Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Changes at Wynn Resorts
Jeffries’ David Katz noted the recent passing of Elaine Wynn in an April 20 note.
“With the passing of Elaine Wynn,” Katz wrote, “investors’ questions centered on the future of her stake in the company and the standstill agreement put in place following Steve Wynn’s departure from the company. Given the context that Tillman Fertitta and associated entities have increased their stake to ~11%, we believe it is fair for investors to contemplate the outcome of Elaine Wynn’s shares, Tillman Fertitta’s strategies, and the overall ownership structure of the company in the long term.
“We view the set-up with multiple ways to benefit, given the historically low valuation 8.7X EBITDA, the inherent asset value, including the land bank, and the strong operating execution.”
Bill Hornbuckle’s remarks at East Coast Gaming Conference
Barry Jonas of Truist Securities attended the East Coast Gaming Conference in Atlantic City, New Jersey, last week and reported on remarks made by MGM Resorts’ CEO Bill Hornbuckle.
“Hornbuckle highlighted the resilient attributes of the gaming industry, particularly during times of economic downturns,” Jonas wrote. “While COVID was different given the shutdowns, Hornbuckle noted that in 2008 none of MGM’s regional properties saw a decline and even Vegas recorded occupancy rates of 82% at trough levels. That said, COVID changed the landscape in Macau with premium mass taking off and MGM now capturing mid-teens market share up from ~9% pre-COVID.
“Hornbuckle also discussed development efforts in Japan which he estimates a market size of ~$30 billion. MGM is the only licensee, and the company plans to commence construction later this month. Thailand is another market which Hornbuckle is monitoring closely given the size and cheap cost of construction and labor. Domestically, Hornbuckle is not seeing much traction in Texas. In New York MGM hopes to convert the Yonkers property into a table games facility “in the near future.”
OSB tax hikes in Ohio, North Carolina
Jefferies’ Katz also looked at proposed online sports betting tax increases in Ohio and North Carolina.
“Ohio recently passed an amended budget that removed the proposed tax hike on OSB from 20% to 40%, clearing one of the many potential tax headwinds for the industry,” Katz noted. “However, in North Carolina, a budget proposal that would increase the OSB tax from 18% to 36% has just passed the Senate. Support in the house is questionable, though this increase now looks more likely than in other states (Maryland, New Jersey, Indiana, Louisiana, Massachusetts, and Michigan). If passed, the increase would go into effect in October.”
