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Indy Gaming: Macau casinos bounce back after three years of depressed gaming revenue

Howard Stutz
Howard Stutz

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.If a colleague or associate emailed this newsletter to you, please click here to sign up and receive your own copy of Indy Gaming in your inbox. - Howard Stutz

With three months in the books, Macau’s casino industry is rebounding from its dismal 2022 performance, which marked the region’s worst annual revenue total in almost two decades.

However, when comparing March numbers with results from pre-pandemic 2019, Macau is still a little more than 50 percent behind what some analysts say would be a solid recovery after three years of economic turmoil.

Three Nevada-based companies — Las Vegas Sands, MGM Resorts International and Wynn Resorts — make up three of Macau’s six gaming license holders.

“We have believed that getting down to 50 percent or lower level relative to 2019 was always going to be an important threshold,” Stifel Financial gaming analyst Steven Wieczynski wrote in a research note Sunday, a day after Macau’s Gaming Inspection and Coordination Bureau said casinos reported collecting $1.53 billion in gaming revenue, a 247 percent increase from a year ago.

The result gave Macau a three-month revenue total of more than $4.3 billion, almost assuring the region will soon surpass 2022’s 18-year revenue collection low in just four months after April’s total is counted.

“While we remain positive around the reopening of this important market, we still believe the next couple of months will be a roller coaster as China goes through the ebbs and flows of reopening,” Wieczynski said.

The Nevada companies are expected to provide additional insight beyond the revenue totals when they report first-quarter earnings results in the coming weeks.

Macau was considered the world’s largest gaming market when it topped $45 billion in casino revenue in 2013. But years of economic upheaval in China, followed by the pandemic, all but shut down the casino business starting in January 2020.

Analysts noted the March gaming revenue total was 23 percent higher than the $1.3 billion reported in February and was Macau’s single-highest monthly revenue figure in 38 months.

“March’s better-than-expected results should reassure investors of the market’s recovery,” J.P. Morgan gaming analyst Joe Greff told investors.

Attendees gather at the GAN Ltd. booth to try out the company's sports betting technology during G2E on Wednesday, Oct. 12, 2022. (Jeff Scheid/The Nevada Independent)

Station and Wynn deals allow GAN to focus on providing sports betting technology

Sports betting technology provider GAN Ltd. told investors last week it prefers being behind the scenes in the hyper-competitive U.S. sports betting landscape.

For example, the company provides its GAN Sports software to Wynn Resorts, which powers the retail and online sports betting operations at Encore Boston Harbor in Massachusetts.

“You wouldn't really know we’re there,” said Robert Shore, vice president of investor relations for the Irvine, California-based company that maintains offices in Las Vegas.

Agreements similar to the one with Wynn Resorts are what GAN leadership believes will lead to a much higher return on investment, rather than trying to break into jurisdictions where larger sports betting companies with nine-figure promotional budgets are winning the customer acquisition battles.

Ontario, Canada, is one of those markets.

GAN CEO Dermot Smurfit said during its fourth-quarter earnings conference call last week the company would abandon efforts to launch its proprietary Coolbet sportsbook in Canada’s most populous province and instead focus on providing technology to casino operators in the U.S.

“While GAN Sports is still in the early innings, we think our existing [business-to-business] client roster truly speaks for itself,” Smurfit said. “There are 32 states in which we can sell our retail sports today, coupled [with] 22 states for our online GAN Sports offering.”

The agreement with Wynn includes the company’s online operations in several states but doesn’t include Wynn’s Nevada sports betting operations. GAN is in the process of being licensed by state gaming regulators for its agreement with Station Casinos to build out the sports betting infrastructure for Station Casinos’ retail sportsbooks, betting kiosks and the STN mobile app.

GAN announced the deal with Station in October 2021 and on their earnings call the company noted that it expects to launch in Nevada with Station in the second half of 2023 subject to licensing by state gaming regulators. GAN’s technology and platform are also being used by the sportsbook at the Island View Casino in Gulfport, Mississippi.

“Station and Wynn give us a nice platform in the U.S.,” Shore said.

GAN remains focused on operating sports betting through Coolbet in less competitive jurisdictions, such as Latin America and the regulated Mexican casino market. It’s also initiated a strategic review process to assess a range of potential business alternatives. The review is being conducted by B. Riley Financial.

Macquarie Securities gaming analyst Chad Beynon told investors there was value in GAN’s recent contracts and its technology platform.

“Outside of the search for strategic alternatives, we still believe GAN has strong tech and content,” Beynon said in a research note. “GAN needs to return to double-digit revenue growth, announce more meaningful deals, or be exposed to more iGaming legislation to attract investor attention.”

Global Gaming Expo attendees discuss a Wheel of Fortune slot machine at the IGT booth during the tradeshow on Oct. 11, 2022. (Jeff Scheid/The Nevada Independent)

Study: Gaming equipment providers building back economic output following pandemic

Gaming equipment suppliers regained much of the economic output lost during the height of the pandemic, which shut down the casino industry worldwide for parts of 2020.

According to a report produced for the Association of Gaming Equipment Manufacturers (AGEM), global gaming suppliers — most of which have either corporate headquarters or a large presence in Nevada — generated an overall economic impact of $44.4 billion in 2021, a 14.9 percent increase over 2020.

But the study, produced for AGEM by Las Vegas-based economic advisory firm Applied Analysis, showed slot machine and table game developers, gaming technology companies and casino management system providers are still below the industry-high figure produced in 2019.

“While gaming suppliers were negatively impacted during the economic downturn that commenced in 2020, the sector demonstrated its ability to cover lost ground in 2021 by increasing overall economic activity with double-digit gains,” the authors wrote.

The results covered 2021 but not 2022 because many of the key suppliers have yet to report their primary figures for the year.

“The expectation is that the recovery trend continued in 2022,” according to Applied Analysis.

The total fell from a record $62.4 billion in 2019 down to $38.7 billion in 2020, when casinos canceled gaming equipment purchases as part of their cost-cutting efforts due to pandemic-related shutdowns.

According to the report, gaming equipment suppliers either headquartered in Nevada or with operations in the state generated $21.7 billion in total economic output and paid $5.9 billion in wages and salaries to more than 67,000 employees.

Worldwide, the manufacturing sector paid $16.9 billion in wages to more than 192,000 workers.

“Globally, the gaming supplier industry is a key source of technological innovation and advanced manufacturing investment,” AGEM Executive Director Daron Dorsey said in a statement. “We are exporting valuable, legal products to meet high consumer demand in regulated gaming jurisdictions worldwide.”

The Nugget Casino Resort in Sparks on Friday, March 10, 2023. (Tim Lenard/The Nevada Independent)

Sparks Nugget is officially owned by Colorado-based Century Casinos

More than a year after the $195 million transaction was announced, the Nugget Casino Resort in Sparks is officially the flagship property of Century Casinos.

The Colorado-based casino operator announced the sale closed early Tuesday. Nevada gaming regulators signed off on the transaction last month.

The 1,382-room hotel casino has a 75,000-square-foot gaming floor, 110,000 square feet of meeting space, nine restaurants, a 700-seat showroom and other amenities. It is one of the largest resorts in Northern Nevada. 

“The Nugget is a great addition to our portfolio,” Century co-CEOs Erwin Haitzmann and Peter Hoetzinger said in a statement. “We have plans to update the façade, signage, slot floor and food and beverage venues of the Nugget. We look forward to working with the staff and community to continue the current success at this property into the future.”

The Nugget’s price tag includes $95 million for half of the real estate covering its site off Interstate 80 and 3 miles from Reno-Tahoe International Airport and $100 million for the operations.

The Nugget was owned by Las Vegas-based Marnell Gaming, which acquired the property in 2016 for an undisclosed price. The resort was developed by Northern Nevada gaming pioneer John Ascuaga, who died in June 2021 at age 96.

Marnell’s Smooth Bourbon LLC owns 50 percent of the Nugget’s site. The other 50 percent was acquired by Century. The Nugget and Smooth Bourbon have a lease agreement for $15 million in annual rent. Following the sale, Smooth Bourbon is a consolidated subsidiary of Century.

Century operates two casinos in Colorado, two casinos in Missouri and one casino in West Virginia. Century has a pending deal to acquire the operations of a casino resort in western Maryland. The company also operates casinos in Alberta, Canada, and Poland.

The recently opened FanDuel branded sportsbook is operated by Boyd Gaming inside the Fremont Hotel-Casino in downtown Las Vegas is seen on Jan. 12, 2023. (Jeff Scheid/The Nevada Independent)

Kentucky is the newest sports betting opportunity, but who gets a piece of the action?

The potential of Kentucky’s newly enacted sports betting legislation will draw business away from neighboring states and provide fertile ground for the major operators that have a national presence, including Nevada-centric companies.

“Our initial estimates are for $250 million to $300 million in gross gaming revenue at maturity,” JMP Securities gaming analyst Jordan Bender told investors last week after Kentucky became the 37th state to legalize sports betting.

Gov. Andy Beshear wasted little time and signed the legislation into law less than 24 hours after passage. The market is required to be live within six months after the legislation becomes effective on June 28.

“For years I believed it was time for Kentucky to join so many other states and pass sports betting,” Beshear said during a press conference. “We talk about having a competitive business climate, but we did not have an important business that nearly every state surrounding us has. Our dollars were supporting Indiana, West Virginia, Ohio and other states.”

Bender said the two companies that will largely benefit from Kentucky’s legislation are FanDuel and DraftKings, which have long operated daily fantasy sports in the state. DraftKings opened a corporate headquarters in southwest Las Vegas last month and FanDuel, which is 5 percent owned by Boyd Gaming, has a branded sportsbook at the Fremont Hotel and Casino.

Kentucky’s new sports betting law allows the state’s nine racetracks and historical horse racing casinos to operate a retail sportsbook. The nine locations can also partner with as many as three online operators each. Conceivably, the state could be home to 27 online sports betting sites.

The law calls for tax rates of 9.75 percent for retail sportsbooks and 14.25 percent for mobile sports wagering.

Churchill Downs, which owns several historical horse racing casinos and racetracks, including its namesake track in Louisville, has deals in place with FanDuel and DraftKings. Bender predicted the two companies could control as much as 75 percent of the state’s sports betting market.

Nevada companies that operate in multiple states, such as BetMGM, Caesars Sportsbook, WynnBet and Circa Sports, will be attracted to Kentucky. The state joins Nebraska, Maine and Florida as states that have legalized sports betting but have yet to launch.

Baseball fans during the Aviators game at the Las Vegas Ballpark in Downtown Summerlin on Thursday, July 14, 2021. (Jeff Scheid/The Nevada Independent)


Via Bally’s Corp. press release

Tropicana Las Vegas operator Bally’s Corp. signed a multiyear partnership with Minor League Baseball (MiLB). The company, which operates the BallyBet sports wagering site, is the first-ever media rightsholder with MiLB for free-play fantasy sports and other non-wagering gaming content through the Bally Live app. Major League Baseball (MLB) acquired MiLB in 2021.

The agreement allows fans to sign into the app for free play content and watch the games of some 120 different teams, including the Triple-A Reno Aces and Las Vegas Aviators.

"We've focused on growing the reach and awareness of our impressive young prospects and iconic MiLB teams. Bally's Corporation will be a critical partner for us in achieving that goal.”

-          Kenny Gersh, executive vice president, Major League Baseball

Via MGM Resorts International press release

MGM Resorts said it will spend $110 million to remodel 819 hotel rooms and 104 suites in the Spa Tower of Bellagio, saying the furnishings and décor will be “inspired by the beauty and tranquility of Italy's Lake Como.” MGM recently completed a remodel of 2,500 rooms inside Bellagio’s main tower.

The first remodeled rooms in the Spa Tower will be available by July with the project expected to be completed in October.

"Bellagio's commitment to delivering unparalleled accommodations, experiences and guest service for our discerning guests from around the world is the hallmark of our brand promise. The Spa Tower's beautiful and luxurious new suites and guest rooms will reinforce our position as one of the hospitality industry's premier destinations."

-          Ann Hoff, president, Bellagio

Via Station Casinos’ press release

Station Casinos launched STN Charms, a non-fungible token (NFT) that is part of the company’s casino loyalty rewards program. The NFT is displayed on slot machine service windows. STN Charms provides guests with personalized NFTs and an online marketplace to buy, sell and browse the catalog of available charms. 

“Through our patent-pending, game-changing technology, we believe STN Charms will reshape the casino gaming landscape and modernize loyalty programs making for a more rewarding and fun gaming experience for our guests.” 

-          Tom Mikulich, senior vice president, Station Casinos


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