Good morning, and welcome to the Indy Gaming newsletter, a weekly look at gaming matters nationally and internationally and how the events tie back to Nevada.

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The top executives of three of the gaming industry’s largest casino operators avoided taking a position on abortion rights and other divisive social issues, agreeing that corporations – especially those in the leisure, entertainment and tourism sectors – have to balance the views of customers and employees.

“Making political statements as the CEO … I don't know that it's in everyone's best interest,” MGM Resorts International CEO Bill Hornbuckle said during a half-hour roundtable discussion for the CNBC Evolve Global Summit last week.

“My political views shouldn't matter,” said Las Vegas Sands Chairman and CEO Rob Goldstein. “They're not important, in my opinion. (The views are) important to me (and) my family, but not to my shareholders. My political views are not relevant in a public forum.”

Hornbuckle, Goldstein and Wynn Resorts CEO Craig Billings were part of a day-long discussion with national business leaders hosted by the cable news network. 

CNBC gaming reporter Contessa Brewer, who moderated the talk, asked the CEOs about the nation’s “inflection point” over the political divide concerning guns, abortion and racial equality. She noted that some previous gaming CEOs were very comfortable taking political positions.

Goldstein’s predecessor, the late Sheldon Adelson, was long considered the largest financial contributor to Republican candidates, super PACs and other conservative causes, donating $113 million in 2016, $123 million in 2018 and $173 million in 2020. Former MGM Resorts Chairman and CEO Jim Murren, a lifelong Republican, publicly backed Democrat Hillary Clinton for president in 2016 and President Joe Biden in 2020. His wife at the time, Heather Murren, headed Biden's fundraising efforts.

Executives from other industries have weighed in on abortion rights, even before the June 24 ruling by the U.S. Supreme Court that overturned a 50-year-old constitutional right to abortion.

Companies such as Amazon, Yelp, JPMorgan, Dell Technologies, Dick’s Sporting Goods and Patagonia are among nearly 120 corporations that updated their health benefit offerings in wake of the ruling. 

But Hornbuckle warned of the potential fallout that could occur by staking a position. He suggested that 30 percent of potential visitors to any MGM property might adamantly support one side on any controversial issue.

“I don't want to lose 30 percent of our customers,” Hornbuckle said. “I think we have an obligation to our stakeholders to be very responsible, be moderate (and) be measured.”

Billings, who took over as Wynn CEO in February, didn’t respond to the abortion issue directly, but said younger consumers want companies “to stand for something and they want them to do it authentically.”

He suggested abortion was part of the environmental, social and governance (ESG) issues that corporate leadership consistently has to grapple with.

“Figuring out what you can do for your employees, for your communities and to reduce your impact on the planet. That's what it's about,” Billings said. “I don't think it's about wading into politics. I think it's about having an impact.”

MGM Resorts has casinos in eight states, all of which now have different abortion laws since the ruling.

Nevada, along with 15 other states and the District of Columbia, has laws that protect the right to abortion. Shortly after the Supreme Court ruling, Gov. Steve Sisolak signed an executive order implementing protections for anyone seeking or providing abortion services or other reproductive health care within the Silver State. 

“We employ 62,000 employees across the system who have values who care,” Hornbuckle said. “That issue alone has impacted some of our employees in Mississippi and Ohio and other states that we operate, so we have to pay attention.”

Goldstein said companies understand the concern of their employees. He noted Las Vegas Sands no longer has casinos in Las Vegas after selling the Venetian, Palazzo and Venetian Expo in February for $6.25 billion.

“(Employees are) our constituents and we want to make sure we're responsive to them and our customers,” Goldstein said. “My political views, I think, are not relevant in a public forum.”

In June 2020, Hornbuckle put out a statement decrying racism following the death of George Floyd in Minneapolis. He proclaimed the company’s support for its Black workers and noted MGM Resorts made a significant financial contribution to the NAACP.

Hornbuckle described his Black Lives Matter statement during the roundtable discussion as an “appropriate” response for the company, its staff and the communities where it operates.

“I put a statement out because I thought it was important,” he told Brewer.

The chat centered around gaming’s recovery in Las Vegas and regionally following the pandemic, the current inflationary pressure, changing consumer attitudes, expansion of online gaming and economic challenges in Macau.

On the potential of the inflationary economy reducing the growth in Las Vegas, which saw gaming revenues top $7 billion in 2021 and are up 42 percent for the first five months of 2022, Hornbuckle and Billings said they have yet to see any slowdown.

“We're not naive to think that consistent gas prices, (a) consistent increase in inflation are not going to impact our business. It hasn't yet,” Hornbuckle said.

Billings said the Las Vegas casino industry “is better prepared” because of its experience recovering from COVID disruptions with knowing “the levers that we need to pull to make it through whatever does happen.”

A link to the full interview can be found at cnbc.com/evolve.

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Exec: Sports betting operators need to show support for their California referendum

In a speech to a state lawmakers meeting earlier this month in Boston, DraftKings CEO Jason Robins touted a California ballot question backed by his company and six other sports betting operators that could bring mobile and online sports wagering to the nation’s largest state.

He told the National Council of Legislators from Gaming States (NCLGS) that the measure included language that would direct 85 percent of the tax revenue generated by mobile sports betting to support California-based organizations and government agencies that service the homeless and provide treatment for mental health and addiction.

Robins said Proposition 27, which will appear on the November ballot in California, was an example of a “creative solution to societal problems” that could be addressed by the gaming industry.

DraftKings, along with FanDuel, BetMGM, WynnBet, Bally’s Interactive, Barstool Sports and Fanatics, spent more than $100 million to qualify the ballot question. However, other than a few remarks by Robins on his company’s quarterly earnings conference calls, representatives from the sports betting operators have remained silent on the referendum.

That might be a mistake, according to Charles Gillespie, CEO of Gambling.com Group, which provides digital marketing services and customer acquisition technology to sports betting operators and casinos worldwide. He believes all the operators need to take a front-and-center role in the campaign.

“I don't understand why they're leaving the whole thing to Jason,” Gillespie said. “California is the perfect kind of example of how complex regulation is in the United States. Politics in California is always going to be complicated.”

Gambling.com views California as potentially the nation’s largest sports betting market if it joins 35 other states and Washington, D.C., with legal and regulated sports wagering.

Truist Securities, citing public data in a research report, listed New York as the nation’s largest sports betting state through May with $7.5 billion in total wagers and $535 million in revenue. New Jersey is second with $5.1 billion in handle and $270 million in revenue. Illinois is the third-largest sports betting state with $4.1 billion in bets and $293 million in revenue.

Nevada, once the only state with legal sports betting, is now fourth in the nation with $3.9 billion in wagers through May and $170 million in revenue.

Gillespie said the operators “have made a credible proposal and there's a material chance that it goes through.”

However, Californians will also decide on Proposition 26, a ballot measure qualified by a coalition of the state’s Indian tribes that would allow retail sportsbooks to be operated inside tribal casinos and several horse racing tracks. The measure doesn’t include a mobile sports betting component. 

The election is roughly three-and-a-half months away, but the landscape is already vitriolic.

A tribal alliance has locked arms with the California Nations Indian Gaming Association in opposition to Proposition 27, calling the measure a “deceptive” move that would only benefit the bank accounts of “out-of-state operators.”

San Manuel Band of Mission Indians Chairwoman Lynn Valbuena, whose Southern California tribe owns the Palms Casino Resort in Las Vegas, said in a statement that Proposition 27, “threatens decades of progress for California’s tribal governments, erodes tribal sovereignty, and threatens our future economic sustainability.”

Gillespie, whose company is not involved with either side in the campaign, suggested the operators need to be more out in front as the election nears.

The major sports betting operators, he said, need a victory and to avoid the failure DraftKings and FanDuel experienced earlier this year in Florida. The companies spent $37 million in an unsuccessful effort to place a sports betting ballot question in front of voters. After Hard Rock Entertainment’s online sports betting business was shut down after 34 days by a federal judge, sports betting in the state may not be resolved until next year.

“The operators lost in Florida. That was big for them,” Gillespie said. “If it happens again in California, it’s terrifying about how aggressive the operators are going to be coming back because (legalizing sports betting) is not going away.”

Gillespie credited language in Proposition 27, which requires operators to participate with California tribes in mobile sports betting. A portion of the revenues would be shared among smaller non-gaming tribes. In addition, the measure allows tribes to operate their own sports wagering platforms.

“They've carved out meaningful economics for a number of tribes in California in this bill,” Gillespie said. “They didn't have to do that. If they have to come back and do this again, there’s no guarantee they're going to be as accommodating.”

Backers of Proposition 27 said this month the measure gained the support of three small Indian tribes – Big Valley Band of Pomo Indians, Santa Rosa Rancheria Tachi Yokut Tribe and Middletown Rancheria of Pomo Indians.

“For too long, rural and economically disadvantaged tribes like ours have struggled to provide for our people,” Philip Gomez, chairman of the Big Valley Band tribe said in a statement. “This measure would provide us with economic opportunities to fortify our tribe’s future for generations to come.”

However, the tribal coalition announced earlier this month that the California Democratic Party voted to oppose Proposition 27 and take a neutral position on Proposition 26.

“By opposing Prop 27, California Democrats rejected out-of-state corporations and reaffirmed their commitment to California’s Indian tribes,” said Agua Caliente Band of Cahuilla Indians Chairman Reid Milanovich.

The tribes also announced support for Proposition 26 from California labor and civil rights leader Dolores Huerta, who said the measure “will empower tribes to create new economic opportunities for their members."

Gillispie predicted that either both propositions would pass or both would be voted down, not a split decision. He also said it was “inevitable” that the tribal coalition would file a lawsuit against the operators if Proposition 27 passes.

Tribal casinos, which produce an estimated $8 billion in annual gaming revenue, will “defend their turf, which is proven to be extremely lucrative for them historically,” Gillispie said.

He added that California is too important in the future of sports betting nationally to remain sidelined.

“It’s in everyone's best interest to find a happy, sustainable way forward, including the citizens of California,” Gillispie said.

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Analyst cautious as gaming revenue still pacing ahead of 2021’s record year

Commercial gaming revenue in the U.S. has topped $5 billion in each of the past three months, according to a report last week from the American Gaming Association.

The $5.1 billion reported for May was the second-highest month behind the $5.35 billion reported in March for the 31 states with commercial casinos. April’s total was $5 billion. The AGA said the March-through-May total is considered the highest-ever combined gaming revenue for a three-month period.

Four states accounted for half of the total.

Nevada led all states with more than $1.3 billion in gaming revenue, roughly 25 percent of the total. Pennsylvania was second with $455.4 million while New Jersey was No. 3 with $443.6 million. New York reported $356.3 million in commercial casino revenue.

Through the first five months of 2022, the AGA said gaming revenue stands at $24.4 billion, 20.6 percent ahead of the same period in 2021.

In a statement, the AGA admitted challenges, such as supply chain issues, labor shortages and inflation, persist. Still, commercial gaming “remains on track for another potential record-setting year with revenue.”

However, Wells Fargo gaming analyst Dan Politzer cautioned there have been “incremental” signs that spending by consumers has begun to soften.

He said casino customers in regional markets are grappling with rising inflation, higher interest rates, and increasing economic uncertainty.

Politzer said he expects casino operator management teams to offer “material evidence” that spending has decreased when gaming companies begin releasing quarterly earnings results in the next few weeks.

“Second quarter trends were generally stable, and early reads on July regional performance will likely reflect a favorable calendar,” Politzer wrote in a research note last week. “However, given broadly increasing macro uncertainty, we expect a more cautious management tone on growth outlooks versus three months ago.”

U.S. commercial gaming revenue reached a record $53 billion in 2021, more than 21 percent higher than the previous annual record of $43.6 billion set in pre-pandemic 2019.

The 2021 total was nearly 77 percent higher than 2020 when COVID-19 forced casinos across the country into months-long shutdowns and reopenings were slowed by government-implemented health and safety guidelines.

During May, traditional casino games generated revenue of $4.13 billion, up 1.4 percent versus May 2021. Sports betting revenue totaled $487.5 million from operations in 26 states and Washington, D.C., a 78.2 percent increase from May 2021, when sports betting was legal in 20 jurisdictions.

Gaming revenue from internet casino operations was $406.4 million, up 30.9 percent from May 2021.

Of the 31 commercial casino states that were operational one year ago, 18 states showed year-over-year revenue growth in May.

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Other items of interest:

The Las Vegas Convention and Visitors Authority and AEG have teamed up to bring the two games of the entertainment company’s inaugural Soccer Champions Tour to Allegiant Stadium in Las Vegas.

On Friday, Juventus will take on Club Deportivo Guadalajara. On Saturday, Real Madrid will play FC Barcelona. The Soccer Champions Tour marks the first return of play in the U.S. for Barcelona and Real Madrid since 2019 and for Juventus since 2018.

A scan of ticket sales via Ticketmaster for the Real Madrid-Barcelona game showed price ranges between $280 to $900 per seat. The Juventus-Guadalajara game has ticket prices between $49 and $300 per seat.

The games in Las Vegas mark the start of the nine-day tour in four U.S. cities, including San Francisco, Dallas and Los Angeles.

“Las Vegas’ ability to attract world-class sporting events has never been stronger and welcoming these two international soccer matches over the course of one weekend is a testament to that,” LVCVA CEO Steve Hill said in a statement.

Spirit Airlines, the No. 2 air carrier at Harry Reid International Airport, expanded its service to offer direct flights between Las Vegas and San Antonio, Texas. The service is expected to begin in November.

Spirit is expected to launch new nonstop flights in August, connecting Las Vegas with Reno, Albuquerque, New Mexico and Boise, Idaho.

Through May, Florida-based Spirit had shuttled more than 2.4 million passengers between Reid Airport and 38 destinations. Southwest is Las Vegas’ largest air carrier with more than 6.8 million passengers through May.

The parent company of Resorts World Las Vegas is reportedly attracting potential buyers for Resorts World Sentosa in Singapore. Bloomberg News reported last week that MGM Resorts International is one of several companies expressing interest to Malaysia-based Genting Berhad in acquiring the hotel-casino, one of two located in the island nation.

The other property in Singapore is Marina Bay Sands, which is owned by Las Vegas Sands Corp. The company is expected to begin a $3 billion expansion of the resort that would focus on increasing its non-gaming attractions.

Jefferies gaming analyst David Katz said he expects the casino business in Singapore to “ramp up” and the country has opened its borders to foreign travel.

“With VIP/junket business in Macau under pressure, the market should be well positioned to capture those high-end customers,” Katz told investors. He suggested the cost to acquire Resorts World Sentosa and the rising cost of debt would “only a handful of large-cap operators or financial sponsors (that) would have the means to pursue a deal.”

MGM Resorts International and Major League Baseball extended and expanded its partnership that began in 2018 after the Supreme Court ruling that allowed states to legalize sports betting.

The casino operator, through its BetMGM digital gaming and sports betting subsidiary, will continue to be an official gaming partner of Major League Baseball. But the partnership was extended to include events associated with Tuesday’s All-Star Game in Los Angeles.

MGM was the title sponsor of the All-Star Celebrity Softball Game and a presenting sponsor of the game. The partnership between BetMGM and Major League Baseball includes data usage in sports betting, promotion across the league’s media platforms, marketing at league events and sponsorship of fan experiences.