Palms renovation weighs upon Station; Japan dithers on casinos

Calling Palms renovations “an issue that has been persistent all year and whose magnitude keeps surprising us to the downside,” J.P. Morgan analyst Joseph Greff lowered revenue projections for Station Casinos for the remainder of the year, extending into early next year. “We now model Palms contributing zero dollars of [cash flow] from 3Q17 until mid-2Q18,” he wrote, citing 40% of the casino floor being out of action, not to mention disruption of the food court. Not to worry, he anticipates that customers will return once the new-and-improved Palms debuts. However, renovations to the nightclubs and hotel rooms loom on the horizon, so expect disruptions to continue for a while, as Station pours $146 million into upgrading the resort.

Not all the news is bad. Once the Palms has been redone, Greff anticipates double-digit ROI at the property, music to Red Rock Resorts shareholders’ ears, no doubt. “Following revamped F&B options across its properties, our view is that RRR is starting to see volumes recover and has sporadically been able to put through some modest price increases,” Greff writes, adding that a new slot-management system is increasing players’ time on device, the Holy Grail of slot-floor managers. Despite a stated preference for Boyd Gaming, Greff terms Station an “interesting investment” thanks to “our positive view of the LV Locals market, with an attractive macro of Clark County population growth, job growth, and wage growth driving solid demand against the backdrop of a stable supply profile.” In other words, there could be worse times to buy RRR stock.

* Push those Japanese casino openings into 2026. The hapless Shinzo Abe administration is delaying a vote on the implementation bill until 2018. To even get that far, Abe has to survive a re-election bid, expected later this autumn. One expected consequence is that, if Abe wins, he will have to put together a new governing coalition from scratch. Abe’s attempts at casino legalization have left a trail of timidity in their wake and this latest delay merely ratifies that impression. Union Gaming Group‘s Grant Govertsen was sanguine: “If the bill is done right I don’t think any of the potential license holders are going to complain too much if the bill doesn’t get passed until next summer.” As with anything in Japanese politics, patience is a virtue. Gaming consultant Ben Lee, meanwhile faults Western casino operators for their strong-arm, sometimes paternalistic approach, saying, “Instead of recognising the roadblocks confronting the concept, the proponents have engaged in megaphone high-pressure sales tactics more common to the West when they should have engaged in more tactful diplomacy.” He predicted that “quintessentially Japanese” design concepts would win out in the end.

* Scientific Games is wagering that sports-legalization is in the cards, so to speak. It has bought NYX Gaming, manufacturer of a worldwide sports-betting platform. At the very least, Scientific can deploy it overseas and in those few U.S. states where sports wagering is legal.

* The Trump administration has clouded the waters in Connecticut with a new letter from the Bureau of Indian Affairs regarding the Foxwoods/Mohegan Sun satellite casino in East Windsor. Sitting firmly on the fence, the letter reads in part, “We find that there is insufficient information upon which to make a decision as to whether a new casino operated by [the tribes] would or would not violate the exclusivity clauses of the Gaming Compact. The Tribes have entered an agreement with the State whereby they have agreed that the exclusivity provisions will not be breached by this arrangement. Therefore, our action is unnecessary at this time.” (Emphasis added.) Now everyone will wait for the next BIA shoe to drop.

* Deceased Las Vegas fixture Jerry Lewis didn’t leave this earth without exacting a King Lear-like revenge upon his six sons. This seems to be a proxy vendetta against ex-wife Patti Palmer, with whom he was wed from 1944 to 1980. Not content that eldest son Joseph was dead already, Lewis made a point of cutting him out of the will just the same. Classy guy, According to the Los Angeles Times, “Lewis admitted in several interviews that he had been unfaithful to Palmer, particularly at the height of his popularity with comedy partner Dean Martin.” You’d think he’d want to make posthumous amends. No dice. It’s just one more reason that your flesh should crawl when you hear the words, “Jerry Lewis.”