Operations

Ch-ch-ch-Changes – Non-gaming amenity trends in the post-pandemic world

Posted on November 30, 2021

As a result of the pandemic, casino operators have had to rethink their non-gaming amenity strategy, altering their programs to better suit their consumers and improve their bottom line. In the past year, as the industry reopened, some patrons were happy to find a refreshed hotel room product, reconfigured food and beverage options, new entertainment choices, and other revitalized non-gaming products.  The pandemic gave operators a chance to redefine the entertainment experience.

Sports betting, while a gaming amenity, has dramatically changed the non-gaming offering provided by casinos across the United States.

From both a mobile and land-based perspective, sports betting has become intertwined with casinos’ amenity offerings. In legal markets, one would be hard pressed not to find sports betting applications up and running on people’s mobile phones in casino bars.  In these jurisdictions, casinos have been able to increase length of stay on property as well as spend on gaming and non-gaming items, particularly food and beverage.

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Breaking Down the Adversarial Wall – Building the operator and regulator relationship through education and dialog

Posted on August 2, 2021

As the gaming industry continues to expand as a form of entertainment across the globe, operators and suppliers typically have three questions when they are looking at a brand-new jurisdiction or an expansion in an existing jurisdiction.  Those three questions are: what is the tax rate, what is the license fee, and who is the regulator?

On the flip side, legislators and regulators will seek input from prospective or existing operators as jurisdictions look to craft a new market, expand their market, or bring further innovation.  The balance between these interests can in some cases become awkward as operators look to effectively compete while also balancing the public policy goals of the market and allowing a strictly regulated market.

The crux of this is creating a healthy balance that allows effective regulation in the market, and not to be overly influenced by an operator or an outside stakeholder.  However, regulators must also allow ongoing, healthy dialogue and input into how a market needs to be crafted, how regulations may impede innovation, or how stakeholders can effectively operate in a market that allows the right amount of competition.

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Research Brief: State Legislative Update on U.S. Sports Betting & Online Gaming – July 2021

Posted on July 16, 2021

The Halftime Report

Over the last 18 months, the world has faced serious challenges.  The paradigm has been turned upside down again and again with the impacts of SARS-CoV-2 and government mandates that have altered the landscape.  These challenges continue as events such as the Olympics will proceed for the first time without fans in the stands, including international visitors that bring significant economic benefit and global attention to the host nation.  This was one of the goals of showcasing the country of Japan to the world, but now the Games will also be without locals.  This has further angered local residents that did not want to host the games during the pandemic as they now will not be able to attend.

The year of 2021 in sports betting will be known for it’s one-upmanship, and this is not because the legislation for sports betting was improving and becoming more refined in using best practices achieved in other states.  It is instead the polar opposite, where the next state tries to one-up the others’ ability to craft a more unique market that often does not bode well for operators and, in the end, the consumers.  Each state that will be highlighted in further detail below has shown unconventional and ineffective path toward crafting their market, including tax rates set at upwards of 50 percent, ambiguity in the law that has caused the regulator to question key elements of their license structure, and in cone case a compact that likely violates the constitutional amendment that was pushed by the same tribe.

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Research Brief: State Legislative Update on U.S. Land-Based Gaming – July 2021

Posted on July 8, 2021

The Mid-Year Point

As the United States hits the midway point of this year, most state legislatures have adjourned their regular sessions. While some legislatures will come back in the fall because of the full-time status, most will only come back for a special session to handle redistricting that continues to to be delayed as states waif for data from the Biden Administration. Below is a summary of the current status in some key states:

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Mergers & Acquisitions – The More Things Change, The More Things Stay The Same

Posted on June 25, 2021

As the gaming industry continues to evolve, so do the industry players, corporations, suppliers, and other stakeholders.  The only constant among this group is that change thrives in this environment.

While some of the players may still look the same since before the pandemic, the hats they appear to wear can vary, as seen with such a high volume of mergers, acquisitions, and other corporate activities over the years.  Even through the pandemic, there was no stopping these continued efforts as companies either were slowed by the initial Great Shutdown or sought new opportunities to move forward.

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Research Brief: State Legislative Update on U.S. Sports Betting & Online Gaming – June 2021

Posted on June 16, 2021

It has now been more than three years since the repeal of PASPA, with the New Jersey and Delaware markets reaching their three-year anniversary since launching sports betting operations.  It has also been three years of ups and down with the sports calendar and with sports betting revenue.  Revenue for the most part continues to climb, although it is difficult to find a stabilized year of data over the last twelve months due to the pandemic.  While is may be some time as the border wars continue, it will be critical to understand the full growth potential for this expansion opportunity in the gaming industry.

The industry continues to face the challenges of SARS-Cov-2, as seen most recently during the Memorial Tournament on the PGA Tour.  Jon Rahm, who at the time was up by six strokes, had to withdraw from the tournament because of a positive test.  While the PGA let him finish the round and notify him in a bizarre 18th hole revelation, it remind the sports community that this pandemic is far from over, especially on a global scale.  Sportsbooks took the change in the marketing in different ways with some counting it as a withdrawal and returning wagers to players, while other took it as a win for Rahm who had a dominant lead.  This did lead to several conversation throughout the industry on how to deal with these and other incidents in the future, as well as the implications on responsible gaming and potential effects into the future.

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Research Brief: State Legislative Update on U.S. Land-Base Gaming – May 2021

Posted on June 3, 2021

The legislative cycle is coming toward the end of its run for 2021 with only a handful of states remaining that have policy implications other than those states that have full time legislatures. With most focus at this point on Louisiana (the last legislature to go into session this year) and Connecticut on sports betting, a number of land-based opportunities did not materialize into expansion. However, there are options that continue to be discussed across the country that prove that land-based gaming is still very much alive.

Almost every casino is back open in the United States following the Great Shutdown. In several cases, business is currently booming, as seen in the resurgence of the gaming industry that faced its greatest challenge that was imposed by government mandates. Nevada is a prime example of this as it just saw one of the best months it has ever had in generating gaming revenue, surpassing the $1 billion mark. Destinations such as the Las Vegas strip are seeing the return of the leisure customer that is excited to be back after over a year of closures. Part of this has been through the continued health and safety measures of the industry, vaccination efforts that began late in 2020, and the relaxation of draconian polices that were not always rooted in evidence-based research.

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Windy City Gaming: Chicago will finally plant its flag for a casino development

Posted on February 17, 2021

Casinos in urban environments, not always the norm, have offered challenges in certain jurisdictions.

Major markets such as Philadelphia have had casinos near downtown for years. Pittsburgh and Detroit also feature casino gaming in downtown settings. The Washington, D.C. market, with MGM National Harbor, has also made an impact. But in recent years, more developers have embraced urban environments to meld properties into the fabric of the greater communities they serve. Two of the more recent examples were in Massachusetts, with MGM Springfield and Encore Boston Harbor.

Some of the greatest opportunities for gaming expansion in the United States remain in urban settings. For years, New York, Atlanta, Miami, Dallas and Houston have been seen as potential expansion sites. But the most immediate opportunity exists in Chicago, which will locate a gaming development within the city itself.

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Strip Reset: COVID-19 is definitely challenging, but does the crisis present opportunities for a Vegas makeover?

Posted on May 16, 2020

Las Vegas soared until recent years, but we’ve reached the tipping point, where it’s necessary for the Strip to redefine itself again. Las Vegas is like no other place in the world. It’s the entertainment and sports capital of the world. It has the most amazing resorts. It just needs to remember our industry’s roots, redeliver on customer service, and provide value.

Covid-19 has devastated the industry and the greater Las Vegas economy. With the resulting industry shutdown, the city must take the opportunity to develop a strategy to reopen, reinvigorate and recapture its guests.

For the first time in well over a decade, both Caesars Entertainment and MGM Resorts, which between them operate 18 Las Vegas Strip resorts, have new leadership teams. These teams are comprised of seasoned casino industry professionals—not outsiders from professions other than hospitality—who have the ability to make these changes.

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Research Brief: Understanding Casino Operations

Posted on April 16, 2020

Given the uncertainties of coronavirus disease (“COVID-19”), investors are looking to understand the general operating parameters of a given casino operation and fixed versus variable expenses. This document provides detail on the intricacies of casino operations from a revenue and expense standpoint, including gaming revenues, operating expenses, and earnings before interest, taxes, depreciation, and amortization (“EBITDA”). The goal of this exercise is to provide an understanding of how these items may fluctuate between operators, as well as between jurisdictions. Additionally, this document will provide readers with an understanding of fixed versus variable expenses (for facilities that are open), allowing investors to more accurately project the performance of target properties under a variety of recovery scenarios.

The following discussion is based on Global Market Advisors’ (“GMA”) experience of reviewing hundreds of income statements from casino properties across the world. For the purposes of this analysis, GMA focused its evaluation on regional gaming operations in the United States, representing casino operations that have generated between $50 and $700 million in annual gaming revenue. Often, the only access that investors may have to operating income statements would be from those published from Nevada and New Jersey. As will be seen within this document, many departmental and overall margins vary greatly from casinos between these and other states. While many operations may have expenses that lie outside of the ranges presented in this report, the overwhelming majority of regional casinos across the United States likely fall within these ranges.

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