Casinos in the Bay State clocked $91 million in revenue last month, a 5% improvement on last year. Encore Boston Harbor led the tiny pack with $58 million, growing 9.5%. Next up was MGM Springfield, performing surprisingly well. It was flat at $21 million, as management appears to have stanched the bleeding. Third was Plainridge Park with $12 million, the only casino to lose market share, down 6%. That place was always living on borrowed time until Encore opened (two years ago this month).
Only Station Casinos would have the huevos to claim to have been “vindicated” for taking bets on sports events whose outcome was already known. For this incredible malfunction (which involved 167 wagers), Station was fined $80,000 by the Nevada Gaming Commission, basically for neglecting to maintain its servers. You’d think Station would have gotten its ducks in a row following a 2018 past-posting scandal involving 350 invalid bets. But no, Station continues to behave as though rules are something by which just chumps have to conduct themselves.
According to Nevada Senior Deputy Attorney General John Michela, Station even admitted to having “failed to maintain their virtual servers.” In other words, they don’t give a damn, blowing through a 2019 show-cause order to do better in the future. To its credit, Station self-reported the violation but had the nerve to whine about the $80K fine, although that’s walking-around money to CEO Frank Fertitta III. At least Station has decided to junk its faulty platform and install a new one from GAN Ltd. It’ll take a year and a half to come online, so Station execs will need to keep their fingers crossed for a long time.
Casino executives have been reluctant to use the I-word (inflation) on their earnings calls. But when the normally upbeat Derek Stevens starts talking seriously about it, we should take notice. In testimony before the Nevada Gaming Commission, Stevens said his customers were reining in their short-term spending habits. “We’ve seen the impact of inflation on slots, tables, and beverages for the last 10 weeks. The restaurant business has held up very well and hotels have been very strong and robust,” Stevens said, explaining, “Some of that has to do with people booking their rooms and their flights out a distance. Restaurants and hotels have been strong, not just with us, but from what we’ve seen in all of Las Vegas.”
He elaborated, “From April to May, the average [ATM] withdrawal amount was down the most I’ve ever seen in my career—11 percent. That’s a telling sign. We noticed a significant reduction in uncarded play, and we’ve seen a reduction in the general spend on some of the last-minute, spur-of-the-moment items, like extra drinks or the pull on a machine.” Stevens isn’t giving up, hoping for an autumn turnaround, but he’s definitely concerned. As well he should be. Inflation is running at 8.6%, the worst since 1982.
Meanwhile, speaking of the cost of living, labor trouble continues to boil over in Atlantic City. Local 54 of Unite-Here (which is seeking a living-wage increase) is warning casinos of costly consequences to their hard-line stance. Caesars Entertainment‘s three Boardwalk casinos would lose $1 million/day between them. That’s nothing compared to the hurt a strike would put on Borgata, over $1.5 million/day. They union projects that a strike could take a 25% chomp out of 3Q22 revenues. According to Unite-Here, the casinos walked away from the bargaining table on June 1 and haven’t been back. Stockton University economist Jane Bokunewicz warns that the casinos could counterattack by drafting non-union workers to cover more jobs in the event of a walkout (making it effectively a lockout). However, columnist Fiona Simmons cautions that “engaging in a war of attrition with your workforce is hardly the smartest way to inspire long-term trust and improve financial results.” (Just ask Bob Griffin and Carl Icahn.)
The City Council, meanwhile, has weighed in on the issue, urging casinos to raise base pay to at least $20 an hour, well ahead of what Unite-Here has been reportedly demanding. Reports our East Coast bureau, “A maintenance worker reported working for Caesars for 24 years, is now earning $15.42/hour,” which is pretty scandalous by any measure. Adding to the pressure on Big Gaming to come to the table, 80,000 NAACP delegates are expected to come to Atlantic City next month and will probably have to cross picket lines.
Local 54 has given Hard Rock Atlantic City two extra days to reach an accord. Bally’s Atlantic City and Ocean Casino Resort aren’t so lucky but are already grandfathered into whatever deal Caesars and MGM Resorts International consummate. So it’s up to the big boys to set the tenor of the talks going forward. Mind you, they have evidently decided to tough it out and let the smaller fry fend for themselves. It would probably not grieve them unduly if a Golden Nugget or Resorts Atlantic City (which are also grandfathered) went belly-up. Unless Bokunewicz is right, the casinos seem to be playing Russian roulette with five bullets in the cylinder.
“Slick Rick” Heidner is making a ruckus again in Illinois. Unable to crack the top tier of slot-route operators, Heidner is suing rival Accel Entertainment for having allowed it to loan Gold Rush Entertainment, Heidner’s company, $30 million three years ago. The 30 mil was supposedly convertible to an equity stake in Gold Rush if Heidner couldn’t pay up. In addition to Accel poaching Gold Rush customers with “bounties,” Heidner accuses Accel of trash-talking Gold Rush to clients. (Mind you, Gold Rush is no stranger to trash talk itself.) The purpose, allegedly, was to prevent Gold Rush from being able to repay the loan, making it prey to Accel. By this point you may be asking what kind of idiot borrows $30 million from his #2 competitor but that’s beside the point. At this point, a court-ordered payout is Heidner’s best hope for a windfall, Gold Rush being badly outgunned in the slot-route war, 3,656 machines to Accel’s 13,663.
Jottings: Casinos in Macao absorbed another swift kick in the pants as a Covid-19 resurgence has led to a threat of closure and the prospect of zero revenue. Sands China faces particular pressure as it only has nine months’ cash on hand. (Galaxy Entertainment could hang tough for five years.) We always knew Macao was a Faustian bargain but never suspected it would be this bad … Sports betting is taking to the high seas. BetMGM has inked a pact with Carnival Corp. to put kiosks aboard 50 ships. What the alliance with notorious polluter Carnival will do to MGM’s “green” image remains to be seen … The Interior Department has yet to sign off on a Lake of the Ozarks casino for the Osage Nation but the tribe is touting it already. The project is relatively low-budget by casino standards: $60 million … Great news for Las Vegas—no airport in the world has seen a bigger post-pandemic bounceback than Harry Reid International. Only Charlotte and New Dehli are rivaling it, and this was before international-travel restrictions were lifted … Sorry, Cedar Rapids. No new casino for you. Iowa Gov. Kim Reynolds (R) signed a tw0-year moratorium on new casinos into law, in yet another setback for Peninsula Pacific Entertainment, which can’t catch a break these days … Ground has been broken on Churchill Downs‘ $260 million Queen of Terre Haute casino, which should be completed by the end of 2023. Hiring will begin late this year … Mobile sports betting failed to clear the North Carolina House by the slimmest of margins. 19 solons basically ran and hid from the vote, dooming the bill to failure. Higher taxes and a ban on collegiate sports betting may yet turn the tide, if all parties are amenable … Speaking of sports betting, you may be wondering what happens in California if both ballot initiatives pass. (We have.) It’s quite simple: The one with the higher number of votes goes into law. But if a tribal-backed initiative finishes second, expect a lawsuit anyway.
Quote of the Day: “Life is not meant to be easy, my child. But take courage: It can be delightful.”—George Bernard Shaw
After Tillman purchased the former Trump Marina now Golden Nugget, he boasted he was “using personal funds” for the 100% renovation in the amount of $150,000,000 (Million). Unless he got loans at a later date, he should be fine. As to Resorts, I thought Morris Bailey was also wealthy, perhaps owning some horse tracks.