First-quarter results for Wynn Resorts were worse than expected in Macao but better than anticipated in both Las Vegas and Boston, while the company posted a revenue chasm around Wynn Interactive. To shore up the latter, Wynn is merging it with Austerlitz Acquisition Corp., which taps a new source of funding for the venture, among other virtues. They will form a publicly traded company under the Wynn Interactive banner, ticker symbol WBET. Currently in 15 states, WynnBet is confident of reaching 77% of the American public in the near term. Wynn Resorts will have 58% ownership and 72% voting rights in the new entity. In an ironic twist, Greff lowered his 2021 cash flow projections for the parent company due to relative weakness in Macao (when was the last time you heard that?), despite newly elevated ones for Las Vegas and Boston. Yes, American operations are carrying Chinese ones for the time being.
By 2022, Greff expects Las Vegas Strip cash flow (i.e., return on investment) to be 27% higher than banner-year 2019 while Macao limps along at 77% of 2019 levels. Blame it on casino-shy VIP players. The silver lining for Wynn is that Wynn Palace is finally pulling something close to its weight, drawing 1Q21 cash flow of $27.5 million to Wynncore Macau‘s $16.5 million. In order to get pre-Covid revenues without pre-Covid-sized visitation, Wynn is recalibrating its marketing toward premium-mass customers. Mass-market wagering remained 55% below 1Q19 and VIPs played 80% less.
Still, JP Morgan analyst Joseph Greff found the investor call “generally encouraging,” as WYNN observed improving trends in Macao and a ramp-up of conventions in Sin City (recall that Wynncore has a virgin convention center on its back nine). Greff stood pat on his price target, adding, “we see WYNN as a way to play an improving Macau, a further recovery in domestic casinos, and now, for an emerging U.S. mobile sports betting and iGaming business.” As for Macao, the company did $3 million cash flow per day, its best numbers since the onset of Coronavirus, with greatly improved retail revenues, 93% hotel occupancy and mass-market play constituting three-fourths of the action. Giving a peek into 2Q21 results, Wynn execs said Macanese slot revenue was $25 million in April, a record amount, and room revenues were up 50%.
In Las Vegas, occupancy is running at 90% on weekdays, 70% midweek, while Encore Boston Harbor cash flow in April is ahead of the first quarter by 30%. Wynn missed cash-flow projections in Macao but exceeded them on the Las Vegas Strip and added that visitor volumes picked up around March Madness, a strength which has been sustained into April. Encore Boston Harbor was projected by Greff to generate $15.5 million in cash flow last quarter. It did $30.5 million. You go, Boston.
It looks like crossing Jeffrey Soffer‘s palm with a Miami Beach casino was a juice job too crass for the Florida GOP to stomach. State Senate President Wilton Simpson (R) says it’s a no-go. We suspected this was a pay-to-play deal and FloridaPolitics.com confirms it: “Soffer has spent more than a million dollars in campaign contributions and hosting elaborate fundraisers for Republicans on his mega yacht. Soffer donated more than $1 million to Republicans in 2020, including nearly $400,000 to the Republican Party of Florida, and $350,000 to the Florida Republican Senatorial Campaign Committee.” As for juicing Donald Trump into a Doral casino, which even Gov. Ron DeSantis (R) evidently thought too blatant a payback, Simpson says that’s not happening either.
Simpson was in favor of a Seminole Tribe compact long before DeSantis was but he’s not tipping his hand about the guv’s grand bargain, which came with a lot of bells and whistles, most involving sports betting. The Lege reconvenes Monday in special session to ponder the compact as well as to consider several other gaming-centric bills. Two would establish (badly needed) gaming regulation in the Sunshine State. A third would decouple (currently mandatory) horseracing at certain parimutuels from card-game permits. In other words, they’d be tracks in name only, a farcical situation.
Surprise, surprise, surprise, as noted gaming authority Gomer Pyle would say. Caesars Entertainment made it official that they’re not selling any Strip properties this year, the worst-kept secret in town. What would be even less astonishing would be if they sold any in 2022. After all, “We remain convinced that it does not make sense for us to market an asset until we can market it off the cash flow that we’re doing with it, not off a bridge to what we think we can do with it,” CEO Tom Reeg said. Meanwhile, San Manuel Band of Mission Indians CEO Laurens Vosloo let it be known that the tribe had been playing footsie with Caesars over an undisclosed Strip casino but, given Caesars’ irresolution, it’s hardly astonishing that nothing came of it.
Meanwhile, the Roman Empire lost $243 million on revenue of $1.7 billion in 1Q21, a result that Reeg was at pains to downplay. “The numbers don’t tell the story this quarter,” he spin-doctored. “We had Illinois and Pennsylvania still closed when we started the quarter. In Nevada, we didn’t have the state open to 50% until two weeks were left in the quarter, so we saw demand build through the quarter.” He apparently did a good enough job for at least one Wall Street analyst to put a “buy” on CZR shares.
Missouri reported April gambling revenues and they were as robust as Iowa‘s: a $171.5 million gross and 23% increase over 2019. (Now if only the rest of the economy were doing so well.) Slots were up 27% to $150.5 million and tables +2% to $21 million. Even Penn National Gaming properties that had been struggling of late got in on the party. River City won $19 million, up 8% and Argosy Belle‘s $15 million was a 14% gain. But Hollywood Casino St. Louis was down 6% despite an $18 million gross. Nearby Ameristar St. Charles (Boyd) leapt 19% to $27 million and Ameristar Kansas City jumped 22% to $19.5 million. Caesars’ two casinos were jet-propelled: Harrah’s North Kansas City gained 20% to $17 million and Lumiere Place vaulted 29% to $16.5 million. Out in the boonies, CZR’s Isle of Capri Boonville moonshot 36% to $8.5 million. Bally’s Corp.’s Casino Kansas City went from $6 million two Aprils ago to $10 million (+40%). Century Casinos hopped 41%, to $7 million, in Cape Girardeau and 72.5% to $5 million in Caruthersville. Now if we could only figure out what ails Hollywood St. Louis …
… is branching out into social media, launching an app that will enable punters to hook up with one another, follow celebrities and influencers, etc. Credit Suisse analyst Ben Chaiken was so excited he called it a “birdie off the first tee.” More specifically, he found it a good way for DKNG to differentiate its product and enhance customer loyalty (“stickiness”). It’s part of a multi-pronged media offensive that includes the inception of DraftKings programming on SlingTV. Chaiken thinks this spate of moves could expose DraftKings to “new customers who have not traditionally bet on sports.” Also, like us, he think it’s the clear frontrunner for one of the two OSB platforms in New York State. “We think it makes sense for DKNG to partner with one of the other leaders in the space to make the bid/proposal more attractive and then allocate themselves the two licenses.” (From a free-market standpoint, the Cuomo Plan really stinks.) Needless to say, this would save DraftKings a lot of moolah that would otherwise be spent on advertising and customer acquisition in a truly competitive market.
Jottings: New York State proudly reports that it recorded its highest sports-betting revenue ever last month—$3.5 million. Man, they can’t institutionalize OSB soon enough. Pundit Rex Pascual claimed that the Empire State’s “sports betting industry is poised to bounce back.” It needs to bounce, period … Most Americans polled can’t name one prominent Asian-American (we would have instinctively said “Elaine Chao” but that’s just us). Try JJ Liu. A poker pro, real estate developer and Silicon Valley veteran, Liu has snapped up the Bristol Arcadia Inn in Virginia. Her business plan is to capitalize on traffic generated by the forthcoming Hard Rock Casino. She’s a little biased, she admits. Hard Rock International has most of her favorite poker rooms …
Grand Lisboa Palace in Macao, the last megaresort in the enclave, won’t be having a soft opening as much as oozing slowly into the market. It will debut with only 300 hotel rooms, plus 1,034 slots and 304 all-important table games. Four years overdue, Grand Lisboa Palace will open sometime in 2Q21, probably in July. Eventually (we don’t know when and Sociedade de Jogos de Macau probably doesn’t either) the resort will have 1,892 hotel rooms under the Versace and Karl Lagerfeld brands … Led by FanDuel, gambling advertising was the 11th-largest segment of local TV-ad revenue (legal services, no surprise, were tops) in the first quarter, some $154 million. That is expected to balloon to $587 million by 2024. DraftKings and BetMGM followed FanDuel in advertising dollars, albeit at some considerable distance … Ohio Gov. Mike DeWine (R) has come out in favor of legalized sports betting. A bill before the Lege would allow for 40 online skins in the Buckeye State … Hospitality jobs may be coming back but workers in the hotel and travel industries could still use help. In the meantime, unruly and uncooperative travelers constitute a major on-the-job problem.
