Penn bullish on Trop; DraftKings can’t help itself

J.P. Morgan analyst Joseph Greff met with Penn National Gaming executives and found them very upbeat on the Tropicana Las Vegas, even though it grosses less than $54 million a year. “Of the three million Marquee Rewards members, Penn estimates 20-25% visit Las Vegas at least once per year and believes capturing just 15% of that user base’s average gaming spend would deem the property successful,” Greff wrote.

As for renovation, Greff doesn’t think we’ll see anything on that front (ditto new construction) until the Trop is producing at least $40 million in cash flow. However, Penn may not be standing pat on its newest Vegas investment: “Finally, management stated it believes in the long-term growth of Las Vegas and, depending on its success at Tropicana, could see further projects down the line.” That has to be music to the ears of investors who fear that casino expansion in the U.S. has hit the wall.

* Despite being barred from taking further action from Nevada, DFS giant DraftKings went and did it anyway. Nevada Gaming Control Board Chairman A.G. Burnett is threatening to ask for prosecution if DraftKings doesn’t cut it out, while the Internet-betting site issued a self-serving explanation, claiming to be “nuanced”: i.e., action that was booked for this weekend was allowed to play out through today. I guess we’ll find out in a week if DraftKings has truly seen the error of its ways.

In the meantime, DFS will henceforth be categorized here under “Internet gambling,” not “Sports.”