Half-a-loaf Cuomo; Ohio implosion

The implication, reacted Credit Suisse analyst Ben Chaiken, was that there would be a high tax rate and traditional operators “potentially wouldn’t be able to enter the market.” He predicted a rerun of New Hampshire‘s arrangement, whereby DraftKings enjoys a monopoly and is taxed 50%. Legislators, however, seem to have different ideas, even as they rushed to file their sports-betting bills. Reported Chaiken, “these bills take a very different form than the implied single/minimal operator(s) and high tax set out by Cuomo; instead they would allow a casino based model, where the four commercial casinos and three tribal casinos offer two skins each, implication being 14 operators (4 commercial casinos and 3 tribal with 2 skins each). This is similar to bills that have been introduced and failed in the state before,” he warned. Also, the 12% tax rate, while clement, wouldn’t reach the threshold required to achieve Cuomo’s half-billion-dollar goal.

“Operators who were believed to be out of the running as of yesterday, now seem to have a second chance, but we would stress that this bill is very different from what Cuomo implied in his address on Wednesday,” Chaiken concluded. PlayUSA prophesied that the Cuomo proposal could “stunt growth” of a potential $20 billion handle/year market, meaning a $1 billion bottom line, of which Cuomo would confiscate half. “It will be a big market no matter what, but the Cuomo plan has a chance to significantly lower the potential revenue ceiling,” cautioned analyst Eric Ramsey, the ‘why’ being that state-run monopolies in other states (N.H., Oregon, Montana and Rhode Island) have suppressed activity by half. “A state-run sportsbook allows the state to capture more of the gross gaming revenue, which makes it appealing to state governments. But a monopoly would do little to aid struggling racetracks and retail casinos in New York. And bettors are left with fewer choices and less enticing promotions, among other issues,” PlayUSA elaborated. We’re pulling for the Lege on this one but Cuomo’s veto pen looms large.

Everything’s good at Circa, according to Derek Stevens, who treated Roger Gros to an audio tour of the new hit property Downtown. Business, sayeth Stevens, has been “busy,” especially on weekends and during football games. The ebullient Stevens is upbeat on what 2021 holds in store for casinos, telling CNBC it would be Las Vegas‘ best year ever. Weekend business is ramping up while midweeks remain soft. He predicts a turnaround as soon as this month. Let’s hope he’s right. Stevens usually is.

After consistently outperforming the U.S. casino market for months, Ohio has taken a tumble, falling 22% last month to $132.5 million. JP Morgan analyst Joseph Greff blames this on reduced capacity (50%) and hours but we don’t think that’s the whole story. Hollywood Toledo continued to benefit from casino closures in Detroit, jumping 15% to $20.5 million. By contrast, Hollywood Columbus fell 21% to $15.5 million. As for Penn National Gaming‘s two racinos, Hollywood Dayton grossed $9 million (-8%) and Hollywood Mahoning Valley made $8 million (-23%). Belterra Park suffered a 26% decline, grossing $6 million while Scioto Downs pocketed $13 million, a 19% blow. MGM Northfield Park plummeted 36% to third-place status, making $14 million. Miami Valley Gaming absorbed a 26% punch, grossing $12 million, while Jack Thistledown‘s $10.5 million represented a 13% decline. Jack Cleveland was down 31% to $13 million while Hard Rock Cincinnati nose-dived 39.5% to $11 million.

Jottings: New Rio owner Eric Birnbaum assured Nevada regulators that he would restore the property to its former, pre-Gary Loveman luster. That puts the kibosh on any talk of imploding Las Vegas’ most beautiful resort … Sluggish business continues to dog MGM Resorts International on the Las Vegas Strip. It just furloughed 140 people from management positions. Stated MGM, “Business volumes are projected to remain low for the beginning of the year due to the pandemic, unfortunately requiring temporary reductions in staffing across our Las Vegas properties. We are focused on bringing employees back to work when business levels recover.”