While the gaming industry seems to be straining at the limits of how far it can expand in the good old U.S. of A. the numbers don’t lie: The casino industry 
posted a record $41.7 billion last year. That’s a 3.5% increase from 2017. State and local governments had to be happy, as they were rolling in $9.7 billion in direct taxes, not counting sales and income taxes, a “force multiplier” for the industry’s economic impact. In addition to the national record, 12 states reported record numbers at that level. Only two states suffered declines. Part of the growth was attributable to sports betting, up from $261 million to $430 million, and that’s just the beginning. Said American Gaming Association President Bill Miller, “More people than ever are experiencing the economic and social benefits of gaming in their communities, due in part to the expansion of legal sports betting across the country.”
As for downsides, the AGA stated, “Legal and regulated sports betting barely scratched the surface of an entrenched black market — comprised of offshore sportsbooks and street bookies.” Added Jefferies analyst David Katz, “The gaming industry is very mature. The largest population centers, excepting Texas and Atlanta, are becoming increasingly saturated with access to gaming … Operators and developers are chasing thinner and thinner returns.” Nomura analyst Harry Curtis even called for job layoffs. As for the Illinois market, flat last year, he said of the oncoming casino expansion, “Demand is not as endless as the legislature would like to believe.” Added Katz, “The one winner is the companies that sell the slot machines. Expansion is good for them. Full stop.”
* Even an extra weekend day couldn’t make Indiana gaming revenues better than flat last month, although there may be worse to come. Caesars Entertainment‘s racinos outperformed its 
riverboats. Indiana Grand was up 11% to almost $23 million and Hoosier Park gained 6% to $16.5 million. Horseshoe Southern Indiana, by contrast, fell 10% to $20 million while Horseshoe Hammond dropped 7% to a still-impressive $31 million. Gainers in the upper tier were Ameristar East Chicago, up 2% to $20 million, and Blue Chip, which has weathered the challenge of tribal Four Winds to post a 4% gain, good for $13 million. The two Majestic Star boats were down 5% and 3.5% respectively, grossing $8 million and $5 million.
In the southern tier Full House Resorts had a great month at Rising Sun, up 11% to $4.5 million (you’ve got to start somewhere), while Eldorado Resorts seems to have misplaced Tropicana Evansville‘s magic touch. It was off 1% to $13 million. Hollywood Casino Lawrenceburg gained 2% to $15 million and Boyd Gaming suffered a setback at Belterra Resort, dropping 8.5% to $9 million. Independent French Lick Resort was up 6.5% to $8 million.
Speaking of Boyd, JP Morgan analyst Joseph Greff chose to oraculate upon the company and described its risk-reward as “compelling.” Long term, “we think it can be a direct and indirect beneficiary of our anticipation for continued 
gaming industry consolidation/M&A” and near term “regional gaming stocks have historically outperformed in the 2Q/early summer months.” Greff sees Boyd as well-positioned to pick from the leftovers of an Eldorado/Caesars merger, as well as deriving benefit from owning its real estate (a key factor in CEO Keith Smith‘s rejection of a REIT conversion). Interest rates, being low, would also make this an opportune market in which to buy.
Also, “U.S. wages continue to trend positively, unemployment rates remain low, and consumer sentiment is generally healthy. We believe these metrics should continue to support a relatively attractive setup for BYD’s fundamentals.” And when wage growth is healthy there is a “strong correlation” with gross gaming revenues. The only drag seen is the IRS’ tardiness in issuing tax refunds this year. That being said, “we expect May GGR will be up mid-single digits on a same-store basis.” Sounds all right to us.
* Good news for Sheldon Adelson: El-Al is incepting service to McCarran International Airport this Friday. The Tel Aviv-to-Las Vegas route is projected to have nearly $6 million in annual economic impact for Sin City. So if Adelson ever needs to meet Bibi Netanyahu in a hurry and the corporate jet is out of service he can go commercial.
