The Global Gaming Expo facilitated a series of meetings between Wall Street analysts and the major players in the U.S. gaming universe. Several of these were held by J.P. Morgan analyst Joseph Greff, who came away sanguine about economic prospects for the industry.
Overall, he found that the Las Vegas Strip and locals markets remain “solid/fine/sound, though exhibiting varying degrees of deceleration, given tougher year-over-year comparisons.” Regional casino markets didn’t fare quite as well, showing signs of deceleration and normalization, varying from area to area.
Overseas, “The premium mass segment in Macau remains solid with the base/core mass lagging the recovery.” Allowing for “negative investor sentiment” exiting the third quarter, Greff believed there were investment opportunities within the gaming sphere.
He began with Wynn Resorts, finding it pleased with the higher-end mass-market customers it was recovering in Macau, enabling it to bounce back faster than average for the region. Greff reported that “some of this is related to pent-up demand coming out of the pandemic and not dissimilar to [Vegas’s] initial recovery.“
Close to Wynn’s Strip base, the company is looking forward to the Las Vegas Grand Prix, which will draw typical (i.e., high-end) Wynn customers. Greff noted that Wynn enjoyed “a nice demand-supply dynamic for the event,” given that 130,000 race tickets were on the market for a city with 150,000 hotel rooms.
In other jurisdictions, Wynn is taking a wait-and-see stance, expecting no decision on New York City until July of next year at the soonest. As for Wynn’s United Arab Emirates development, 2027 remains the projected opening, as there have been no updates on licensing or final regulations.
Caesars Entertainment executives kept fairly mum about collective-bargaining agreement talks with the Culinary and Bartender unions, “but our sense is that the end result is one that is probably very manageable.” In Greff’s view, if not that of Caesars, the deal will be struck in time for the Grand Prix, a high-tipping event. Caesars brass said the race is drawing overseas customers in strength, room rates are “off the charts,” and convention business “is rocking.”
Contrary to Greff’s forecast, Caesars execs expected growth from their regional casinos, “so this was a positive” as well. They opined that the Strip and locals markets in Las Vegas were running “neck and neck” for business, though recent Caesars renovation projects would help the Strip.
In sports betting, Caesars is finding itself averaging a six percent hold. It’s looking to improve that through more same-game parlays. Greff wrote that “getting to peer hold would be a meaningful revenue to EBITDA flow through and growth driver.”
Igaming continues to be a priority, with 10 percent market share targeted. Other top items on the Caesars agenda include deleveraging to below four times cash flow. Once there, the company can contemplate mergers and acquisitions.
Station Casinos was Greff’s proxy for the Vegas locals scene. Station brass reported “pretty steady” business in both frequency and customer spending. They also looked forward to a new Culinary contract, which would not include Station, due to the fact that many unionized employees are Station patrons “benefitting [Station] and offsetting any pressure from having to potentially keep up with Strip wages.”
The $780 million Durango Resort’s opening takes place November 20 and Greff thought “it looks spectacular.” For 1,800 jobs, Station received 30,000 applications, one-third of them from workers at other Station properties.
“We don’t get the sense that [Station] is in a rush to develop further/right away (additional rooms for Durango could make sense, though that wouldn’t be for six months at earliest, post opening),” Greff observed.
Station execs reiterated their basic strategy, namely to place casinos either on the Las Vegas Valley’s beltway or in high-income communities where there is little or no competition, particularly Inspirada and Sky Canyon.
