Giant dildo at large in Sin City; Scientific pleases, disappoints

Credit Suisse analyst Ben Chaiken wasn’t convinced, heading his report, “The good doesn’t outweigh the bad.” The i-gaming momentum, he wrote, “is not part of the core earnings story.” He explained, “SGMS’ core business is still gaming, which faces material headwinds. In the prior year period, SGMS generated $363m of “segment EBITDA”, 60% of which came from slot machines. So while we like the iGaming industry, we don’t think this is the way to express that view.” Chaiken added that Scientific’s installed slot base fell 5.5%. “We see risk that this installed base comes down as operators figure out which machines they can ‘turn on’ and keep, and which machines they can potentially dispose of.” Worse still, future casino openings would be “minimal” if any. Simply put, there’s little market for new slots. Chaiken sees the coming trend to be one of sports books consuming floor space previously dedicated to slots.

Taking a middle course was JP Morgan analyst Joseph Greff. He was impressed by SciPlay but said that “uncertainty” hovers over Scientific. He noted “expense control” at the parent company and “resilient” lottery biz. According to SGMS execs, slot handle is “trending up significantly” compared to 2019, though, as Greff wrote, “operator demand for equipment is still uncertain.” Fortunately for Scientific, 50% of its installed base is in regional casinos, which everyone expects to recover fastest. Debt refinancing should add $200 million in liquidity. The possible sale of Ron Perelman‘s 39% stake in the company went unremarked. Predicting “a prolonged recovery given capital preservation needs of gaming operators and reconfiguration of floors,” Greff still likes SciPlay’s trend and that of the lottery division. He puts an $18 price target on SGMS.

One of our S&G correspondents paid Downtown a visit yesterday, starting at The D, and filed this report: “The long bar looked lonely with all its chairs removed and bar top games covered up with signs announcing closure. Also went to Four Queens. Crowds are much sparser and more wearing masks.  Some of the merchandise kiosks have opened up on the [Fremont Street] Experience. People didn’t seem to know what to do with themselves. The Circa sign is up and looks good.” Indeed it does:

Jottings: Baseball season has resumed, saints be praised, but that doesn’t stop the stat-o-casters. BetQL ran a simulated MLB season 10,000 times over and concluded that the Atlanta Braves will not only make the playoff (94% likelihood) but win the National League East (69%). Isn’t it depressing when someone declares the season over when it’s hardly begun? … If the “crowd” noises at baseball matches sound like a video game, that’s because they are … 20 years of service at Mohegan Sun by Ray Pineault have been rewarded. The GM has been promoted to COO of Mohegan Gaming & Entertainment, adding properties in New Jersey, Pennsylvania, Canada and South Korea to his portfolio … More evidence that demand for Las Vegas is slackening: Wynncore is planning to furlough an undisclosed number of employees. They’re the lucky ones. The Tropicana Las Vegas hasn’t even reopened and already 620 workers are getting pink-slipped while Phil Ruffin is giving 252 the chop at Circus Circus. A spokesman for Wynn Resorts admitted to “challenged business volumes.”