The American casino industry continues to enjoy solid gaming revenue growth as illustrated in the numbers below excerpted from Fantini’s National Revenue Report.
American casinos continued their healthy run in August, with gaming revenues soaring 6.05 percent to $3.63 billion in total and 5 percent on a same-store basis. That was the biggest year-over-year revenue gain since February and the fifth out of the past six months when revenues rose. The only down month was a mere 0.3 percent decline in July, whose calendar comparison was dampened by two fewer weekend dates, including the trading of a Friday for a Monday.
The pace of growth is also accelerating. The 6.05 and 5 percent growth rates compare, for example, to year-to-date gains through July of 2.67 percent and 1.75 percent. And if Hurricane Harvey-afflicted western Louisiana is factored out, revenues grew 6.27 percent.
That acceleration continues among states that so far have reported September gaming revenues.
With consumer confidence levels high and the job market strong, there is every reason to believe business should remain robust in at least the near term.
Among public companies that get a considerable amount of their business from regional markets, August revenue percentage changes from jurisdictions that report by property, were:
Tropicana +11.38 percent
Churchill Downs + 4.62
Caesars + 2.03
Penn National + 1.75
Full House + 0.79
Pinnacle + 0.14
Boyd – 0.13
Eldorado – 5.61
Of course, these numbers don’t always tell the story.
Boyd, for example, would have had a positive 4.47 percent comparison factoring out hurricane-hit Delta Downs.
Similarly, Pinnacle would have nearly doubled its growth rate to 2.71 percent except for Harvey. Likewise, Nevada, Colorado and Mississippi, which do not report by property, heavily influence what the total revenue picture will look like. Boyd, again, gets around 45 percent of its revenues from the Las Vegas locals and downtown Las Vegas markets, and they grew 6.26 and 13.4 percent, suggesting Boyd had a very good August.
Eldorado, likewise, gets a big chunk of its business from Reno, where citywide revenues soared 11.92 percent.
Other public companies with casinos in states that do not report by property are Caesars, Full House, Penn National and Pinnacle.
So, we’ll have to wait until companies announce third quarter earnings to get their full pictures, but based on the evidence we do have, that picture should be a positive one.
Speculation Is, Well… Speculation
There has been some speculation about what effect the horrendous shooting at Mandalay Bay will have on the casino business, and some efforts to quantify it.
Based on past major events where similar violence has occurred, the general belief is that any impact should be modest and short-lived.
But that is purely speculation, and not very informed speculation considering the limited number of comparable instances to develop a record.
The closest measurable impact would be on MGM Resorts, where Mandalay Bay operations were interrupted and where MGM has pinned a good portion of its business model on non-gaming entertainment. That includes its first national branding campaign, Welcome to the Show, emphasizing MGM is now an entertainment company.
David Katz of Telsey lowered his fourth quarter Mandalay Bay EBITDA forecast by $14.5 million to $37.4 million, and said the impact is probably limited to the quarter. For a company that he estimates will generate $2.734 billion in EBITDA this year, that is a barely noticeable haircut.
Rachel Rothman of Susquehanna Financial down-rated MGM to neutral, cut her stock price target $5 to $33 and shaved earnings forecasts in response, while saying she expects the business and consumers to bounce back with resilience.
The first test of the shooting’s long-term impact on consumers could come on New Year’s when crowds flow onto the Strip.
Another long-term effect for casinos would be the sustained cost of any increased security.
Perhaps more problematic for MGM are the lawsuits sure to come. At the least, thy will divert some management attention and raise legal costs.
In the end, and assuming no other horrific event to jar consumers, the bigger impact on the casino entertainment industry in Las Vegas comes from the economy and consumer confidence, both of which, as noted above, are strong.
