanDuel (23%), BetMGM (23%), Barstool (8%) and Caesars Sportsbook (7%), which is seriously underperforming given the supposed brand equity of the Caesars name.
The really big bucks were in Internet gambling, which generated $102 million. BetMGM was in its element with $40.5 million, followed at some considerable distance by FanDuel ($15.5 million), DraftKings (ditto), BetRivers ($7 million), Golden Nugget Online ($5 million), Barstool ($4 million) and FoxBet ($3 million). Had it not been for the wholesale giveaway of sports betting revenue, BetMGM could have claimed victory, translating its share of handle into 37% of actual revenue, while DraftKings underperformed with a mere 13% and FanDuel captured 30%. Thrifty Barstool’s take (6%) was commensurate with its share of handle. Now if only operators would stop giving away the store …
PlayUSA analysts buried the lead, focusing on near-record levels of handle to the exclusion of the promotional overkill. They did, however, reveal that WynnBet got clobbered, the only sports book in the state to lose money. As for i-gaming, “Live dealer games have pushed online casino gaming to a new level,” analyst Eric Ramsey said. “The state’s industry will almost certainly reach $1 billion in revenue in its first year of existence, which is a remarkable milestone for such a young market.”
Detroit‘s brick-and-mortar casinos, by the way, won $107 million from gamblers last month. In case you were wondering. That’s a 2% dip from 2019. MGM Grand Detroit was first with $48.5 million and 45% market share. Greektown Casino brought up the rear with $22 million and MotorCity split the difference with $36.5 million and 34% market share. We’ll have to take quite a different view of MotorCity now that it is a buyer (Ocean Casino Resort) rather than waiting around to be bought.
With the market having soured on Macao-based stocks, Greff suggests that investors look closer to home for an opportunity, namely Penn National Gaming. He argues that its share price has underperformed ($76) and is valuation is “undemanding.” Barstool he characterizes as “meh” but finds brick-and-mortar play “relatively solid.” Of Barstool, he writes, “We’d also add that there is little to no equity value in the stock for the Barstool Sports media platform, which is run rating $200m in annual revenues with north of 100m monthly active users.” He gives it one to two years to gain traction, whereupon new partners may be needed to put it over the top. Greff’s pro-Penn case is based less on actual operations than on heavy shorting of the stock, along with its tendency to lag the gaming group overall.
However, regional casino revenues are seen as “broadly sustainable” and steady once the effects of Hurricane Ida and the Lake Tahoe wildfires are discounted. Gambling win is down but only incrementally. Online, it’s early days for Penn, live in only nine states and hoping to add three more by year’s end. Where it’s live it has 6% share of OSB and 4% of i-gaming. Overall, “Management was cautiously optimistic regarding the sustainability of margins as the core customer hasn’t returned back to pre-COVID-19 levels, though labor/staffing remains a challenge. On the digital front, with the closing of theScore acquisition, PENN will bring the tech stack in-house, so with 100% ownership of both the tech and the brand, the company controls its own destiny.”
Looking ahead, Greff will want to know how the younger player demographic is holding up and how loyal it is, as well as how they and Baby Boomers are comparing to pre-Covid times in terms of visitation and spend per visit. Also, is Penn seriously interested in a Las Vegas Strip asset? “Is this interest still alive and how would it tie in to its other businesses?” Inquiring minds want to know, on The Street and -off.
Fontainebleau continues to be The Big Project That Couldn’t Quite. It’s lost its raison d’être for revival, an alliance with the Marriott mega-chain of hotels. Marriott says it “recently reached an amicable settlement with the hotel’s owner that has resulted in Marriott exiting the project.” Full stop. Thus ends a three-year relationship with F-blue, whose October 2023 alleged grand opening looks increasingly delusional. As the Las Vegas Review-Journal‘s Eli Seagall writes, Marriott’s kiss-off “is the latest twist for a 60-plus-story, multibillion-dollar project that has come under new ownership three times in the past decade or so and still never opened—leaving a towering reminder of Las Vegas’ mid-2000s real estate frenzy, the devastating crash that followed and, more recently, the pandemic’s severe spillover effects.”
Although Jeffrey Soffer still holds title to the property, there’s been little sign of actual financing and the Marriott defection takes with it most of what credibility F-blew had. However, he seems to have ousted Marriott in a fit of pique, saying “we feel it is important to make clear that, upon opening, the hotel will be managed and operated by Fontainebleau Development.” Not a name (or a loyalty database) that has a lot of equity in Sin City. He blamed “previous owner” Steven Witkoff for the Marriott alliance, as though it were a bad thing.
“Having come full circle and taken ownership of the site in Las Vegas, we intend to fulfill our original vision and deliver the same extraordinary hospitality experience that our guests have come to expect from Fontainebleau Development,” concluded Soffer’s statement, leaving unspoken the fact that his “guests” have been expecting F-blue for almost 15 years now. If F-blue is to be finished rather than imploded, now’s the time to strike the proverbial hot iron. Unfortunately, said iron looks more like a back burner, seeing how that Soffer and Koch Industries will have to find themselves a new, brand-name hotelier.
Jottings: Park Theater at Park MGM is so yesterday. It’s been rechristened Dolby Live in conjunction with Lady Gaga‘s return to the Strip, an occasion we can all celebrate … Speaking of rebrands, Meadows Casino near Pittsburgh is out, Hollywood Casino at The Meadows is in. Also out is the food court, replaced by—a new food court. Head over there tonight if you want to experience the rampant cuteness of puppy races … Anti-vaccination crybabies, stay home. Singapore doesn’t want you. As of now, proof of full Covid-19 vaccination is required to enter the city-state’s two casino megaresorts. Good call … Quality help seems to be getting hard to find and harder to keep: 892,000 hospitality and food-service workers called it quits in August. Stress and having to cope with short-staffing are blamed … Finally, congratulations to Mohegan Sun for 25 years of operation (we’ve covered them all) and ever-increasing business success. Keep up the good work.
Quote of the Day: “The bettors say, ‘I don’t need to hear Jim Nantz and Tony Romo talk about sports betting. It’s inauthentic. It’s not their area.’”—NFL Chief Strategy Officer Christopher Halpin, on the newfound ubiquity of sports-betting-oriented programming.
Why would the wildfires in Lake Tahoe affect Penn? Penn has no casinos in Lake Tahoe.