Golden Gaming was coming off a strong 4Q19: Net revenues at its Nevada casinos were 24% higher, to $134 million, and its slot routes were up 4.5% to $73 million. However, JP Morgan analyst Joseph Greff warned 
investors to “stay neutral,” lowering his price target from $19/share to $15. Noting a plunge (63%) in 2020 equity, Greff wrote, “Unfortunately, GDEN‘s 4Q report does not matter much in the current environment of volatility and uncertainty.” The company “said its properties are seeing mostly normal levels of activity and are by no means ghost towns, and that no closures are currently planned. The Strat has been performing well (it was sold out just this past weekend), and GDEN looks forward to operating the property without any construction disruption over the coming year.” It added that it was looking at slot routes in Pennsylvania and Missouri.
The sooner Golden can get those routes, the better. Its Achilles heel is its predominant exposure to the Southern Nevada market, ensuring that if the Clark County economy tanks in the Covid-19 tsunami, GDEN will go down with it. Fortunately for Golden, it owns all its real estate and doesn’t have to worry about suddenly pesky REIT rental payments. However, Greff was worried about Golden’s high leverage (5.6X), “which is a liability at this point in the cycle given growing economic uncertainty.” Cash flow, such as it will be, was expected to go primarily toward debt reduction. Today, who knows?
* Massachusetts state Rep. Susan Williams Gifford (R) is meddling with the state’s casino structure and those who complain of a saturated market 
will be even unhappier if Gifford gets her way. In a bill crafted to suit Notos Group it would amend existing law to lower the budget for a Region C (southeast) casino to $300 million and add a second slots parlor. Plainridge Park can’t be too thrilled about the latter proposal. Notos CEO Peter Forman said, somewhat less than credibly, “We’re backing legislation that would allow the state to consider options other than a full resort casino. We have not endorsed any specific proposal that might be made to the state.” (Notos is pushing a slots parlor at Wareham Park.)
As for playing the ponies, Forman said it “seems to have a little more potential value to the region, because there are lots of farms in the region and there is an agricultural spin to horseracing. Whether it’s possible to have a sustainable horseracing industry, I would leave those in the industry to find out.”
Noting that the legislation is gift-wrapped for (and apparently written by) Notos Group, state Sen. Marc Pacheco (D) fired back that it “would corrupt the system and the plans that the Massachusetts Legislature and 
governor put in place. We took a lot of time to study this issue, to look at what the implications were and what the market would be like in Massachusetts.” Perhaps cognizant of the dreaded Penn National Effect, Pacheco added, “When the gaming industry announces they’re going to build a casino, very rarely do a lot of the estimates come to pass. They’re usually more lucrative in terms of their vision rather than the reality.”
Sadly, we have observed to be almost invariably true. Not that Pacheco is against a Region C casino: “The most effective way to assess market saturation is to simply use the process in place,” he told the Boston Globe.
* New Desert Diamond Casino in Glendale is effectively scoffing at Coronavirus worries, staying open as all other tribal casinos in the area shut their doors. Talking Stick Resort and Casino Arizona are under wraps until March 31. The Gila River Hotels & Casinos chain is going into two-week lockdown. Nobody knows if the worst will be over by then, but they have to start somewhere and good on them for doing it.
* Bloomberry Resorts CEO Enrique Razon opened a can of whup-ass on Japan‘s casino-approval process and investment expectations recently, calling it “a bit of a joke. So what is this process anyway? Where’s the 
clarity? Tokyo doesn’t want one. Yokohama? Maybe, maybe not. Chiba said they wanted one, and now they say they don’t want one. The process is pretty much muddled still, and nobody really knows what’s going on. It’s a $10 billion investment.If I had $10 billion sitting on me, I don’t know if I would build that casino.” Indeed, nobody has ever spent $10 billion on a casino. Not even close (although some reports on Marina Bay Sands pegged its price tag at $7.5 billion). Razon is willing to spend $4 billion, admitting that Nippon is “a high priority … very attractive.”
In Japan’s defense, even if its gaming market is only $10 billion a year (as some suspect), that still gives each operator a $3.3 billion slice of the annual revenue. But do you want to put $10 billion or more into an untested market when Coronavirus is draining your financial reserves? Do Japanese players cotton to baccarat? How many legislators are going 
to try to shake you down for bribes? And how much casino floor are you really going to have? It’s nominally 3% of the entire resort—maybe less. (Pictured, an abandoned design for an MGM Resorts International casino in Yokohama.) “Does that 3 percent include hallways? Does it include a public space, where I may be hosting a convention or meetings? What am I basing my gross floor area on?” So queried Global Market Advisors Director Brendan Bussmann. The Japanese government’s insistence on as little gambling as possible is going to make ROI much more difficult and now, coping with Covid-19, the Shinzo Abe government’s snail-powered approval process appears to be at a standstill. There will casinos in Japan someday, although we wouldn’t wager good money on it.
