It’s getting very difficult to tell the players without a scorecard in the game of the REIT-ification of the Las Vegas Strip. Case in point, Bellagio, which now has three owners. There’s MGM Resorts International, which holds a token 5% stake. Then there’s Blackstone Real Estate, whose ownership has just been diluted to 73%. And now there’s Realty Income, which is paying $950 million for the privilege of owning 22%. $300 million goes toward direct ownership, while the rest is channeled toward yield-bearing preferred equity interest. The deal should be consummated by year’s end and will probably have no discernible effect on your Bellagio experience.
What is bothering Americans the most? If you believe the American Gaming Association, we Yanks are losing sleep over black-market slots. The AGA politely refers to these as “unregulated skill machines,” which cedes the point that—unlike slots—there is an element of skill involved, pointing to a potential rapprochement. We’re sure AGA President Bill Miller would rather have these renegade slot makers inside his tent pissing out than the current vice versa. An AGA study discovered that two-thirds of U.S. citizens surveyed took the machines to be legit slots, an unsurprising finding. Whether that translates to active concern seems a stretch. As Miller says, these machines are unregulated, untaxed and offer no consumer protections—although when was the last time a player won a contested casino jackpot? However, Miller is clearly reading his own meaning into the survey outcome when he thunders, “These results are further evidence that Americans see these machines as a threat that should be eliminated, not regulated.” We agree with Miller that playing such slots is a sucker’s bet and if he holds firm for their extirpation, instead of some mealy mouthed compromise, he’s got our support.
The 2,002 survey respondents were surprisingly well-informed about the difference between legitimate and illegitimate slots. 70% found player protections inadequate (based on experience?) and 56% thought them a security risk at the businesses they infest. If indeed there are 600,000 black-market slots, as the AGA insists, the lobbying group and law enforcement have their work cut out for them. As for the alleged $109 billion in illicit handle, well, we know where the AGA would rather that money were spent. Miller would do well to hammer the lost-taxes angle. Politicians are apt to listen when it turns out they’ve forfeited $8.7 billion in revenue through inaction. There’s nothing that motivates a politico quite like the prospect of casino taxes.
Pass the crying towel for casinos in Atlantic City. Profits for the second quarter were a mere $138 million, down 20% from last year (before a new labor pact was in place). The industry was quick to push employees under the bus, blaming workforce costs, along with inflation. Since the numbers, which went viral, were published by the Division of Gaming Enforcement, suspicion is allayed that this is an industry ploy to head off a ban of smoking on casino floors, still feebly alive in the Lege. However, the data is somewhat misleading, as it reflects strictly brick-and-mortar casino operations, not New Jersey‘s burgeoning online casino business. Even so, B&M net revenue is up 1.5% and hotel occupancies run at 70%. A room will set you back an average of $166. Also, employment is up by 1,000 souls. As New Jersey Casino Control Commission Chairman James Plousis reported, “All operators were profitable despite reporting significantly higher costs, including but not limited to labor costs.”
Surprisingly, Borgata ($35 million) was not the most profitable casino, clocking in at #5. Pride of place went to well-run Hard Rock Atlantic City, which made $53 million. Ocean Casino Resort was next with $47.5 million. Tropicana Atlantic City did surprisingly well with $41.5 million, outpacing portfolio mates Harrah’s Resort ($37 million) and Caesars Atlantic City ($27 million). Despite its flagging grosses, Golden Nugget was the most profitable of the bottom feeders, with $12.5 million, while Bally’s Atlantic City barely made ends meet at $2 million (Resorts Atlantic City made $12 million). The spin at the next Bally’s Corp. earnings call should be priceless.
Failed casino owner and convicted sexual assailant Donald Trump was recently arrested in Atlanta. At the time of the incident, BetOnline was taking wagers on Trump’s weight, with an over/under of 278.5 pounds. However, the tubby Trump was allowed to self-report his weight and claimed it was 215 pounds. HA! Hahahahahaha! If blubbery Trump is 215 we’ll suck Kate Beckinsale’s toes. We ourselves tip the scales at 273 pounds and aren’t the least bit proud of it, if you must know. And we are trying to slim down, unlike the man who gave the world now-vanished Trump Plaza. Incidentally, the 1981 horror classic Wolfen opens with a New York development mogul with a Dutch surname getting devoured by lupine adversaries. Who could they have had in mind?
Greece seems to be where casino megaresorts go to die. The latest endangered species is Hard Rock International‘s planned resort near Athens. Banks that are underwriting it want another $132 million in equity from Hard Rock and its local partners. 132 mil is chump change for Hard Rock but could still scupper the deal. There is one possible end-around, involving tapping a $496 million governmental recovery fund. But using Covid-19 relief dollars to build a casino seems like an outrage in the making.
Jottings: Law enforcement in Macao is taking a page from the Las Vegas Metro playbook. After a Macanese gambling hall was cleaned out to the tune of $727K in a fake-chip scam, authorities would only identify the scene of the crime as “one of the most prominent casinos on the Cotai Strip.” And one hand washes the other … Looking for a job (or 500)? Terre Haute Casino Resort is now hiring. The 1,000-slot, 50-table casino does not yet have an opening date … Grand Island temporary casino at Fonner Park in Nebraska went live with table games this weekend. Sports betting goes live this week … For those of us who look younger than our age, we might not welcome using biometrics to verify us at the casino. The technology could also be used to keep you out of VIP areas. Boo! … Good news for investors: The Caesars Palace online-casino app is up and running in four East Coast states. This continues the increasingly positive Caesars Digital story … Ever-growing, mammoth Foxwoods Resort Casino opens another gambling floor this week. The Pequot Woodlands Casino will offer 430 slots, 130 of them high-limit, along with 24 table games … Melco Resorts & Entertainment‘s $1 billion-plus expansion of Studio City will be highlighted by a W Hotel. It is designed by Zaha Hadid Architects and has 557 rooms and suites.
Quotes of the Day: “[B]arring evidence of trying to sway a contest’s outcome, a year’s suspension for a teen or young-20-something seems more reasonable than a career lost.”—The Des Moines Register, pleading for leniency for collegiate athletes caught up in Iowa‘s sports-betting scandal.
Golden Nugget has closed on their purchase of the Hard Rock casino in Lake Tahoe. Hopefully they will be a positive addition to the market.