That’s what JP Morgan analyst Joseph Greff had to say about 2Q18, adding, “The 2Q18 earnings reporting period in late July/early August was one of the worst in recent memory for U.S. Gaming as stocks with strong earnings/outlooks saw modest 
declines and those that had outright disappointing outlooks saw declines in excess of 10%.” Regional gaming companies were rated the best buy, in order of preference Penn National Gaming, Boyd Gaming, Station Casinos and Eldorado Resorts. Greff opined that stocks’ “volatility [was] exacerbated by short-term investor positioning and disappointing near-term commentary on LV Strip room pricing.” By contrast, regional operators had “a combination of low expectations, continued good fundamentals, strong free cash flow, and [cash flow] growth” going for them.
As for MGM Resorts International and Caesars Entertainment, they “are now show-me stories and will take time to work. “We maintain the view that LV Strip room pricing concerns are still somewhat isolated to the 3Q, but we are 
not expecting a hockey-stick inflection in the 4Q.” When it comes to Penn, “We were also encouraged that PENN’s CEO Tim Wilmot purchased 100,000 shares on the open market for” slightly over $3 million. In Boyd’s case, despite a “solid” 2Q18, “investors were not overly impressed and shares declined 2% in the two trading days that followed … we believe investors may have been looking for a larger guidance increase.”
“While we can’t really defend the (surprising) magnitude of MGM’s 2H18 guide down as well as the timing of sizable share repurchases, both of which test our patience boundaries, we do 
see value at current levels amid looming easier year-over-year growth comparisons on the Strip, coupled with an improving free cash flow profile,” Greff continued. “We also attribute share price weakness to concerns about management credibility and fear that LV Strip operators may be entering a period of pricing pressure (with the leisure segment particularly susceptible),” he added of Caesars, although — given its modest price — CZR would seem like a good bargain play.
* Americans for Nonsmokers Rights is lauding the third anniversary of Ho-Chunk Gaming Madison‘s smoke-free-casino policy. Ho-Chunk is the “only smoke-free casino in the state [and] we are hopeful that we have started a trend in the industry,” said casino Executive Manager Dan Brown. Don’t get carried away, Dan. It’s a good start but it’s hardly a trend. According to Brown, the Great Lakes Inter-Tribal Council’s Epidemiology Center studied the views of player’s club members about cigarette smoke. The result, says ANR, was “that going smoke-free could bring high-tier players in more often, which would result in higher earnings for the casino.” That’s the kind of tangible data which might make a difference as groups like ANR try to remake the casino industry’s image as a smoker’s paradise.
* “If you try to win, they don’t let you play anymore.” That’s the complaint of a British gamblers about sports books shunning the action of advantage players. According to ESPN, “Gaming experts say sportsbooks might have closed as many as 50,000 betting accounts in recent years, and just as many punters have had their betting limits restricted to mere pittance … Banning or limiting sophisticated players has been a regular part of Las Vegas sports betting for decades, and, like in the U.K., there’s absolutely nothing illegal about it.” Given the thin profit margins of sports books, this does not come as a surprise. The practice has even started in New Jersey, where sports betting is still wet behind the ears.
As though this weren’t bad enough, colleges and universities are looking to belly up to the sports-betting trough, by dint of “integrity fees” (soon to be as much of a swear word as “resort fees”). The fees would represent a tax equal to 20% of sports book profit and the American Gaming Association‘s Sara Slane rightly had a conniption fit about it. “It’s absolutely absurd. There is no business that would agree to that. It’s not going to accomplish ultimately what I think the leagues would like to see, even the colleges would like to see, which is to have regulated, legalized sports betting and consumers partaking in that platform versus continuing down the path of the illegal market,” said Slane.
At least one university exec was living in the real world. “You’re not talking about millions of dollars,” he told the Washington Post. Other schools say they need to money for compliance costs, educating athletes on the dangers of point-shaving (a subject on which today’s athletes seem quite conversant) and to keep an eye on aforesaid athletes. “The pros that come in, they’re expensive,” remarked one athletic director. “You could go as far as working with the university to maybe have a class the kids have to take on a regular basis.”
If that seems paranoiac, UNLV used to keep tabs on players’ movements via their car registrations and — since a casino was across the street from the football practice facility — an eye was kept out for gamblers. Even gaming attorney Anthony Cabot opined that “to say we’re going to ignore this because we don’t like gambling is to ignore you had this significant industry that can impact the integrity of your games. To do nothing about it is, I think, irresponsible.” However, with sports betting having been passed in Mississippi and West Virginia sans integrity fees, trying to revisit the issue in the next legislature may be a case of closing the barn door after the horse has fled.
