Good morning and welcome to the Indy Gaming newsletter, a weekly look at gaming affairs nationally and internationally, and how events relate to Nevada.
Please click here to sign up and receive Indy Gaming in your inbox.
Fitch Ratings gaming analyst Colin Mansfield waited patiently in line to sample a specialty offered by Boon Tong Kee, one of 17 restaurants in Famous Foods Street Eats at Resorts World Las Vegas.
With more than 3,000 guests invited to a private celebration at the $ 4.3 billion hotel-casino – just hours before the newest strip resort opened to the masses on June 24 – the lines were at the bars and clogged restaurants on the property.
Mansfield toured the development earlier this week. He was impressed with the details that Resorts World owner Genting Berhad from Malaysia put into the project.
“(The) casino floor felt like real estate in Singapore and contained an impressive mix of dining options,” wrote Mansfield in a research report made available to the investment community on July 8th that highlighted the general recovery of Las Vegas after more than a year was discussed pandemic closings and operational restrictions.
“We’re not particularly concerned about the addition of 3,500 rooms as this is only about a 2 percent increase over existing supply,” said Mansfield of Resorts World’s three Hilton Hotels-licensed hotel brands that are part of the The company’s rewards program. “The property is a welcome addition to the north end of the Strip and performance will increase as connectivity improves and international visitor numbers return.”
The Fitch Ratings report updated the company’s October 2020 results, which predicted the country’s largest gaming market could see a slower-than-expected recovery through 2024.
Mansfield said Las Vegas could return to pre-2019 levels by 2023.
“Strong domestic recreational gaming picks up the weakness of the non-existent international visitor and soft-convention business, causing Fitch Ratings to revise its recovery assumptions to reflect our most positive outlook for the Strip,” wrote Mansfield.
Compared to 2019, Fitch expects gaming revenue on the Las Vegas Strip to decrease 20 percent in 2021 and 6 percent in 2022 if the books close.
“The slowdown in vaccination trends in the US and uncertainty about viral variants are leading to a certain conservatism in our forecast, despite the strong spring performance,” wrote Mansfield of the strip’s almost 27 percent increase in gambling revenue in May compared to May 2019 .
The Fitch report came out ahead of the recent spike in positive COVID-19 cases, which led the South Nevada Health District to recommend that both unvaccinated and vaccinated people wear masks in public places.
Mansfield also toured the recently opened 1.4 million square foot West Hall extension to the Las Vegas Convention Center, which cost $ 1 billion. He suggested that the new space “offer a differentiated expo experience”. He doesn’t think it will cannibalize the convention business out of the strip casino operation with large convention and meeting rooms.
“Demand for conventions at the Las Vegas Convention Center will help drive room bookings and pedestrian traffic to North Strip hotels, particularly Wynn Las Vegas and Encore and Resorts World,” wrote Mansfield.
The reason for Fitch’s revised, more positive outlook for Las Vegas is that demand for the market has increased month-on-month since early 2021, including the acceleration that began with capacity increasing to 50 percent in the spring. All capacity limits were lifted by June 1st.
Mansfield cited figures from the Gaming Control Board, which showed that slot machine bets had rebounded to 2019 levels by March and increased more than 23 percent in May. Strip table game bets, which in some way rely on baccarat players from international markets, fell just 14 percent in May.
While Fitch’s revised outlook may prove conservative given operating trends, the potential for renewed pandemic restrictions “amid domestic vaccination slowdowns and uncertainty about virus variants” has been considered.
“Continuing the current positive trends into the fourth quarter would give Fitch more confidence in the sustainability of the recovery,” wrote Mansfield.
Fitch is not alone in his positive assessment of Las Vegas.
Gaming analyst Barry Jonas of Truist Securities and Brendan Bussmann, partner of Global Market Advisors, thought in a monthly update that the opening of Resorts World had brought “new energy” to the Strip, and especially to the north end.
But could the same energy fuel a building boom?
“Resorts World has stated that they are already considering expanding the existing site,” they said.
At the same time, the much maligned and unfinished development of Fontainebleau – a thorn in the side since the construction freeze in 2007 – could finally be completed with new owners on board, including the real estate arm of Koch Industries.
The other location is the undeveloped 38-acre Wynn West, which is across the strip from Wynn Las Vegas. The property was purchased by Wynn Resorts for $ 336 million in 2014. The site was once home to the Rat Pack-era New Frontier, which imploded in 2007 to make way for a multi-billion dollar luxury resort. This property, which bears the name Plaza Las Vegas, was no longer realized after the economy came to a standstill.
“No specific plans for the next resort were announced,” remarked Jonas and Bussmann.
Scientific Games global headquarters will be seen in Las Vegas on Tuesday June 29, 2021. (Jeff Scheid / Nevada Independent)
Scientific Games seeks full ownership of its social gaming spin-off
Two years after Scientific Games spun off its social game development arm into a separate public company, the Las Vegas-based gaming equipment company is looking to get the business back on its feet.
The move coincides with the announcement two weeks ago that Scientific Games intends to sell its old lottery business and a sports betting business that the company has spent millions of dollars on.
In its announcement, Scientific Games announced that it would focus its business on three areas: the games division, which provides gaming equipment and management systems to the casino industry; Developing its online games business; and the growth of its social gaming subsidiary SciPlay.
Scientific Games retained 81 percent of SciPlay when the company was spun off in 2019. The withdrawal of the remaining 19 percent took place last week in a letter of offer from CEO Barry Cottle. He told SciPlay’s board of directors that this was the only deal the company – and largest shareholder – would approve of.
“We would not expect us to vote for an alternative sale, merger or other corporate transaction involving SciPlay, or to dispose or sell any portion of our ownership interest,” wrote Cottle.
When SciPlay went public, Scientific Games’ 19 percent stake was valued at $ 16 per share. The company offered to buy back this stock for $ 17.02 per share. SciPlay’s shares, which trade on the Nasdaq, were as high as $ 21.74 per share last year.
Stifel Financial gaming analyst Jeffrey Stantial called the announcement “the end of a short-lived experiment with SciPlay as a publicly traded company”. Strategically, the acquisition of the remaining shares is in line with Scientific Games’ focus on gaming content and investing in digital growth opportunities.
Jefferies gaming analyst David Katz said there will likely be “some public squabbling” if SciPlay shareholders go for a higher price. However, he believes the deal will eventually be closed. SciPlay has a license agreement for Scientific Games content that expires next June.
“We consider this agreement to be a key aspect of the overall value of SciPlay,” said Katz.
Scientific Games conducted a “strategic review” of its five divisions last year to try to reduce the staggering $ 9.2 billion in long-term debt that floats above its balance sheet. Much of the debt stems from the company’s 2014 acquisition of slot machine giant Bally’s Technologies, which cost $ 5.1 billion.
Katz predicted that the proceeds from the sale of the two companies could eliminate more than half of the company’s total debt.
Other interesting items:
The share price of the Las Vegas-based supplier of playground equipment AGS hit a 52-week high of $ 11.32 on June 11th on the New York Stock Exchange. B Riley Financial, gaming analyst David Bain, believes the company is worth a lot more. Based on conversations with the manufacturer’s top tribal casino operators, Bain suggested that recurring revenue from slot machines – games where AGS shares the revenue with the casino – has increased. Bain, who raised his stock price target for AGS to $ 21 per share, the company increased its installation of premium games before many tribes normally close their slot machine budgets. “We find that the vast majority of AGS domestic participation games are in Oklahoma, Texas and Florida – states with customers that we think are less psychologically affected by Delta variant (COVID-19) fears,” said Bain .
The World Series of Poker Online version – WSOP.com – is now operational in Pennsylvania. The platform was live in Nevada and New Jersey. In addition to real money cash games, WSOP.com offers satellite tournaments where players can win seats in the World Series of Poker, including the $ 10,000 buy-in No Limit Hold’em World Championship event at the Rio. The live tournament, which was paused for a year and went fully online in 2020, will take place at the Off-Strip Rio Casino Resort from September 30th to November 23rd.
Casino operator Bally’s Corp. and WNBA’s Phoenix Mercury announced a sports betting and sponsorship partnership, the first such agreement between a gaming company and a professional women’s sports team. The agreement brings the sports betting brand BallyBet ashore in Arizona, the company’s 15th state with market access. Bally’s will, among other things, host and manage an online and mobile sports betting service in Arizona, operate a sports betting retailer near the Phoenix Suns Arena, and promote its Phoenix Mercury gaming-related business.
The Nugget Casino in Sparks donated $ 25,000 to the Bishop Manogue Catholic High School’s John Ascuaga Memorial Scholarship Fund in honor of the property’s late founder. Ascuaga, who died on June 28 at the age of 96, expanded the small casino into one of the largest resorts in northern Nevada. He was considered “a pillar” of the gaming community in northern Nevada. The property is now owned by Marnell Gaming, based in Las Vegas. “We felt it was a fitting tribute to follow his tradition of contributing to community education,” said Company CEO Anthony Marnell III. “We appreciate all he has done for education in Northern Nevada, and the Memorial Scholarship Fund is a great way to honor his legacy.”
