Turnaround at Station; Suburban sexcapades

Things are looking up for Station Casinos. The latest dispatch from JP Morgan analyst Joseph Greff was optimistic, citing “a market that should experience solid 2% to 3% [gross gaming revenue] growth and possesses the ability to harvest margin growth as well.” As for the elephant in the middle of the casino floor, “We think Palms [cash flow] expectations have come down to realistic levels, so profit drags from this property should be in the rear view mirror at this point, a statement we could/would not have made at any point last year with any conviction.” While plans for Durango Station, a hotel-less casino in Reno and a replacement for Days Inn at Wild Wild West went onto the back burner nearly a year ago, Greff expects Station’s next move to be to divest itself of its famous land bank, as well as nonproductive assets.

Station is shopping 88 vacant acres in Reno and 56 near South Point presently (“timing is great,” sayeth Greff), and “potentially (we’d say likely) marketing for sale its ~105 acre Wild West site proximate to the Las Vegas Boulevard, and importantly, Allegiant Stadium, the soon to open new home of the Las Vegas Raiders.” The common denominator to all these moves is $400 million-$500 million, the amount Station needs to lower its leverage to 4X. Operationally, Station piled a strong 4Q19 (+4% locals net revenue) on a robust 4Q18 (+6%). One-time charges and low table-game hold drove Palace Station cash flow into the red, when otherwise it would have been $3 million. The Palms posted a small ($15 million) but positive return on investment for 2019, despite a flurry of charges and writeoffs (read: KAOS). “In 2020, we project $544m of Las Vegas Locals EBITDA, which includes $22m of Palms contribution,” wrote Greff.

More positive economic news was that “Same-store net LV Locals revenues reached the highest level since 2007.” Native American casino-management fees disappointed slightly but were made up for by a 15% reduction in corporate expenses. As for life after KAOS, “management noted that since closing the club, the property has seen an uptick in slot handle and table drop, encouraging trends in the hotel,” plus mixed food-and-beverage numbers. Guess those clubbers weren’t so good for gambling after all.

* Sex for pay isn’t legal in Las Vegas. But what if you’re Doing It with a doll? The Las Vegas Review-Journal has been probing a sex-doll brothel called Sex Dolls Experience, a tenant of a sex club innocuously called The Studios, at 5150 S. Pecos Road, near our old Tropicana Avenue stomping grounds. The Studios is a “fluid gender social lifestyle club,” which covers a multitude of, um, possibilities. “Photos from The Studios’ website showcase rooms outfitted with beds, couches, televisions, at least one stripper pole and bondage equipment,” says the R-J. Owner Joyce Judge seemed flustered by the sex-doll furor, saying “We’ve been there six years, and we’ve never had a problem with anybody until today.” (To compound the irony, the Pecos Avenue property is owned by a church.)

Reported the newspaper, “On Wednesday, a ‘What to Expect’ section of the website described an appointment with one of the dolls, including meeting a host on arrival, picking out a doll, wig and costume, and being escorted to a reserved room for a prenegotiated period of time. On Thursday [after being contacted by the paper], only the description of meeting a host remained, and the rest was replaced with ‘We are not a brothel!!'”

Pahrump sex worker Roxanne Price was concerned about the “stiff” rivalry dolls could provide. She told the R-J, “While human prostitutes are mired in legal red tape, doll brothels don’t have to worry about complying with any restrictive legislation,. It’s as if sex dolls and sex robots have more rights and freedom than actual human sex workers.” Amen to that … and you never know what’s going on next door in Sin City.

* Congratulations to Mohegan Sun. It was selected among the top 1o of Fortune Magazine’s “100 Best Workplaces for Diversity.” No other gaming company made the top 10. Mohegan Sun’s workforce is 49% minority, 48% female, 29% Baby Boomer, 13% disabled and 4% LGBT. Said Mohegan Gaming & Entertainment CEO Mario Kontomerkos, “The work culture present at Mohegan Sun and all MGE properties is vigilantly guided by the Spirit of Aquai, which represents our way of being welcoming, cooperative, building relationships and having a mutual respect for others. The upshot is an organization that operates with fairness and integrity towards an inclusive and inspiring work culture that transpires globally.” The bar for the industry has been raised.

Jottings: A little birdie must have told developer Howard Bulloch that the Las Vegas Raiders are hard up for parking. He’s shopping 38 acres across from Mandalay Bay which have been something of an albatross around his neck—until now … Kentucky Downs, in Franklin, in planning to open a $25 million slots, er, historical racing parlor late this summer. The racino sits adjacent to the largely untapped Tennessee market … Seven race course sports books took bets from an undercover, 16-year-old agent in the United Kingdom. As a consequence they’ll have to fork over 2.5% of gross profits to The Man … Moody’s has assigned a B3 rating to a loan for $860 million Circa, secured by The D and Golden Gate. In grading the loan, Moody’s cited the “management team’s knowledge and success operating in the downtown Las Vegas gaming market along with the considerable amount of cash equity supporting” Circa. Derek Stevens‘ relatively small revenue stream and exposure to one market were cited as concerns, but not major ones … Reno-Sparks Convention & Visitors Authority CEO Phil DeLone is being investigated for unspecified “misconduct.”