Las Vegas: The first shall be last

We’re not alone. JP Morgan analyst Joseph Greff is talking up the fundamentals of the regional gaming sector this week. He wrote, “We still like the regional gaming space as it provides exposure to the drive-to, high frequency visit, leisure gaming patron recovery, plus a now lower [operating-cost] structure that should drive margins higher (e.g., gradually bringing back/re-hiring workers based on demand levels, fewer amenities such as live entertainment/buffets, etc.). Net, we continue to believe regionals are a good place to be given margin upside, exposure to sports betting, and a generally better than feared level of [gross gaming revenue] recovery.”

Citing the above factors, its alliance with Barstool Sports and the leadership of CEO Jay Snowden, Greff pegged Penn National Gaming stock to reach $36/share by the end of next year. Boyd Gaming he targeted for $24/share, arguing that it has “a favorable localized/regional footprint predominantly focused on a drive-to, leisure gaming customer … Furthermore, we see BYD as a favorable way to play growth in U.S. sports betting, and note that its 5% stake in FanDuel is largely unappreciated/overlooked by investors.”

In other Boyd news, the company red-penciled 25% of its Las Vegas and regional workforce, giving as the reason “significant restrictions” on its business and low visitation. It could have been worse: In May, Boyd was talking about cutting as much as 60% of its employees. Boyd didn’t say where the brunt of the terminations would fall but one notes that Eastside Cannery, Main Street Station and Eldorado (no relation to Tom Reeg) remain closed. Back in business, however, is Ohio‘s Belterra Park, which previously looked to be toast.

In what Greff called “the first positive and meaningful development for the Macau sector in some months (maybe longer),” the government of Guangdong province is lifting quarantine requirements on Macao-returning travelers, effective today. The gambling capital of the world has been strangling on such movement restrictions within China. Casino operators, eager to stay in good odor with the government, have no choice but to grin and bear it, losing money hand over fist. Since Guangdong clamped down, Macanese gambling revenues have “fallen off a cliff (i.e., mid to upper 90% monthly year-over-year declines). [Guangdong] accounts for ~50% of visitors and is a geographically proximate source of premium mass and VIP play.” For Greff, the policy change translates into an unleashing of pent-up VIP play. Melco Resorts & Entertainment, Wynn Resorts and Sands China are expected to be the prime beneficiaries.

Jottings: It’s official; Jeff Sessions is finished. The anti-Internet-gaming, anti-legal-marijuana bluenose has lost his bid to regain his U.S. Senate seat. Given Sessions’ sorry track record on personal liberty we’re not sad to see him consigned to the dustbin of history … There’s a new term for abusive, anti-mask louts: maskholes … Despite rampant Covid-19 in Florida, it’s business as usual at Seminole Hard Rock Tampa. The casino just debuted Aristocrat Technologies‘ Cash Express Luxury Line, described as a “legacy-based game” featuring slot faves Buffalo, 50 Lions and Timberwolf … Even though it’s been a boondoggle since Day One, the idled Las Vegas Monorail just got thrown a lifeline. The Las Vegas Convention & Visitors Authority is “in talks” to buy the turkey; they better get a handsome discount … Penn National finally has a reopening date for the Tropicana Las Vegas: Sept. 1. Welcome back.