Sands: Pump up the volume; Nevada’s new casino tax; Cannery’s secret weapon

As in “VIP volume.” That’s what Las Vegas Sands has to do in order to monetize some of its Macao assets, according to a J.P. Morgan report that appeared this morning. In the course of meeting with Sands honchos, Joseph Greff and colleagues learned that “underutilized” (read: underperforming) spaces in Macao include the new Four Seasons Plaza casino — in a market whose appetite for gambling is a long way from sated — and the Playboy Club in Sands Macao. The proposed solution: Ramp up VIP junkets to these properties. To this end, Sands has signed pacts with two new junketeers and hopes to show results by the new year.

Somewhat paradoxically, Sands asserted that “underutilized real estate … is attracting solid interest,” although I suppose one could draw a distinction between interest and actual foot traffic. Also, did someone misspeak in stating that the attractions of Four Seasons Plaza (left) include offering excellent credit? U.S. operators are forbidden to extend markers to Macanese punters; hence the importance of the junketeers, who can advance money to their VIP clients — and collect it in ways about which we’d rather not know.

Sands officialdom wasn’t offering specific numbers regarding the performance of Marina Bay Sands, saying that it was improving quarter to quarter. Based on 1Q11 $3.7 million/day in casino revenues, Morgan analysts project it will be at $4.3 million/day by year’s end. Greff’s crew reckons that investors put too much stock in Sands’ Singapore-VIP performance (disappointing) than its mass-market play, which is steady and strong. There’s even good news on the VIP front, which is described as reliable, with a firm baseline.

Nothing was said by LVS casino supremo Rob Goldstein about the ongoing investigation of Sands in re the Foreign Corrupt Practices Act. And if anything was mentioned with regard to Sands Bethelehem, Venelazzo, the St(ump) Regis (which may get capped at its present height) or Sands’ various expansion proposals, it wasn’t deemed worthy of repetition.

Casino players are balancing the budget for the State of the Nevada, to the tune of $17 million. An accord between Gov. Brian Sandoval (R, right) and the Legislature includes a new law whereby unclaimed slot winnings become the property of the state. In the long view, that’s not going prevent the gaming industry from making ends meet — but it’s an additional levy on casinos and a one-step-removed tax on players themselves. So cash out every last nickel on those TITO vouchers, unless you feel like tithing Carson City your winnings. While hardly painless, the budget process was at least handled with a professionalism not seen since the late Kenny Guinn was governor.

While some Las Vegas casino operators have been on their uppers, that would not include Cannery Casino Resorts. Not even the loss of its Rampart Casino management contract (Rampart will be run internally, with some help from Herbst Gaming) could dampen the ardor of bond analysts, who raised their rating on the company.

While cash flows at its Vegas-area casinos have been down, Cannery’s not-so-secret weapon has been in Meadows Casino and racetrack (above) in Pennsylvania, driving 65% of the firm’s overall cash flow. The company is carrying nearly a half-billion dollars in debt but has narrowed losses from $23 million in 2009 to $15 million last year.

“However, we do not expect a return to meaningful growth or to previously generated levels of revenue and EBITDA in the locals market over at least the next few years,” warned a Standard & Poor’s report on Cannery. That’s a sobering reminder that, even as things are turning around on the Strip, damage to Las Vegas from the collapse of the ’07 gaming/housing/construction bubble extends deep into the community, to the extent that Mayor Oscar Goodman recently estimated that the devastation could take a decade to erase.