Caesars massacres table games, renames Superdome; Bally’s boffo

At the risk of flogging a deceased equine, the emperor at Caesars Entertainment has yet again showed himself to be without clothes. The latest Eldorado-ization of the Roman Empire is the wholesale slaughter of table games along the Las Vegas Strip. As Vital Vegas reported over the weekend, “entire swaths” of the games have disappeared from casino floors, leaving blank patches to be filled in with slot machines or that dreaded new idol of casino executives, electronic table games. Just think of all the high-salaried dealers you can pink-slip! As Scott Roeben wrote to us, it’s “a really big shift that was happening under our noses.” We should have known, perhaps. Caesars execs had been promising to run a post-pandemic company at pandemic-era cost levels, which would require some real creativity. Enter the robo-games and the conversion of properties like Caesars Palace and The Cromwell into giant slot parlors.

Not only do ETGs cost less than old-fashioned table games, they offer lower minimums (and table minimums along the Strip have gotten pretty steep). It’s a shameless play for the low-roller clientele and another symptom of “Less Vegas,” the post-Covid environment in which the casinos make money by offering a diminished experience for the same—or sometimes higher—price. Certainly in Caesars’ case it bespeaks a contempt for the player, providing a regional-casino atmosphere in what was supposed to be the Holy See of gambling. It’s the latest in a death of the Roman Empire by a thousand cuts: short-poured liquor, closed buffets, shuttered shows and defunct player lounges. Roeben gloomily writes, “As there’s unlikely to be a new wave of demand for table games, expect this to be the new normal in Las Vegas casinos.”

One of our sources just spent a weekend at Flamingo Las Vegas and gives Caesars low marks. They write, “there was no daily room cleaning service available, and it was a hassle just to get extra towels delivered to the rooms. Also, it was strange to walk over to Rao’s at Caesars one evening for dinner, find both it and Mr. Chow’s closed, but a huge swarm of people next door to both restaurants waiting/hoping to get into the Bacchanal Buffet. If more of the restaurants/buffets were open, it would not have seemed nearly as busy/crowded. And table minimums were VERY high. I didn’t really take notes, but everything seemed consistently high for mid-week, mid-day gambling. But people were playing. But I’m also wondering how much of this will slow down when some of this pandemic incentive money starts to run out …” We wonder, too.

While poor-mouthing players in Las Vegas, CEO Tom Reeg somehow found the $138 million needed to rebrand the New Orleans Superdome as Caesars Superdome. The spending doesn’t stop there, as Caesars will be booking big-scale events into the space. “This will be their building for the next 20 years at least, so a big part of the discussion has been about how do we get some of the world class entertainment they have,” said New Orleans Saints President Dennis Lauscha. “How do we get some of the big boxing matches into New Orleans? How do we develop Champions Square to take it to another level from an entertainment standpoint? Those are really big investments that we’re talking to them about making jointly.”

More, uh, constructively, Reeg is plowing $320 million in capex into Harrah’s New Orleans, with the ultimate goal of rechristening it Caesars New Orleans. Boasted regional President Dan Real, “We’re investing hundreds of millions of dollars into the city … and our goal is to have the Dome renovated and maintained in a manner where we will be able to hold our head high and go after the biggest events that there are in the world.” Caesars gets a field-level luxury suite in return, as well as upgrades to the two suites it already owns. It will also get incalculable brand exposure from the many sporting events to be held there, including the 2025 Super Bowl. But, in the unkindest cut of all, NOLA.com referred to Caesars as a “Reno, Nevada-based casino operator.” Cruel but true.

What to do with problem child Horseshoe Baltimore? Once touted as being in a can’t-miss location, the property has become a don’t-visit casino, falling to a very distant third place in Maryland. But Caesars has a plan for that, in tandem with co-owners Jack Entertainment and Caves Valley Partners. Some of the new developments aren’t so much new as pandemic-delayed. They include construction of a 4,000-seat event center, The Paramount, installation of a TopGolf driving range and addition of a nightclub called Hammerjacks (the unfortunate name conjures up rough trade). TopGolf was announced back in 2018 but only began construction this past May. Said Baltimore Development Corp. Executive Vice President Kim Clark, “We started looking at the vacant and underutilized industrial properties and said, ‘What can they be, and how can we make this a better corridor?’ What can we do to create a better experience?”

A “better experience” is clearly what’s needed, to judge from Horseshoe’s pallid financials, which haven’t even benefited from the present recovery. “It’s a little distant from the Inner Harbor, and most suburban Marylanders wouldn’t consider walking from the Inner Harbor to where Horseshoe is,” said Hartford Community College professor James R. Karmel, offering one diagnosis for what ails the patient. Neither the Baltimore Ravens nor the Baltimore Orioles have provided a lifeline to the casino, despite expectations to the contrary, as it sits in what’s derided as “a no man’s land.” Enter the new amenities. “These types of things we’re doing will drive more people to Baltimore, provide more options for the people who live here and more reasons for people to come here,” said Horseshoe General Manager Randy Conroy. Added Sage Policy Group CEO Aniran Basu, “The goal is to build up significant synergies: Watch the Ravens, do some gambling, do TopGolf, do fine dining, and then plan your next trip to Baltimore.” And the one after that, hopefully. After all, the first step Horseshoe solving its problems is to admit it has a problem.

Once-promising Chicago casino contenders continue to fall by the wayside. First, MGM Resorts International balked at the usurious tax burden (40%, plus substantial upfront fees) and now Wynn Resorts has decided Chicago is too rich for its stomach. That leaves Hard Rock International, second-tier Rush Street Gaming and a host of no-name, no-reputation nonentities. If Hard Rock bails on her, Chicago Mayor Lori Lightfoot (D) is going to find herself up a creek minus a paddle. “We expect to have a very unique entertainment and gaming experience that you’re not going to find anywhere else in the region,” says Lightfoot but “very unique” may not be ‘very good.’ The problem for the Windy City is that developers are caught between the need for significant return on investment (difficult in tax-happy Illinois) and the cost of a Vegas-class casino, which could run into billions of dollars. Developers have our full sympathy in this situation. They have to produce “innovative architecture” that encompasses not only a casino but a 500-room hotel, 60K square feet of convention space and even museums. That’s a tall order under the circumstances.

Complicating the equation further is the Lege’s approval of two new casinos in the Chicago suburbs, meaning the downtown casino will have to subsist on urbanites and tourism. As Brendan Bussman of Global Market Advisors put it, “The challenge with Chicago is, the sun and the moon and the stars really have to align to make it work.” Proposals are due August 23. We’ll see who’s still got skin in the game at that point.

Bally Corp. reported earnings yesterday and Truist Securities analyst Barry Jonas called the 2Q21 results “meaningfully better than expected, on wide-based strength.” Revenues are expected to settle somewhere in the $258 million-$268 million range, way ahead of last year’s $29 million (when there was no business of which to speak). Company bosses, according to Jonas, said “the strong performance was driven by better than expected performance at BALY’s land-based casinos (though we believe Atlantic City is an exception and will be management’s focus point for a turnaround) and on its Interactive platform.” The Gamesys acquisition appears to be going swimmingly, with Bally not having to dilute its equity to consummate the deal. Expect more color August 9, when Bally execs meet with Wall Street investors.

Jottings: VIP play in Macao has fallen and can’t get up, say JP Morgan analysts. They project it will be only 35%-40% of pre-pandemic levels next year … Virginia casino regulations have been codified by the Virginia Lottery Board. They now go to Gov. Ralph Northam (D) for his approval, then back to the Lottery Board … Las Vegas Strip restaurants are hard up for workers, even at top salaries. A wave of retirements is blamed, along with the dilutive effects of Circa and Resorts World Las Vegas. How is Fontainebleau ever going to staff up its three-score eateries? … Crown Resorts has one less suitor. Its various governmental probes have scared off Star Entertainment and its $6.6 billion, saying it was concerned “whether [Crown] retains the licence to operate its Melbourne casino or the conditions under which its licence is retained.” Star will seek another acquisition target. Intelligent Investor‘s Nathan Bell believes otherwise: “I think it was more the price Star wanted to back away from. It may still be a bidder yet, as I’m sure the regulators would prefer a local operator to own our casino licenses.”