Bowing to Wynn; Mixed views on Las Vegas

Today the Massachusetts Gaming Commission meets to finalize its disgraceful prostration, er, litigation settlement with Steve Wynn and presumably to lay the groundwork for levying some manner of fine on Wynn Resorts now that Nevada has set a $20 million precedent. However, if CEO Matt Maddox thinks he’s out of the woods he’s reckoned without Attorney General Maura Healey, who’s not sufficiently impressed with Encore Boston Harbor to give the company a free pass: “The fact that this structure is built or near-built should not be what drives the decision-making of the commission,” she warned and very aptly, as the MGC seems to have allowed a $2.6 billion fait accompli on the banks of the Mystic River to send it down the path of least resistance.

However, Steve Wynn may have broken Massachusetts law, putting him squarely in Healey’s cross-hairs. Explained University of Texas gaming expert Clyde Barrow, “One of the interesting things in the Expanded Gaming Act is that when determining suitability, you can’t break any laws in Massachusetts. It’s conceivable that if the attorney general is to make the argument that Wynn broke the law with sexual harassment, they can make the case that the license was improperly given and the court could make an injunction on the opening.” We’re no longer sure that Wynn Resorts should be operating in Massachusetts and defer for the nonce to Healey’s eventual judgment. As Boston Globe columnist Teresa Hanafin puts it, “Disgraced casino mogul Steve Wynn just won’t go away.”

* Even with an easy comparison to last year, January gambling revenues were down on the Las Vegas Strip (-4%) and statewide (-3%). Despite higher hold, baccarat win was down 14.5% while slot revenue was flat on 4% higher coin-in. Table games other than baccarat were down 4% despite 1.5% higher wagering. Strip casinos grossed $532 million dwarfing Downtown‘s $52 million (down 8%). The Boulder Strip fell 10% to $82 million, North Las Vegas‘ $29 million represented a 2% gain, while the rest of Clark County also was up 2%, to $107 million. Two percent less slot win on flat coin-in helped conspire to keep Las Vegas locals’ losses to $218 million. Laughlin was up 2% to $46.5 million, Reno shed a percentage point to gross $44 million and snow bunnies were evidently scarce at Lake Tahoe, tumbling 14% to $17 million. Rural markets did well, with Elko up 7% to $23.5 million and Carson Valley gaining 9% to $9 million. Wendover, economic bellwether for the Silver State, vaulted 12% to $16.5 million.

Credit Suisse analyst Cameron McKnight took a positive view: “Bottom line, revenues were strong, with normalized mass market revenues up 3.8% against a -3.9% [comparison], and headline mass market revenues were up 9% … January performance was strong. Slot revenue down 0.1% y/y, and mass table volumes up 1.7% y/y signal that the ‘everyday’ consumer is doing well.” However he had to concede that baccarat was “weak,” possibly impacted by lower Chinese tourism. But, he concluded, “In our view, normalized mass market revenues are the best indicator of market growth and health as they include slot machines, which represent 50% of Las Vegas, and excludes the volatile baccarat business, in which only a handful of casinos participate.”

McKnight foresees hotel rates in Vegas increasing 19% in 1Q19, propelled by 8% higher convention attendance. As for leading economic indicators, airline passenger loads into Sin City are accelerating while home prices are decelerating (but still 4% higher last month). He also reported that the Oakland Raiders “appear to be making progress” toward staying in their home town, with an option to play an orphan season in 2020, should Raiders Stadium in Las Vegas not be completed in time. That should hopefully give the building contractors some impetus to get their gleaming edifice finished with all deliberate speed.

* Carl Icahn is worth almost $22 billion and owns 10% of Caesars Entertainment (with an option to buy 10% more). This has not, however, prevented him from poor-mouthing himself to Uncle Sam, the better for his companies to be allowed to keep polluting. Can we pass the collection plate for Uncle Carl? Speaking of cronies of Donald Trump, who always leaves other people to pick up the tab, Phil Ruffin has ‘fessed up to being the “Kansas businessman” who covered the $25 million Trump University settlement. Ruffin’s rationale? “He had $28 million in back fees that he never collected. The hotel paid him [what] was owed to him. I don’t know what he did.” Now everybody does.