CityCenter sale applauded; DraftKings sued twice over

Deutsche Bank analyst Carlo Santarelli took a gander at the terms of MGM Resorts International‘s purchase/re-sale of Aria and Vdara, and liked what he saw. He reaffirmed his “buy” rating on MGM shares, with a price target of $54. He applauded the deal for three reasons: simplification of MGM’s corporate structure by removing joint-venture partner Infinity World; cash and lots of it; the transaction “allows MGM to better manage its Strip assets, as opposed to receiving fifty cent dollars at a key core asset, as it had been.” Santarelli believes MGM will use at least some of the proceeds to pay the remaining $1.7 billion in CityCenter debt. Considering that it cost MGM $4 billion to build Aria alone, we think the transaction is, at best, a wash, not to mention the death knell for “New Urbanism” on the Las Vegas Strip. Still, when one considers the collapse of the condo market, the slow, slow ramp-up of Crystals and the Harmon Hotel fiasco, MGM is getting out relatively unscathed.

That Hindenburg Report exposé of SBTech is continuing to bite DraftKings in the ass. A lawsuit has been filed on behalf of shareholders by Robbins LLP. It accuses DraftKings of misleading investors by failing to reveal that “SBTech had a history of unlawful operations … accordingly, DraftKings’ merger with SBTech exposed the Company to dealings in black-market gaming … as a result, the Company’s revenues were, in part, derived from unlawful conduct and thus unsustainable” and so forth. We don’t know if this will hold up in court but those pundits who dismissed the Hindenburg explosion as a one-day story were real Pollyannas.

DraftKings is also being sued in New Jersey over the alleged infringement of two patents owned by Canadian firm Winview. The disputed technology involves geolocations and something called “equalizing latency.” That’s the stuff that enables odds to be seen in the same instant coast to coast. According to LegalSportsReport.com, “Industry consultant Joe Brennan noted Winview faced an uphill battle because its patent applies to the feed of the event, not the event itself.” It gets more complicated from there. (Prop bets play a big role.) Announcement of the suit gave a big boost to Winview stock, while DKNG’s price was unruffled.

Casino execs who used to look on 2019 as the high-water mark for gaming may find themselves measuring future results against the palmy days of 2021. Take Iowa, for instance. Last month it was 17% ahead of its 2019 pace. The statewide gross was $141.5 million, led by Prairie Meadows racino’s $19.5 million. Diamond Jo Dubuque was up 4% to $6 million and Diamond Jo Worth +11% to $8 million. As for the Caesars Entertainment quartet, Isle Bettendorf was +17% to $6 million, Isle Waterloo +14% to $8 million, Harrah’s Council Bluffs +9% to $6 million and Horseshoe Casino +15% to $16 million. Penn National Gaming didn’t do too shabbily at Ameristar Council Bluffs, grossing $14.5 million for an 11% gain.

Sports betting handle was $111 million, which boiled down to $8.5 million in actual revenue. DraftKings had 30% of the latter, followed by FanDuel‘s 24% and William Hill‘s 21%. In terms of handle, William Hill had 33% ($36.5 million) but played unluckily, while Wild Rose (DraftKings/BetRivers) saw $31.5 million in action and Diamond Jo (FanDuel/BetMGM) was third with $26.5 million. “With a lighter sports schedule and few local betting events to spur interest, Iowa won’t see significant growth in betting again until the football season,” PlayUSA analyst Dustin Gouker opined.

Think twice about that Las Vegas visit. The Silver State’s Covid-19 positivity rate has doubled in the last month, to 8%, and the number of new cases hasn’t been this high since February, while the state was still in lockdown. Only Missouri and Arkansas are worse off. Said Dr. Cassius Lockett, the Southern Nevada Health District’s director of disease surveillance and control, “We are in a serious race against the fast spread of the delta variant,” while Mark Pandori, director of the Nevada State Public Health Laboratory at the University of Nevada-Reno, tempered that with “My level of concern is moderate to high, but only for unvaccinated individuals.” Gov. Steve Sisolak‘s response? He’s conducting a lottery drawing to incentivize people to get vaccinated, although all too many Nevadans seem to have a death wish.

Jottings: Surprise, surprise, surprise! Not. The Las Vegas Convention & Visitors Authority all too predictably awarded its advertising contract yet again to Billy Vassiliadis and R&R Partners. In a nod to fair competition, a portion of the contract will be shared with New York-based Grey Global Advertising, which will concentrate on social media. R&R and the LVCVA are joined at the hip and probably wouldn’t have survived the surgery required to separate them … Speaking of fixes, juiced-in, $563 million Urban One casino in Richmond‘s juice was barely dry when it announced project delays. The casino opening will be pushed back nine months, just in time for the mayoral race, and the hotel won’t be ready until 2025. Was this the best Richmond could do? … Betting on in-state college teams faces an uphill climb at the New Jersey ballot box. Only 25% of voters surveyed are in favor while 49% are against. We’re not ready to call this constitutional amendment DOA but it’s on life support … Vital Vegas author Scott Roeben has been a consistent booster of Resorts World Las Vegas, so we are hardly surprised that he gives the final product a rave review. Well, not “final,” as important components are still unfinished. Elsewhere, Roeben finds low-roller casinos are either getting rid of table games or cutting them back and replacing live dealers with electronic table games. At least you don’t have to tip an ETG (yet).