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Indy Gaming: VICI Properties intrigued by stadiums; could Las Vegas be a location?

Howard Stutz
Howard Stutz
EconomyGaming
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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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Real estate investment trust VICI Properties owns a diverse roster of businesses beyond its 43 gaming locations in 15 states that are operated by eight casino companies.

The company owns four championship golf courses — two in Nevada and one each in Indiana and Mississippi. VICI invested in Chelsea Piers, a sports and fitness complex in New York City; Great Wolf Resorts, a non-gaming lodging and indoor water park operator; and Big Shots Golf, a chain of self-contained driving ranges.

In June, VICI also invested in a Florida golf course resort and community owned by developer Cabot Group.

“We love the indoor water park business, the theme park business, (and) family entertainment centers,” VICI President John Payne said on the company’s second-quarter earnings conference call last week. “There are parts of sports that I think are quite interesting that we're studying and parts of fitness that we're continuing to study.”

Add stadiums to that list.

VICI CEO Edward Pitoniak told an analyst that investing in a stadium development was an intriguing idea for the REIT, which launched in 2017 by taking ownership of 20 Caesars Entertainment hotel-casinos as part of the casino operator’s bankruptcy reorganization.

But he also expressed caution, saying stadiums often need renovations after a few decades.

“I do think we are mindful of the fact of obsolescence risk in stadiums,” Pitoniak said.

“For every Fenway Park (home of the Boston Red Sox) or Wrigley Field (Chicago Cubs) or Anfield (Liverpool FC) or Old Trafford (Manchester United), there's a stadium that had proved to have about 20 years of useful life,” he added.

VICI owns roughly 660 acres across the Strip, much of which covers 12 resorts and entertainment complexes, including The Venetian, MGM Grand and Caesars Palace.

A 27-acre parcel behind Bally’s Las Vegas, Paris Las Vegas and Planet Hollywood that is owned by VICI has reportedly been eyed by the Oakland A’s as a potential site for a $1 billion Major League Baseball Stadium should the team relocate from the Bay Area.

The VICI site sits along Koval Lane and fronts a portion of the 3.8-mile, 14-turn racecourse planned by Formula One for the Las Vegas Grand Prix in November 2023.

VICI executives have declined comment about the land, which is one of two locations the A’s are considering in the Strip corridor.

A rendering of the Oakland A's proposed waterfront stadium at the Howard Terminal in Oakland, California. (Rendering courtesy Oakland A's and Major League Baseball)

Recent events in the Bay Area, however, may keep the team in Oakland, where the A’s want to build a $1 billion waterfront ballpark to replace RingCentral Coliseum. The stadium is the centerpiece of a proposed $12 billion mixed-use project at the Port of Oakland’s Howard Terminal.

Last month, the San Francisco Bay Conservation and Development Commission voted to remove the port designation from the Howard Terminal site. A few days later, the Oakland City Council decided against placing a ballot referendum in front of voters in November that would seek an advisory opinion for the stadium project.

There are still several hurdles that must be cleared in Oakland, including financing the infrastructure improvements associated with the project. A’s President Dave Kaval has reiterated the team will remain on “parallel paths” toward landing a new ballpark in Oakland or moving to Las Vegas.

On Tuesday, the Las Vegas Review-Journal reported that Treasure Island and Circus Circus owner Phil Ruffin was meeting with the A’s about his 37-acre festival grounds site as a possible stadium location.

Meanwhile, Gaming and Leisure Properties (GLPI) — a rival casino REIT — didn’t offer any clarity last week on Tropicana Las Vegas, the other potential stadium site the A’s have been exploring. The company is selling the operations of the Rat Pack era hotel-casino to Bally’s Corp. The transaction is awaiting Nevada regulatory approval.

During the company’s second-quarter conference call Friday, GLPI General Counsel Brandon Moore said it is aware Bally’s is looking at some type of redevelopment for the 34-acre parcel.

“We don't run that process,” Moore said. “We have obviously a strong interest. We understand it's proceeding at pace but can't really tell you where that stands today.”

Bally’s, which said in February it was having “advanced discussions with potential development partners,” reports quarterly earnings on Thursday.

VICI remains dedicated to moving beyond gaming. Payne said the company was “pioneering some areas here that have not traditionally done business with a REIT.”

Pitoniak said the global professional sports world has become interested in developing large training facilities.

For example, the Las Vegas Raiders built the $75 million Intermountain Healthcare Performance Center in Henderson, which serves as the team’s headquarters. Both the Los Angeles Rams and Los Angeles Chargers are in various stages of developing training facilities and team offices in Southern California.

“That’s become a bigger area of investment focus for pro sports teams,” Pitoniak said. “And we've been having discussions and doing a lot of study around being a (financial) provider. Global sport (has) obviously become more and more a focus of capital provision.”


Venetian Macau and Las Vegas Sands' properties on Coati in 2016. (via xiquinhosilva on Flicker)

Macau gaming revenue sinks to its lowest total in more than two years

Macau’s 12-day casino closure during July and other COVID-19 restrictions sent the region’s gaming revenue tumbling to $49 million during the month, a 95 percent decline from a year ago and the Chinese market’s lowest monthly level in two years.

According to a statement from the government’s Gaming Inspection and Coordination Bureau on Monday, the July total was the lowest single-month number since June 2020, when casinos operating in the middle of the pandemic reported $88 million.

For the first seven months of 2022, Macau's gaming revenue is $3.3 billion, down 53.6 percent from 2021, when casinos collected $10.8 billion. In pre-pandemic 2019, Macau casinos produced $36.6 billion.

Macau has to comply with China’s zero-COVID policy, which leads to strict quarantine rules, travel restrictions and business shutdowns. However, many of the limitations are expected to ease this week, but analysts continue to warn that casino business will be minimal during August.

Stifel Financial gaming analyst Steven Wieczynski called Macau “a total black box” for Las Vegas Sands, MGM Resorts International and Wynn Resorts, the three Las Vegas operators with significant holdings in the market.

After selling its Las Vegas resorts in February, Sands relies on the Marina Bay Sands in Singapore for the majority of its revenue and cash flow because of the slowdown in Macau.

Stifel Financial gaming analyst Steven Wieczynski. (Photo courtesy of Stifel)

“There are no clear indicators as to when the Chinese market will fully ease their restrictive COVID measures, which should help drive the return of ‘normal’ business patterns to Macau,” Wieczynski told investors in a research note. “At this point, Macau operators are working on reimagining or reengineering their business models for when the market opens back up.”

Initially, when the renewed COVID outbreak was detected in June, Macau’s government implemented multiple rounds of testing for all residents. Several hotels, including the Sands-operated Parisian Macau, became quarantine sites.

The government ordered casinos to close for seven days on July 11 and extended the shutdown for another five days. Macau casinos reopened on July 23 but with just 50 percent staffing. Ongoing border restrictions with Mainland China reduced visitation.

Las Vegas Sands Chairman and CEO Rob Goldstein said the company has invested more than $15 billion in Macau over the last 20 years and believes in the market.

“We retain great optimism and our ability to perform to pre-pandemic levels and beyond in Macau once visitation returns,” Goldstein said on the company’s July 20 second-quarter earnings conference call. “We would welcome the opportunity to invest billions of additional dollars in Macau. We continue to believe Macau is an outstanding market for additional investment.”

Jefferies gaming analyst Andrew Lee, who is based in Hong Kong, doesn’t expect any large rebound in Macau until the fall.

“Gaming revenue is likely to improve slowly, driven by local players as Macau slowly reopens,” Lee wrote in a research note. “Tourists remain the key revenue driver. However, we expect Mainland China tourists to skip Macau in the near term on quarantine fears.”

Analysts once predicted Macau could reach upward of $100 billion in annual gaming revenue in the five years after the market produced a single-year record $45 billion in 2013.

Wieczynski said Monday that Macau’s casino operators believe their balance sheets “are strong enough right now to withstand an extended slow environment like the one they have been operating in for the last two years.”

Looming over the market, however, is the gaming license renewal process that began July 29 and runs through Sept. 14. All six license holders, including Sands, Wynn and MGM Resorts, are expected to participate in the process for new 10-year gaming licenses that also allow for three-year extensions under certain circumstances.

All companies each paid the Macau government $6 million in June to extend their current licenses to Dec. 31. The 20-year concessions were set to expire at the end of the month.

“In general, we concur with expectations for a benign process for current operators,” Lee told investors.


Attorney Mark Clayton adjusts the microphone for Latisha Deanne Casas of the San Manuel Indian Tribe during a Gaming Control Board meeting in Las Vegas on Dec. 1, 2021. (Daniel Clark/The Nevada Independent)

Gaming attorney Clayton appointed to the board of a technology company

Las Vegas gaming attorney Mark Clayton is joining the board of Bragg Gaming Group, a Toronto-based technology and content provider.

Clayton has 32 years of legal, regulatory and compliance experience in the gaming industry. He’s represented companies such as Caesars Entertainment, Las Vegas Sands, 888 Holdings, DraftKings, Flutter Entertainment and Entain PLC.

Clayton retired from Greenberg Traurig earlier this year after heading the law firm’s international gaming practice since 2014. Last year, he represented Malaysia-based Genting Berhad in the licensing for Resorts World Las Vegas and Southern California’s San Manuel Indian Tribe in its purchase of Palms Casino Resort.

After serving as the chief of the Nevada Gaming Control Board’s Corporate Securities Division in the early 1990s, Clayton was general counsel for several publicly traded casino companies. Gov. Kenny Guinn appointed Clayton to the three-person control board in 2005 and he served one term before joining the Las Vegas law firm of Lionel Sawyer and Collins.

“Mark is recognized as one of the most accomplished attorneys in the gaming industry,” Bragg Chairman Paul Godfrey said in a statement. “Mark’s wealth of expertise and experience will serve us well as we continue to execute on our global expansion initiatives.”

Bragg has provided content to the iGaming industry since 2018. The company, which is publicly traded on the Toronto Stock Exchange, owns two companies in Nevada. Wild Streak Gaming is a content studio that provides casino games to land-based, online and social gaming platforms. Spin Games is a technology and content provider in the U.S. casino market.

Clayton serves as an independent member of the Palms Resort Casino compliance committee and has previously served on the compliance committees for Caesars Entertainment, The Cosmopolitan of Las Vegas and Silicon Gaming.


U.S. Treasury Building Washington D.C.
U.S. Treasury Building Washington D.C. from Wikicommons

AGA updates its guide to help casinos avoid money-laundering issues

The American Gaming Association has updated its manual that advises the casino industry on anti-money laundering practices and procedures for the first time since 2019.

The Washington, D.C.-based trade organization first published its Best Practices for Anti-Money Laundering Compliance guide in 2014 as a comprehensive set of best practices. The publication was updated five years later.

Since that time, Congress enacted several changes to the Bank Secrecy Act through the Anti-Money Laundering Act of 2020. Also, the Financial Crimes Enforcement Network of the U.S. Department of the Treasury (FinCEN) granted the gaming industry federal exceptive relief for certain types of ID verification.

Alex Costello, the AGA’s vice president of government relations, said the gaming industry continues to combat money laundering efforts even as the methods and sophistication of financial crimes evolve.

“An invaluable resource for our industry, this guide demonstrates gaming’s commitment to protect the U.S. financial system from money laundering and other forms of illicit finance,” Costello said.

Since 2019, some 16 states legalized sports betting. Also, iGaming is now legal in six states. Nearly a dozen jurisdictions allow the use of digital payments for gaming and other states are exploring the use of cryptocurrency in connection with casino activities.

Costello said new types of cybercrimes and fraudulent activity have surfaced.

To address these changes, the AGA updated the publication to provide guidance, highlight new red flag indicators, update compliance obligations, revise definitions and provide other essential information for gaming companies to maintain their anti-money laundering practices.

In 2021, gaming operators filed nearly 55,000 suspicious activity reports to aid law enforcement in fighting money-laundering activity.

The AGA represents gaming on the Bank Secrecy Act Advisory Group (BSAAG), which was organized by FinCEN to collaborate with stakeholders in the financial sector. 


The fountains at Bellagio seen along the Strip on Tuesday, Nov. 16, 2021. (Jeff Scheid/The Nevada Independent)

Quotable

Via MGM Resorts International

Would you like to enjoy dinner or brunch surrounded by the foliage and displays within the Bellagio Conservatory and Botanical Gardens? The Strip resort announced a single table for up to six guests for dining on special pre-fixe menus crafted by MICHAEL MINA Bellagio (for dinner) or Sadelle's Café (for brunch). Reservation times are limited to two hours and can be booked Wednesday through Sunday for dinner (5 p.m. to 10. p.m.) and seven days a week for brunch (9 a.m. to 2 p.m.) The five-course dinner costs $250 per person. The two-course brunch is $75 per person.

“We wanted to create an entirely new and immersive way for our guests to experience the beauty of this space. The sights, sounds, colors, and energy of the Conservatory, combined with chefs Michael Mina and Mario Carbone curating the culinary journey, make for an epic experience that only Bellagio can deliver.”

-          Josef Wagner, vice president of food and beverage at the Bellagio

Via ESPN

Massachusetts lawmakers approved a sports betting bill Monday that is expected to be signed by the state’s governor. The measure allows online wagering and retail sportsbooks and prohibits betting on games involving in-state colleges unless the teams are taking part in tournaments, such as “March Madness.” Sportsbooks at professional venues, such as Fenway Park, are not allowed.

"I think the data indicates that most consumers are expected to be betting on mobile devices, not necessarily placing a bet at the window of an in-person sportsbook. … We suggested it would make sense to have an in-person sportsbook at a venue, but we're very pleased with the final bill."

-          Dave Friedman, senior vice president of government affairs for the Boston Red Sox

Via The New York Post

New York Mets owner Steve Cohen is reportedly ramping up efforts to partner with a casino operator on redevelopment prospects at Citi Field, the Mets’ home stadium. He is vetting several casino operators for his licensing push and is believed to favor Hard Rock Entertainment. Cohen has also spoken with representatives from Las Vegas Sands Corp.

“For decades, New Yorkers have known that our city can get more out of the area around Citi Field. Steve has invested in the team, the ballpark, and the borough because he views owning the Mets as a civic responsibility. He will continue engaging stakeholders across Queens as the community thinks about how to revitalize the neighborhood.”

-          Tiffany Galvin-Cohen, spokeswoman for New York Mets owner Steve Cohen

Via Bally’s Corp.

As for New York’s other baseball team, the New York Yankees signed a marketing partnership with Bally’s Corp., which allows Bally Bet to become an official sports betting partner of the 27-time World Series champion. Bally Bet is one of nine online sports betting companies operating in New York.

"This is a great partnership that will give Bally Bet and our other interactive brands terrific visibility in New York. The Yankees' history as a franchise and their popularity as a global brand speaks for itself."

-          Adi Dhandhania, chief operating officer of Bally's Interactive North America

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