Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
California sports betting
In a January 7 statement, Jefferies analyst David Katz noted that advocates in California are advancing efforts to legalize sports betting: “The state attorney general of California put in motion the process by assigning a title and summary of the sports betting initiative in California, “ Katz wrote, “which needs 874,641 valid signatures to be on the ballot this November.
“Although a small portion of the revenue-sharing Tribes in the state support these measures, a majority of the Tribes are opposed to legalizing sports betting in California. Given the divergent views of the multitude of Tribes, we believe there is a smaller group of the largest Tribes expected to drive the process. Operators have also connected with these larger Tribes to attempt alignment of efforts, which we consider critical to meaningful progress. We expect more meaningful progress in 2024, although success is far from assured given what we view as the most complex political landscape in the U.S.”
Macau gaming post-holiday slowdown
David Katz of Jefferies also wrote about a recent trip to Macau in a January 8 note: “During our visit last week to Macau, the gaming floors and shopping malls were relatively quiet, but restaurants appeared relatively busy. But this is in line with the traditional post-holiday slowdown. Gaming floors were quieter with less crowding around tables and smaller queues at high-end luxury retail stores (Channel, Hermes and Louis Vuitton). The Hong Kong-Macau ferry trips both ways were less than full, with a noticeable older aged group. Galaxy and The Venetian’s main gaming floor remain the busiest, and Grand Lisboa Palace was notably busier than previous visits, although less than the market leaders.”
Las Vegas Strip room rates
Analyst Joseph Greff of J. P. Morgan January 8 issued a note about a Las Vegas Strip room rates survey between Jan. 28 and Feb. 3, 2024.
“For the survey period, relative to the comparable period 2023, midweek rates are -55% and weekend rates are +34% (-36% overall),” Greff wrote. “By company: MGM rates are -64% for the midweek and +25% for the weekend (-46% overall); Caesars rates are -72% for the midweek and +21% for the weekend (-55% overall); Wynn Resorts rates are -22% for the midweek and +85% for the weekend (flat overall); Venetian/Palazzo rates are -39% for the midweek and +85% for the weekend (-9% overall).
VICI Properties
Fitch Ratings January 4 issued a note about VICI Properties. “Although counterparty risk is prominent, due to the company’s material tenant concentration with Caesars and MGM, properties are under pooled master leases. This means lease restructuring or concessions likely would not stem from single-property weakness and would only occur if overall operator performance was meaningfully affected. In addition, casino properties are unlike other asset types, given their size, strategic importance and regulatory barriers to entry.“VICI’s recent investments with Canyon Ranch, Bowlero, Kalahari, Chelsea Piers and Cabot depart from this dynamic in terms of size, strategic importance, and regulatory barriers to entry. These operators may also see increased cyclicality compared to gaming operations, which is a key risk. However, VICI still maintains strong legal and structural protections in these deals, as evidenced by its master lease with Bowlero.”
