There’s an Eeyore sweatshirt that says, “Could be worse. Not sure how, but it could be.” That pretty much sums up the situation in Macao, which finished 2021 44% ahead of 2020 when it comes to gambling revenue … but could one envision a worse scenario than 2020? Not sure how, but we could. The world’s gambling capital managed almost $11 billion in revenue last year, Las Vegas-like numbers but we have come to expect so much more. Of course, it’s difficult to open the throttle on Macao given the Chinese government’s newfound disapproval of gaming, and its habit of dialing access to the casino enclave up and down like the burners on a stove.
Then there’s the matter of concession renewals, which seem like a done deal but still have their skeptics, like Jefferies analyst David Katz, who cited “uncertainty” surrounding the concessions, leading him to take “a conservative stance” on Macao-centric stocks. Indeed, the market has punished stocks that are heavily reliant on Macanese casinos. Las Vegas Sands has fallen 35%, Wynn Resorts 20%. Galaxy Entertainment took a 33% bath and Melco Resorts & Entertainment got walloped 43%. “China Lite” MGM Resorts International, however, made out like a bandit, seeing its share price vault 51%.
Even if the concession renewals come through, as they almost certainly will, there is the collapse of the junket industry with which to reckon. Junketeers will probably survive, like cockroaches, in some form but will have to shift their focus from the waning VIP sector to higher-end mass market players (which should redound to the benefit of Sands, among others). Whatever happens, expect a slow recovery: Morgan Stanley is predicting only $15 billion gaming revenue for this year, so let that be a lesson to those who put almost all their eggs in the Macanese basket or, as Steve Wynn once said, “We’re essentially a Chinese company.” Whoops.
Sticking with the Pacific Rim a bit, casino gambling in Saipan is—or was—the exclusive province of Imperial Pacific International. But IPI got into more than a bit of trouble. $15.5 million in licensing fees? Unpaid. A $3 million regulatory fee? MIA. $40 million in community-benefit contributions? AWOL. Payments due to vendors? Fughedaboudit. With IPI suspended from operation and unlikely to redeem itself, legislation has been introduced to open Saipan to as many as five new operators. The only problem? It might be unconstitutional. So says Commonwealth Casino Commission Executive Director Andrew Yeom, who (ironically) was a moving force behind IPI’s suspension. “We cannot have a local bill trying to supersede a Commonwealth law,” he told the media. Still, given the allure of casino lucre, we expect the bill to pass. Legislatures propose, courts dispose.
Closer to home, it may not be a given that Cirque du Soleil‘s Love is carried over at The Mirage after Hard Rock International takes charge. While CdS has been largely unaffected by resurgent Covid-19, four performances of Love just got scrubbed, midweek dates for which one would expect ticket sales to be slow(er). “Those conditions are at least peripherally related to COVID concerns among ticket-buyers. Even so, no other Cirque show has cut its schedule from previously planned dark dates entering 2022,” reports Las Vegas Review-Journal columnist John Katsilometes. “It’s not a secret on the Las Vegas entertainment scene that ‘Love’ at the Mirage has been struggling at the box office throughout the city’s pandemic reopening,” writes Kats. Cirque has been quick to give ailing shows the axe lately, so Love might not be around by the time Hard Rock takes the keys from MGM.
So eager was Arizona to have sports betting that it may have given away the store. A tax loophole allows books to deduct every dollar given away in promotions. Given the level of free play being offered these days, that’s a preponderance of revenue slipping through Gov. Doug Ducey‘s fingers. Specifically, it’s receipts of only $1 million on $70 million in revenue from September and October, months that broke U.S. records for the biggest first and second months of sports betting ever. The State of Arizona finds itself on the outside looking in. Theoretically, in collects 8% in taxes on the negligible amount of in-person wagers and 10% on mobile ones. But that’s hard to pocket when 70% or more of revenue is going right back out in the form of promos.
Sen. Michelle Ugenti-Rita (R) was not amused. “This is exactly why I voted against expanding gambling,” she tweeted. “The public got screwed. They lost $32M & the state received nothing. The real winners are the gluttonous sports teams that leach [sic] off their fans. The rich getting richer will be legacy of” Ducey. True, there were $14 million in privilege fees, but that’s hardly recurring revenue. It looks like Arizona politicians stepped over dollars in their zeal to collect dimes.
Sports betting handle hit $475.5 million in Colorado in November, dipping sequentially thanks to an unfavorable calendar (one less weekend). Revenue was $37 million, only $19 million after promotional deductions. No breakdown by operator is available but football led the action with $170 million in action, followed by basketball with $154 million. Soccer scared up $11 million but table tennis, a Colorado staple, dropped off the radar.
Jottings: Winter weather threatens to put a damper on January casino win in Atlantic City. Not only have storms dumped as much as six inches of snow on the Boardwalk, flooding in the back-bay area may discourage drive-in traffic still further … Former casino executive Richard Schuetz, who worked his way up from the floor to the C-suite, has some harsh words today for gaming execs who tolerate the pestilence that is tobacco smoke in the casino. Schuetz’s jeremiad pulls no punches and is absolute must-reading … Yet another Las Vegas Raider has succumbed to the Sin City lifestyle. Cornerback Nate Hobbs has been busted on a suspected DUI, making him the latest poster child for why the Raiders need to clean house and stop being the team you love to hate … The Nevada gaming recovery is leaving Laughlin and North Las Vegas behind. The two markets are trundling along at sub-2019 levels … Gaming & Leisure Properties‘ purchase of Maryland Live has closed in what feels like record time. Cordish Gaming continues as operator … The consortium that bought the Tahoe Biltmore Lodge has added the beachfront Beesley Cottages to its portfolio for $18 million. It plans to use them as an amenity enhancing the appeal of the new casino, 120-room hotel and 80 condos at Tahoe Biltmore … Our congratulations to Snoqualmie Casino, the first in Washington State to roll out mobile sports betting, albeit strictly on-reservation. International Game Technology is the lucky provider … Congress put aside its differences long enough to overwhelmingly codify the Catawba Indian Nation’s Two Kings Casino into federal statute. Said House Majority Whip Jim Clyburn (D), “The Catawba Indian Nation Lands Act is a very significant step towards rectifying historic injustices that have been perpetrated against the Catawba Indian Nation. This legislation will be crucial in helping the Catawba Indian Nation secure economic self-sufficiency.”
Quote of the Day: “The Tampa Bay Times recently reported that in Broward, Hillsborough and Duval counties, physical encounters erupted between the opposing parties and were reported to local law enforcement. What’s gone wrong with our society? Can you imagine pepper-spraying a stranger whose viewpoint you disagree with? A woman gathering signatures for a petition?”—Gainesville Sun guest columnist Larry Lowenthal on the four-way fight over sports betting in Florida.
