Crown Resorts

Atlantic City, Massachusetts up, Illinois down; Crime fails to pay

Atlantic City rebounded nicely in June, up 5.5% to $241.5 million. Table game winnings were flat, despite 3.5% larger wagering than last year (so the players made out well) and slot win jumped 7% on a commensurately higher amount of coin-in. That extra weekend day this year sure didn’t hurt. Borgata approached its 20th anniversary (100 in dog years) stronger than ever, leaping 11.5% to $60.5 million. Ocean Casino Resort made a game stab at second place, vaulting 17.5% to $35 million, but even in a down month (-3%), Hard Rock Atlantic City staved it off with $43 million.

Stupid political antics; Baseball boondoggle; Mega-Jottings

American Gaming Association President Bill Miller likes to say—and quite rightly—that communities should welcome casinos because Big Gaming is willing to pay big taxes. Until now, that is. Las Vegas Sands has barely planted its flag in Nassau, New York, and is asking for (get this) tax breaks. For crying out loud, Rob Goldstein! Way to hobble your campaign to be downstate’s third resort-casino. According to an unnamed Sands source, the megabuck company ($45 billion in market capitalization) wants “a reduction in the mortgage recording tax” in return for higher education levies, among other things. Oh, and a lower sales tax on construction-related items. Such freeloading ill-behooves a company as esteemed as LVS and has us rethinking our endorsement of its Five Boroughs pitch.

Wynn, Caesars jostle in New York City; Penis envy

With a rival Coney Island casino proposal TKO’d and Steve Cohen‘s Citi Field one on the ropes, Wynn Resorts is stepping up its push for getting the brass ring at Manhattan‘s Hudson Yards area, adjacent to the Javits Center. A $10 billion proposal was unveiled over the weekend, including a 1,700-room hotel tower. In addition to fine dining and retail, the project (co-crafted with Related Cos.) would entail 250,000 square feet of gambling. Apartment and office towers would also be included in a complex that attempts to be all things to all people. Given the proposed size of spend and co-developer Stephen Ross‘ financial closeness to Gov. Kathy Hochul (D), Wynn now has to be seen as the favorite.

The not-unconflicted Hochul holds one of the six votes that will determine where the megaresorts go and, at this point, nobody thinks incumbents MGM Empire City and Resorts World New York will be snubbed. Given that Wynn’s site sits on the much-traveled #7 line of the New York City subway system and wouldn’t involve displacing anybody or anything, we think this is the prohibitive front runner as the RFP deadline draws nigh. Sands Nassau is making impressive progress but we rate it an underdog.

Crime and punishment

Former casino overlord Donald Trump is monopolizing the headlines today but let’s not let him have all the fun. There’s plenty of other gaming-related news today. First and foremost, in the same week that Nashville has seen the latest in an endless series of mass shootings, our attention is drawn back to the Mandalay Bay Massacre, one of the worst. Seemingly every news outlet in the country has gotten ahold of the FBI report on shooter Stephen Paddock. Even though Paddock cased possible shooting sites from San Francisco to Boston, the G-men put down his Las Vegas outburst to a fit of pique. (Kudos to the Wall Street Journal for getting the feds to give up the goods.) A witness told G-Men that “was not treating Paddock well because a player of his status should have been in a higher floor in a penthouse suite.” Yup, that’ll really cause people to go postal. Happens every day.

Christmas wishes

It’s time to reward those who have been nice and offer appropriate gifts to the naughty. So, without further ado, we play Santa Claus to the casino industry …

DraftKings tumbles big-time; Big Gaming bets on red

“It’s kind of fun to do the impossible,” said Walt Disney. For the leadership of DraftKings, “the impossible” would include finding a path to near-term profitability. DKNG reported 3Q22 numbers late last week and J.P. Morgan analyst Joseph Greff called the projected, year-end negative return on investment “worse than expected.” And it gets more adverse next year, when DraftKings is expected to return [sic] $110 million more negative ROI than Wall Street anticipated. “This is disappointing as this outlook follows recent 3Q22 earnings commentary from DKNG’s OSB/Digital competitors … who have talked up an accelerated path to profitability and suggests that DKNG is lagging peers on a path to positive EBITDA generation.” Oh sure, DraftKings might produce a positive ROI … in 14 months or maybe break even in 2024. But the company continues to get less bang for its buck, in terms of revenue and market share than (privately held) rival Fan Duel.

Atlantic City sexism and other capers; Falling Star

While we have no definitive idea whether Ocean Casino Resort CEO Bill Callahan is a male chauvinist pig, he certainly presents a convincing set of credentials in a Global Gaming Business puff piece. Never mind the efforts of predecessor Terry Glebocki (above, hounded out by the Illitch family), when it comes to Ocean’s reinvention from joke to overachiever, Callahan says he did it all himself, derogating previous administrations several times over in an ode to his own perspicacity. We’re sure that, by this point, Callahan has made some changes—like the new sports book—that are redounding to the good. But to take credit for everything … that requires a fair amount of gall.

Jottings for the weekend

Aside from the launch of sports betting in Kansas—spearheaded by Hollywood Casino and Kansas Star—it’s been a slow news week. Casino gambling is headed the wrong way in Alabama, where employee-owned GreeneTrack Class II casino was forced to shut down, thanks to the state Supreme Court. The latter levied a $106 million tax bill on GreenTrack, an impost that exceeded revenues. With similar levies facing other private-sector, electronic-bingo casinos in the state (except for tribal ones), other closings may well follow … Florida-based No Casinos will be the next party to wade into the lawsuit involving the Seminole Tribe‘s dubiously constitutional sports-betting compact (above). Group spokesman John Sowinski argues that the Seminoles are trying to have their cake and eat it too by expanding gambling across the state—in violation of Amendment 3—and yet claiming it is exempt by being tribal. “It’s an intellectually dishonest argument. It is an argument that is an affront to the people of Florida who have the right in their constitution to control what forms of gambling exist outside of tribal lands,” said Sowinski …

Macao is closed; Mixed signals from the Midwest

Effective today, all casinos in Macao have closed, in governmental reaction to a spike in Covid-19 cases. “Only essential businesses like supermarkets, gas stations, and pharmacies will remain open.” In other words, just when you thought things couldn’t get any worse in Macao, they did. SJM‘s Grand Lisboa is the Covid hot spot, with 13 of the 71 newest cases being spotted in the pleasure palace. At the risk of sounding heartless, this latest turn of events exposes the danger of doing business at the sufferance of an authoritarian regime. Companies vulnerable to the effects of the shutdown include (in diminishing order) Las Vegas Sands, Wynn Resorts and MGM Resorts International. They may pass the pain on to their Macanese workers. When the Las Vegas Review-Journal asked if they would continue paying the idled—through no fault of their own—employees, all three firms clammed up.

Recovery slowing but still going; Singapore soars

Although gambling revenues in Maryland decelerated somewhat from May, they were still 1% higher than last June and 14% more robust than 2019’s, for a total haul of $163 million. It was basically a two-horse race, with MGM National Harbor controlling 42% of market share to Maryland Live‘s 34.5%. MGM’s category killer grossed $68 million (up 7.5%) while Cordish Gaming‘s rival powerhouse brought in $56 million (down 4%). Horseshoe Baltimore was a distant third with $17 million but achieved a victory of sorts by being flat with last year. (Any month in which Horseshoe is not sliding downward is a good month.) Best of the rest was Ocean Downs with $8.5 million, despite being 3% off its feed, while Hollywood Perryville brought in $7.5 million, a 4% dip. Hardest hit, relatively speaking, was Rocky Gap Resort, down 7% but good for $5 million.

Atlantic City booms on eve of strike; Louisiana not so lucky

Staring down a seemingly inevitable strike on July 1 by Unite-Here, casinos in Atlantic City could at least take solace in a May that saw gaming revenues leapfrog 9% over last year. The total gross was $233 million, as slot revenues ($174 million) jumped 10.5% on 13% higher coin-in. Table revenue climbed 6.5% on 5.5% larger wagering. Zooming 30% ahead, Borgata banked $63.5 million to Hard Rock Atlantic City‘s $41.5 million (+19%). Hard Rock, incidentally, has been given a two-day reprieve from labor unrest. Ocean Casino Resort—pictured—was third with $25.5 million, gaining only 3% traction. Over at the Caesars Entertainment triumvirate, only Tropicana Atlantic City ($22 million) was revenue-positive, up 8.5%. Harrah’s Resort ceded 1.5% to $21 million and Caesars Atlantic City was down 9.5% to $20 million.

Ongoing improvements at Bally’s Atlantic City helped eke out a 2.5% increase to $13 million, while Resorts Atlantic City slipped 8% to $14 million. Golden Nugget was microscopically ahead of Bally’s at $13 million, a gain of 3%. I-gaming was a boon, good for $136 million, led by Borgata’s 31% market share and Golden Nugget’s 25.5%. Then came Resorts Digital‘s 22%, then way down to Caesars’ 7%, Tropicana’s 6%, Hard Rock’s 4%, Bally’s 2.5% and Ocean’s 1.5%. Internet gambling is great if you’re MGM Resorts International, lagniappe if you’re Bally’s Corp. As for sports betting, it engendered $61.5 million in revenue on $766.5 million in handle.

Special Edition

So we leave on vacation (I checked into the Westin O’Hare and didn’t leave the building for three and half days) and all hell breaks loose in Big Gaming. The breaking story was MGM Resorts International‘s decision to shuck Gold Strike Tunica. It’s unloading a non-core property to the fast-expanding Cherokee Nation Entertainment. The fact that the Cherokee got 1,100 hotel rooms and a casino for a below-average 6X cash flow speaks for itself. Vici Properties remains the landlord and will collect $40 million a year from Cherokee Entertainment. MGM collects $350 million in cash, net, money it will hopefully not sink into the Osaka pit. The transaction is expected to take a year to close.

Although 2022 is still shaping up as a better year than 2019 for the industry, the post-pandemic recovery is definitely cooling. Indiana came out of May down 4% from last year, booking $212 million in revenue. With $36 million, Hard Rock Northern Indiana was the clear winner, besting nearby Horseshoe Hammond, falling a precipitous 24% to $29 million, and Ameristar East Chicago, plunging 34% to $17.5 million. Over to the east, Blue Chip was relatively unruffled, off 3.5% to $12 million. Elsewhere in the state, Hollywood Lawrenceburg was flat at $14.5 million and everyone else was down except Bally’s Evansville, up 7% to $14.5 million. Horseshoe Indianapolis banked $29 million, off 4.5%, and Harrah’s Hoosier Downs was down 1% to $21 million, both of them making up for the leakage up in Hammond.

Bally’s bans smoking (sorta); Purge at Cosmo; Aussie renegades

Two and a half cheers for Bally’s Corp., which has banned smoking at table games at its two Rhode Island casinos. We’ll throw in the other half-cheer when Bally’s nixes smoking in all gambling areas. (Ironically, the company is part of a consortium fighting a rear-guard action against a smoking ban in Atlantic City.) The company bowed to pressure from its table-game dealers, who had been protesting outside the Twin Rivers-branded casinos in Tiverton and Lincoln. Bally’s isn’t completely out of the woods, as state Rep. Teresa Tanzi (D) has filed legislation to revoke Bally’s special exemption from the state’s smoking ban. But this does take some of the pressure off.

George of the Year; Kansas ayes sports betting, Missouri not

It’s only May but we have to give the nod to The Cosmopolitan of Las Vegas. Outgoing owner Blackstone Group graced all employees with $5,000 bonuses, an incredibly generous gesture. Blackstone certainly didn’t have to do it but they did and we are grateful. In addition to rewarding years of faithful service, the payout also provides a “soft landing” for anyone displaced by incoming owner MGM Resorts International (which enjoyed spineless approval by the Nevada Gaming Commission). Does Blackstone know something we don’t? Are big job cuts coming? Given Las Vegas‘ recent history (as in post-2000), we’re betting on ‘yes.’

According to The Associated Press, “joyous bedlam” broke out at the Cosmo when the news filtered to employees of their unexpected payday. Given that the megaresort employs roughly 5,400 staffers, we’re talking about a $27 million largesse, “george” by any measure. As Chief People Officer Daniel Espino put it, “It’s you, every single day, that makes a difference. Whether you clean the rooms, cook the food, are dealing cards, serving drinks, at the front desk.” As for Blackstone, it now takes its $1.6 billion sale price for the Cosmo and plows it into Crown Resorts, which could desperately use some good karma these days.

Chicago blew it; Times Square, anyone? Monday Mega-Jottings

Even as Chicago Mayor Lori Lightfoot (D) blunders forward with her megaresort campaign, more voices are being raised in criticism of how the Second City is going about the process. A Crain’s Business analysis determined that “Each location appears to have serious shortcomings when it comes to delivering the greatest possible benefits from a long-awaited city casino.” The conclusion is that Lightfoot is moving too fast in order to garner a quick payday for the city’s “woefully underfunded” pension system.

And the best way to do that, Crain’s argues, is to create a tourist draw, not something that leeches off of existing Illinois casinos. “Maybe a glitzy city casino would lure a few more Hoosiers and cheeseheads. But Indiana, Wisconsin, Iowa and Missouri all have plenty of casinos, limiting the potential market of day-trippers.” And, it argues, casino gambling may cannibalize existing revenue streams like major league sports and a stellar theatre scene.

Parx dethroned; Shreveport sleaze; Maine’s latest bet

Move over, Parx Casino, there’s a new leader in the Pennsylvania gaming market. That’d be Penn National‘s eponymous racino near Harrisburg. For the second month in a row it was tops in the Keystone State, banking $64 million, up 11.5% from last year. Parx had to settle for $60.5 million, a 2% dip from 2021. On the comeback trail was Rivers Philadelphia, up 13% to $54.5 million. Valley Forge Resort was an incredibly strong fourth-place contender, soaring 40% to $52 million (remember, it’s considerably smaller than its market rivals, constrained by law), while Philadelphia Live manifested only limited signs of life: $25 million, albeit a 20% gain. It did displace Harrah’s Philadelphia, whose $19 million represented only a 2% uptick.

Other market-dominating casinos were Wind Creek Bethlehem ($47 million, +33.5%) and Rivers Pittsburgh ($35.5 million, +20%). Much further back were Mohegan Sun at Pocono Downs ($22 million, flat), Hollywood Meadows ($20.5 million, -2%), Mount Airy ($20 million, -14%) and Presque Isle Downs ($11.5 million, +11%). Then came the satellites: Pittsburgh Live ($10 million, +20%), new Hollywood York ($8 million) and Hollywood Morgantown ($5.5 million, +241%). As customary, Lady Luck Nemacolin brought up the rear with $2 million, up 3%.

Chicago tips its hand; Wynn loses; Thunder Down Under

Would somebody clue in Chicago Mayor Lori Lightfoot (D) that Neil Bluhm‘s Rush Street Gaming is no longer the majority owner of Rivers Casino Des Plaines? That honor goes to Churchill Downs. But Lightfoot is using Des Plaines as a stick with which to beat Bluhm’s (admittedly underwhelming) Chicago casino proposal, Rivers 78. Although the Chicago Sun-Times argues that Bluhm “combines real estate development skills with knowledge of gambling, and his political and business contacts here are peerless,” Lightfoot has not-so-subtly let it be known that her preference is for Bally’s Corp., whose riverfront proposal is shown above.

Bluhm is penalized by his presence, however vestigial, in the suburbs and Hard Rock International is doubly dinged by A) Hard Rock Northern Indiana in Gary and B) the “complex” air-rights negotiations inherent in its proposal. That leaves Bally’s Tribune, as it is presently called, which has conveniently predicted the highest revenue numbers, music to Lightfoot’s ears. “Bally’s is the only bidder that does not already have a property in the Chicagoland market and, therefore, is more likely to operate with independence in maximizing revenues for the Chicago casino,” her minions said. It’s also the project whose temporary casino could go up the soonest (Bluhm’s would be last) and has sweetened the pot with the pledge of $25 million, maybe more, in upfront money. It also enjoys the support of Walter Burnett, its local alderman.

Barley’s leaves a bad taste; Woe is Star; Mega-Jottings

When a casino is named Barley’s Brewing Co. you’d expect to get a decent glass of suds there. Not so. Las Vegan Lon Enwright is $8 million richer—but physically damaged beyond price—after being served cleaning fluids instead of beer (the taps were in the process of being flushed and the facts are not in dispute; there is even a hint of employee malice). The former Strip wine steward has lost his sense of taste, suffers from stomach and esophageal ulcers, and is at increased of risk of cancer as a result. Literally adding insult to injury, Barley’s owner Station Casinos offered Enwright a piddling $300,000 settlement. A Las Vegas jury thought differently and awarded the plaintiff $8 million in damages. Station hasn’t said what it will do but if it’s got any decency it will pay up. However, given its “contumacious” character, we’re not hopeful but appeal to the better angels of CEO Frank Fertitta III‘s nature.

Star Entertainment is feeling the heat Down Under. CEO Matt Bekier has resigned as the government continues to investigate alleged breaches of anti-money-laundering and anti-terrorism laws. Australia has had somewhat of an anything-goes approach to the casino biz, so Bekier falling on his sword represents an inevitable reaction to this over-lenience. Last week, Crown Resorts was deemed “unfit” to operate Crown Perth (shown) but allowed to run it for the next two years under state oversight. As always, Aussie regulators know how to send a mixed message to offending casinos.

IGT: Biz as usual; Borgata ups the ante; Mega-Jottings

Wall Street analysts were rather ho-hum about International Game Technology‘s 4Q21 earnings announcement. The company’s cash flow from lotteries were almost exactly as predicted ($335.5 million, revenue of $687 million) while gaming brought in $66 million (on revenues of $321 million). The digital segment was a relative disappointment: $9 million instead of the predicted $16 million in EBITDA, while corporate costs overshot the mark, $24 million rather than the expected $19 million. Yawned Credit Suisse analyst Ben Chaiken, “We think 4Q numbers are likely good enough, with important segments (Lotto and Gaming) inline, and we think the miss on digital and corporate should be looked over.” Management continues to project as much as $4.3 billion in 2022 revenues—and why not? By and large they’re hitting their numbers. Chaiken did think it imperative that “new CEO Vincent Sadusky … establish a narrative of extrapolating hidden/underappreciated value in IGT.”

Wynn steals its own thunder; Atlantic City hits a downer

Leave it to Wynn Resorts to squelch news of a bad 4Q21—losing $256.5 million—with an, oh by the way, announcement that it was selling Encore Boston Harbor for $1.7 billion (essentially breaking even on construction costs) and leasing it back. The move is out of character for Wynn, which likes to own its real estate. The company will be renting über-lucrative Encore for $100 million a year, which seems a fair price to pay for such a phat asset. The buyer is San Diego-based, generically named Realty Income Corp. CEO Matt Maddox and CFO Craig Billings insisted this was a one-off for Wynn, with Billings saying, “In Boston, we were able to achieve both an attractive cost of capital and that asset is based on the stability of revenues in the regional markets and the much lighter CapEx burden relative to say Las Vegas made it a logical financing source for us, which is really what it was.” The nearly $2 billion will be sunk mostly into the United Arab Emirates, where Wynn plans a casino-based destination resort.

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