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Several of Nevada’s largest publicly traded gaming companies are planning to invest billions of dollars into casino and resort developments throughout the U.S. and internationally.
But Las Vegas, for now, is an afterthought.
Wells Fargo Financial gaming analyst Daniel Politzer told investors in a research note earlier this month that projects developed by the Las Vegas Sands, Wynn Resorts and MGM Resorts International could be the most lucrative of the proposals. But some might not make it past the planning stages.
He said Las Vegas Sands, which no longer has gaming properties in the U.S. after the sale of its Strip resorts for $6.25 billion 16 months ago, will spend more than $13 billion to expand and upgrade its Macau and Singapore resorts and is seeking to build a hotel-casino project on Long Island, New York. However, the company is one of nine bidders for three New York City gaming licenses.
“By far, Las Vegas Sands has the most expensive and aspirational pipeline,” Politzer told investors. “Long-term returns could be meaningful.”
He also noted MGM’s plans for an $8 billion resort in Osaka, Japan. However, given the project’s planned opening in 2030, “it’s not a needle mover right now [for the company]” Politzer wrote.
He said Wynn Resorts’ $3.9 billion investment in an integrated resort development on the man-made Al Marjan Island in Ras Al Khaimah, United Arab Emirates, is “underappreciated” by the investment community and could boost the company’s price per share by more than 10 percent when it opens in early 2027.
As for Las Vegas, Politzer didn’t mention December’s planned opening of the long-stalled, 3,700-room Fontainebleau on the Strip’s north end by the privately held Fontainebleau Development. The Miami-based company said in December it had raised $2.2 billion to complete and open the hotel-casino that halted construction 16 years ago.
“Following minimal development activity during the pandemic, there are now dozens of planned projects across our gaming coverage,” Politzer told investors.
In addition to the Fontainebleau, other Southern Nevada projects in the works include Red Rock Resorts’ $780 million Durango Station, Penn Entertainment’s $206 million expansion of M Resort in Henderson and Caesars Entertainment’s $100 million transformation and transition of the Jubilee Tower at the Horseshoe Las Vegas into the Versailles Tower for the adjacent Paris Las Vegas, which is expected to be completed later this year.
Politzer said Caesars has five other U.S. development projects but the Las Vegas tower transfer was viewed favorably because Paris has higher average daily room rates than Horseshoe.
Durango is expected to open later this year, a move likely to kick off additional development. Red Rock controls 527 acres of vacant land in Las Vegas, of which 41 percent is up for sale.
“[The company] has not committed to any future projects after Durango, but we think [a second phase] would be the logical next step, especially if the Las Vegas locals [market] stays healthy,” Politzer wrote.
He said Red Rock’s 49-acre site in Henderson’s Inspirada community was most likely the company’s next development, with an anticipated cost of more than $800 million.
An Inspirada casino would provide competition to M Resort. Penn announced last year it would double the size of the Henderson casino, adding 380 hotel rooms and more convention space.
M Resort’s expansion, which is expected to be completed in 2025, is part of Penn’s $850 million investment into four casinos — including two Illinois riverboats and a hotel for its property in Columbus, Ohio. Real estate investment trust Gaming and Leisure Properties is providing $225 million toward the costs.
“It’s hard to pencil out much return in Illinois,” Politzer wrote. “Further investments in Columbus and M Resort should provide a decent return.”
Sands executives may not know its New York status until 2024.
Politzer said the conventional wisdom is that Resorts World and MGM Resorts, which operate slot machine-only casinos in the New York City area, will each earn a license, leaving seven companies, including Las Vegas Sands, Wynn, Caesars, Bally’s Corp. and Hard Rock Entertainment, battling for the final spot.
Calling the $5 billion Sands project in Uniondale “the most compelling proposal,” Politzer said the process was difficult to handicap. “We believe Sands is a front-runner, given the scale of its project, track record, and ability to work well with local constituencies.”
Bally’s earns the single license as Rhode Island legalizes online casinos
Rhode Island lawmakers pushed through legislation this month that made the nation’s smallest state in terms of size — just 1,214 square miles — the seventh state with online casinos.
The structure will be a monopoly for casino operator Bally’s Corp., which will receive the state’s only online casino license. Bally’s, headquartered in Rhode Island, runs the state’s two land-based casinos: Bally’s Tiverton and Bally’s Twin River.
In Nevada, Bally’s owns Tropicana Las Vegas and Bally’s Lake Tahoe.
Gaming equipment supplier International Game Technology, which is Rhode Island’s official vendor for slot machines and lottery equipment, will also participate through its revenue-sharing agreement with the state.
“Gaming revenue is critical to the state, and we believe that the addition of iGaming will only continue to generate positive returns for Rhode Island and our stakeholders,” a spokesperson for Bally’s said in an emailed statement after Rhode Island Gov. Daniel McKee signed the legislation without much fanfare.
Rhode Island will join Connecticut, Delaware, Michigan, New Jersey, Pennsylvania and West Virginia with legalized online casinos. Nevada legalized online poker in 2013 but has not approved online slot machines or table games.
JMP Securities gaming analyst Jordan Bender told investors in a research note last week that Rhode Island’s online casinos could produce up to $135 million in annual revenue in the five years following its launch.
He said the figure would be higher if digital table games were included. Under Rhode Island’s new law, a live dealer must be in place and streamed via a simulcast from one of the two Bally’s casinos. With wagers technically placed in a casino, the bill’s proponents were able to avoid a ballot referendum.
“Slots account for roughly 90 percent of online revenue in the U.S. and we expect gaming revenue to be slightly impacted given the lack of product on the table side of the business,” Bender told investors.
Rhode Island’s gaming tax rates for the online operation will be 61 percent on slot revenue and 15 percent on table game winnings.
Online casino revenue nationwide was $5 billion in 2022, according to the American Gaming Association, up 35 percent from 2021. The figures don’t include Nevada’s online poker totals because the state does not publicly release the results. There is just one state-based operator, Caesars Entertainment’s site based on the World Series of Poker.
Through the first five months of 2023, online casino revenue in the U.S. was almost $2 billion, up 22 percent.
Truist Securities gaming analyst Barry Jonas told investors Rhode Island could be a case study on the effect — positive or negative — online casinos have on land-based operations.
“We see legislators in other jurisdictions looking closely as they weigh legalization and potential consequences in their own states,” Jonas wrote in a research note.
If successful in Rhode Island, Bally’s could find itself in the middle of efforts to legalize online gaming in Nevada. Two years ago, a cross-section of Nevada gaming operators voiced opposition to expanding the state’s online gaming regulations.
That same year, MGM Resorts CEO Bill Hornbuckle said Nevada’s gaming industry is “missing a significant opportunity for growth” amid reluctance to legalize online casino gaming. MGM owns 50 percent of digital gaming operator BetMGM.
Boyd Gaming owns 5 percent of FanDuel and has online casino operations in Pennsylvania and New Jersey through the partnership. Boyd spent $170 million on Toronto-based Pala Interactive, which provides technology for real money online gaming and free-play social gaming to companies in eight states and Canada.
Fitch analysts give Strip landlord VICI high marks
Fitch Ratings Service has reaffirmed its positive view of real estate investment trust VICI Properties, which is the Strip’s largest landowner following nearly $23 billion in acquisitions since 2022.
In a statement Monday, Fitch analysts said the company ratings outlook reflects the REIT’s status as one of the largest in terms of enterprise value, cash flow generation and access to funding.
On the Strip, VICI owns roughly 660 acres covering 10 resorts operated by MGM Resorts International, Caesars Entertainment, Apollo Global Management and Hard Rock Entertainment.
VICI, which is headquartered in New York City, is the gaming industry’s largest REIT, owning the land and buildings associated with 49 gaming properties, operated by 10 gaming companies in 15 states and Canada.
As of March 31, VICI had $17.1 billion in total debt and $3.6 billion in cash and other financial sources, including bank loans and pending sales agreements.
“Positively, the company has stable occupancy and rent collections with Consumer Price Index-linked escalators, though overall gaming REITs have weaker contingent liquidity compared with more traditional commercial real estate property types,” Fitch analysts wrote.
Last year, VICI completed a $17.2 billion buyout of rival REIT MGM Growth Properties and contributed $4 billion toward a $6.25 billion purchase of the Strip properties that were operated by Las Vegas Sands Corp. In January, VICI paid Blackstone REIT $1.27 billion for 49.9 percent of MGM Grand and Mandalay Bay, assuming the firm’s $3 billion in property debt.
Golden Nugget owner one of the top donors to Texas inauguration
Golden Nugget owner Fertitta Entertainment was one of the two largest donors to January’s inauguration of Texas Gov. Greg Abbott and Lt. Gov. Dan Patrick. But the donations didn’t help the casino and sports betting legalization efforts in the state.
According to the Texas Tribune, the Houston-based hospitality company owned by billionaire Tilman Fertitta contributed $250,000 toward the $4.7 million raised for the celebration of Abbott’s and Patrick’s third terms. Dallas-based Energy Transfer also donated $250,000. Fertitta served as chair of the inauguration committee and had a front-row seat at the event.
Fertitta, who owns the NBA’s Houston Rockets and five Golden Nugget casinos, was part of a coalition pushing to legalize sports betting in Texas. The bill was approved in the House but the Senate never held a hearing on the measure.
Patrick, presiding officer of the Senate, has long opposed Texas gaming expansion.
Las Vegas Sands, whose efforts to legalize casinos in Texas also failed, contributed $100,000 toward the inauguration.
Quotable
Via an article in The Hollywood Reporter
Director Darren Aronofsksy, whose credits include Academy Award-nominated Black Swan, The Wrestler and The Whale, is directing Postcard from Earth, the first immersive production planned for the $2.2 billion Sphere in Las Vegas, which will premiere in October. The idea behind Postcard from Earth is to utilize the Sphere’s technologies, including an immersive high-resolution LED screen, concert audio system and atmospheric elements such as wind and scent to transport audiences to places real and imagined.
“Cinema is an immersive medium that transports the audience out of their regular life, whether that’s into fantasy and escapism, another place and time, or another person’s subjective experience. The Sphere is an attempt to dial up that immersion.”
– Darren Aronofsksy, film director, Sphere in Las Vegas
Via press release from Avelo Airlines
The air carrier announced that Harry Reid International Airport will become its sixth U.S. base with nonstop service to five destinations. Avelo said it was adding roundtrip flights this year between Las Vegas and Bend/Redmond, Oregon; Brownsville, Texas; Dubuque, Iowa; and Eureka/Arcata, California. Avelo has offered nonstop service between Las Vegas and Sonoma/Santa Rosa, California since September 2021.
“We are excited about the exclusive nonstop access to Vegas Avelo’s new base will offer our customers from these five communities, and more in the future. The new flights, destinations and jobs our new base will enable is a winning hand for Las Vegas, Avelo and, most importantly, our customers.”
– Andrew Levy, CEO, Avelo Airlines
Via press release from the International Gaming Standards Association (ISGA)
The technical gaming standards organization created a responsible gaming committee that will be chaired by Alan Feldman, chairman emeritus of the International Center for Responsible Gaming and a distinguished fellow at the UNLV International Gaming Institute. A former MGM Resorts executive, Feldman has become a widely recognized expert in responsible gaming and player protection.
“The time has come to create a global standard, process and path for predictive responsible gaming. Regulators have done an incredible job of creating their individual approaches. It is now time to pull the best practices together into a journey from discovery to quantitative management.”
– Earle G. Hall, chairman, IGSA
