Indy Gaming: Fitch Ratings revises its outlook toward Las Vegas casino recovery, sees rebound by 2023

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Fitch Ratings gaming analyst Colin Mansfield waited in line patiently to sample a specialty item offered by Boon Tong Kee, one of the 17 eateries in Famous Foods Street Eats inside Resorts World Las Vegas.

With more than 3,000 guests invited to a private celebration of the $4.3 billion hotel-casino – a few hours before the newest Strip resort was opened to the masses on June 24 – the lines at the property's bars and restaurants were jammed.

Mansfield toured the development earlier that week. He came away impressed with the detail Resorts World owner, Malaysia-based Genting Berhad, put into the project.

“(The) casino floor felt like a Singapore property and contained a formidable mix of food and beverage outlets,” Mansfield wrote in a research report provided to the investment community on July 8 that discussed the overall Las Vegas recovery following more than a year of pandemic-related closures and operating restrictions.

“We’re not overly concerned with 3,500 incremental rooms hitting the market as it represents only an approximately 2 percent increase to existing supply,’ Mansfield said of Resorts World’s three hotel brands that are licensed from Hilton Hotels and are part of the company’s reward program. “The property is a welcomed addition to the north end of the Strip and performance will ramp up as connectivity improves and international visitation returns.”

The Fitch Ratings report updated the company’s findings from October 2020, which predicted the nation’s largest gaming market may experience a slower than anticipated recovery that carries into 2024.

Mansfield said Las Vegas could return to the 2019 pre-pandemic levels by 2023.

“Strong domestic leisure gaming is picking up the slack from non-existent international visitation and soft convention business, leading Fitch Ratings to revise its recovery assumptions to reflect our most positive outlook for the Strip,” Mansfield wrote.

Compared to 2019, Fitch expects Las Vegas Strip gaming revenues to be down 20 percent when the books are closed in 2021, and down 6 percent in 2022.

“Slowing vaccination trends in the U.S. and uncertainty regarding viral variants drives some conservatism in our forecast notwithstanding the strong spring performance,” Mansfield wrote of the Strip’s nearly 27 percent gaming revenue jump in May, compared to May 2019.

The Fitch report was published before the recent uptick in positive COVID-19 cases, which caused the Southern Nevada Health District to recommend that both unvaccinated and vaccinated people wear masks in public settings.

Mansfield also toured the recently opened 1.4 million square foot West Hall expansion of the Las Vegas Convention Center, which cost $1 billion. He suggested the new space “offers a differentiated expo-type experience.” He doesn’t believe it will cannibalize convention business from Strip casino operations with large convention and meeting space.

“Convention demand at the Las Vegas Convention Center will support room bookings and foot traffic to North Strip properties, specifically Wynn Las Vegas and Encore, and Resorts World,” Mansfield wrote.

The reason behind Fitch’s revised, more positive Las Vegas outlook is that demand for the market has increased month over month since the beginning of 2021, including the acceleration that began when capacity levels were increased to 50 percent in the spring. By June 1, all capacity limits were removed.

Mansfield cited Gaming Control Board numbers that showed slot machine wagering had recovered to 2019 levels by March and were up more than 23 percent in May. Strip table game wagering, which relies somewhat on baccarat gamblers from international markets, was only down just 14 percent in May.

While Fitch’s revised outlook might prove conservate given operating trends, the potential for renewed pandemic restrictions “amid slowing domestic vaccinations and uncertainty regarding viral variants” was factored into the consideration.

“A continuation of current positive trends through the fourth quarter would give Fitch greater confidence that the recovery is sustainable,” Mansfield wrote.

Fitch isn’t alone in its positive assessment of Las Vegas.

Truist Securities gaming analyst Barry Jonas and Global Market Advisors partner Brendan Bussmann, in a monthly update, thought the Resorts World opening brought “new energy” to the Strip, and primarily the north end.

But could that same energy fuel a construction boom?

“Resorts World has stated that they are already looking at expansion of the existing site,” they said.

At the same time, the much-maligned and unfinished Fontainebleau development – an eyesore since construction was halted in 2007 – could finally be finished with new ownership on board, including the real estate arm of Koch Industries.

The other site is the vacant 38-acre “Wynn West,” located across the Strip from Wynn Las Vegas. The property was purchased in 2014 by Wynn Resorts for $336 million. The site once housed the Rat Pack-era New Frontier that was imploded in 2007 to make way for a multi-billion-dollar luxury resort. That property, dubbed Plaza Las Vegas, never came to fruition after the economy tanked.

“No solid plans for the next resort have been announced,” Jonas and Bussmann noted.

Scientific Games global headquarters is seen Tuesday, June 29, 2021, in Las Vegas. (Jeff Scheid/Nevada Independent)

Scientific Games seeks total ownership of its social gaming spin-off

Two years after Scientific Games spun off its social game development arm into a separate public company, the Las Vegas-based gaming equipment provider wants to bring the business back into the fold.

The move coincides with an announcement two weeks ago that Scientific Games intends to sell its legacy lottery business and a sports betting operation the company spent millions of dollars to develop.

In its announcement, Scientific Games said it would focus its business on three areas: the games division that provides gaming equipment and management systems to the casino industry; development of its online gaming business; and the growth of its social gaming subsidiary, SciPlay.

Scientific Games retained 81 percent of SciPlay when it spun off the company in 2019. The move to take back the remaining 19 percent was made in an offer letter last week by CEO Barry Cottle. He told the board of SciPlay that this was the only deal the company – and largest shareholder – would vote to approve.

“We would not expect … to vote in favor of any alternative sale, merger or other corporate transaction involving SciPlay nor divest or sell any portion of our ownership interest,” Cottle wrote.

In SciPlay’s initial public offering, Scientific Games’ 19 percent stake was valued at $16 per share. The company offered to buy back that stock for $17.02 per share. Shares of SciPlay, traded on the Nasdaq, have been as high as $21.74 a share in the last year.

Stifel Financial gaming analyst Jeffrey Stantial called the announcement, “the end of a short-lived experiment with SciPlay as a publicly traded company.” Strategically, acquiring the remaining shares aligns with Scientific Games focus on gaming content and investing in digital growth opportunities.

Jefferies gaming analyst David Katz said there will probably be “some public wrangling” when SciPlay shareholders pursue a higher price. But he expects the deal to ultimately close. SciPlay has a licensing agreement for Scientific Games content, which expires next June.

“We consider this arrangement a key aspect of SciPlay’s total value,” Katz said.

Scientific Games conducted a “strategic review” of its five corporate operations last year in an effort to reduce a daunting $9.2 billion in long-term debt that has been hanging over its balance sheet. Much of the debt goes back to the company’s $5.1 billion acquisition of slot machine giant Bally’s Technologies in 2014.

Katz predicted proceeds from sales of the two businesses could eliminate more than half of the company’s overall debt.

Other items of interest:

The stock price of Las Vegas-based gaming equipment provider AGS hit a 52-week high of $11.32 on June 11 on the New York Stock Exchange. B Riley Financial gaming analyst David Bain believes there is much more value in the company. Based on discussions with the manufacturer’s major tribal casino operators, Bain suggested recurring slot revenues – games in which AGS shares the proceeds with casino – have risen. Bain, who increased his stock price target for AGS to $21 a share, the company has increased its installation of the premium games ahead of then many tribes normally finalize their slot machine budgets. “We note a vast majority of AGS’ domestic participation games are in Oklahoma, Texas and Florida – states with customers less psychologically impacted by (COVID-19) Delta variant fears, in our view,” Bain said.

The World Series of Poker’s online version – WSOP.com – is now operating in Pennsylvania. The platform has been live in Nevada and New Jersey. In addition to real money cash games, WSOP.com offers satellite tournaments where players can win seats at World Series of Poker, including the $10,000-buy-in No Limit Hold’em World Championship event at the Rio. The live tournament, which took a year off and went totally online in 2020, will be held Sept. 30 through Nov. 23 at the off-Strip Rio Casino Resort.

Casino operator Bally’s Corp. and the WNBA’s Phoenix Mercury announced a sports betting and sponsorship partnership, the first such agreement between a gaming company and a women’s professional sports team. The agreement will land the BallyBet sports betting brand in Arizona, the company’s 15th state for market access. Bally's will, among other things, host and manage an online and mobile sports betting service in Arizona, operate a retail sportsbook in the vicinity of the Phoenix Suns Arena and promote its business in connection with Phoenix Mercury games.

The Nugget Casino in Sparks donated $25,000 to the John Ascuaga Memorial Scholarship Fund at Bishop Manogue Catholic High School in honor of the property’s late founder. Ascuaga, who died on June 28 at age 96, developed the small casino into one of Northern Nevada’s largest resort properties. He was considered “a pillar” of Northern Nevada’s gaming community. The property is now owned by Las Vegas-based Marnell Gaming. “We felt it would be a fitting tribute to follow his tradition of contributing to education in the community,” company CEO Anthony Marnell III said. “We appreciate all he did for education in Northern Nevada and the Memorial Scholarship Fund is a great way to honor his legacy.”

Nevada casinos’ take of $1.23 billion in May shatters nearly 14-year-old high

It seems there is something to the “pent-up demand” theory.

Nevada casinos collected a single-month record of $1.23 billion in gaming revenues during May, a stunning figure given that most casinos statewide were still operating under COVID-19 capacity restrictions that weren’t fully lifted until June 1.

The record figure, reported Wednesday by the Gaming Control Board, easily eclipsed the state’s previous single-month high of $1.165 billion recorded in October 2007.

Control Board Senior Research Analyst Michael Lawton said an all-time record on the Strip for slot machine revenues and a healthy month for the Strip’s high-end baccarat business fueled the results.

Lawton said all the sub-markets were up in May, “which can be attributed to strong demand, healthy consumers and leisure travel beginning to rebound.”

The $1.23 billion figure was up 25.3 percent over May 2019. The state is comparing monthly totals to 2019 because casinos statewide were closed in May 2020 during a 78-day shutdown of businesses during the pandemic.

On the Strip, gaming revenues of $655.5 million marked a 26.7 percent increase over May 2019. Strip resorts reported baccarat revenue of $105.9 million in May, an increase of 97 percent from 2019. Casinos played luckier during the month, holding more than 22 percent of all baccarat wagers, compared to a 7.7 percent hold in May 2019.

Record-busting slot machine revenues on the Strip came in at  $358.3, 24.5 percent over May 2019.

“Sequentially, gross gaming revenues (on the Strip) showed a nice acceleration,” J.P. Morgan gaming analyst Joe Greff said in a research note. Even without including the baccarat, Greff said the Strip’s monthly revenue totals would have been up 19 percent with wagering volumes increasing 17 percent.

May marked the third straight month that Nevada gaming revenues eclipsed the $1 billion mark. For the first five months of 2021, statewide gaming revenues are down 1.3 percent compared to 2019, when the Nevada casinos collected more than $12 billion from gamblers, which was the first year the state hit such a lofty total since 2007.

Macquarie Securities gaming analyst Chad Beynon said he wouldn’t be surprised if the results from the last three months in Las Vegas carry over into the summer.

“Looking ahead, although a traditionally weaker month of the year, June hosted two noticeable events, the World of Concrete, the (city’s) first major convention on June 8-10, and the Resorts World Las Vegas opening on June 24, the first major opening on the Strip in more than 10 years,” Beynon said in a research note.

On the Strip, despite May’s total number, gaming revenues are down more than 13.6 percent compared to the first five months of 2019.

International travel still down

Baccarat totals for the month aside, the Strip is still missing a key business segment – high-end international customers.

During May, McCarran International Airport reported its highest single-month passenger total since February 2020, the last full month of operations before the pandemic. Still, the more than 3.5 million passengers flying during the month of May still marked a 23.3 percent decline over May 2019.

International travel continues to be a challenge for Las Vegas, with just 50,258 passengers recorded in May, a decline of 85.1 percent —  all of the passenger traffic coming from Mexico. Las Vegas once had direct flights between 11 different countries.

In May, a Senate Subcommittee on Tourism, Trade, and Export Promotion co-chaired by Sen. Jacky Rosen (D-NV) discussed ways to bring back the international travel market.

At last week’s grand opening event for Resorts World Las Vegas, Gov. Steve Sisolak acknowledged the need for international travel to help fill Las Vegas Strip hotel rooms.

Resorts World is owned by Malaysia-based Genting Berhad, which operates several large gaming properties throughout Asia.

“We’ll get international travel back in time,” Sisolak told The Nevada Independent. “It’s a key market. International customers spend more and stay longer.”

Sisolak said he discussed international travel issues with Genting Chairman K.T. Lam, who said the company has international customers who live in California and New York who will come to Resorts World Las Vegas.

For the first five months of 2021, McCarran’s passenger volume is down 41.7 percent over the same time frame as 2019.

Las Vegas visitation nears 3 million

Las Vegas saw a nearly 12 percent jump in visitor volume during May compared to April, but the market was still roughly 22 percent below its pre-pandemic levels in 2019.

The Las Vegas Convention and Visitors Authority (LVCVA) said Southern Nevada drew just under 2.9 million visitors in May, compared with almost 3.7 million visitors in May 2019. Still, Las Vegas saw its highest visitor count since the pandemic turned off the nationwide travel industry.

Las Vegas, for the 13th straight month, recorded a zero in convention attendance. But that streak is expected to end when June’s numbers are counted because of the World of Concrete trade show and other planned events.

Hotel occupancy reached nearly 71 percent in May, up 5.3 percent over April. Weekend room occupancy was at 88 percent. The LVCVA said midweek hotel occupancy was 62.8 percent, up 4.9 percent from April, but down by more than 25 percent compared with May 2019.

Truist Securities gaming analyst Barry Jonas was skeptical of Las Vegas sustaining the growth from the past three months because midweek occupancy “remains a concern.”

Jonas said he was “looking for green shoots [signs of economic recovery] to get more constructive as the convention calendar picks up.”

Good news outside the Strip

Casinos in downtown Las Vegas recorded their combined second-highest all-time monthly revenue total during May – $75.2 million – an increase of 37.2 percent over May 2019. The figure fell just below April’s single-month record of $76.3 million in gaming revenue.

Analysts have credited the opening last year of Circa Casino Resort as helping to bring additional business downtown. For the year, downtown gaming revenues are up 21 percent over 2019.

In Washoe County, casinos recorded the region’s highest monthly gaming revenue total since August 2008, $91.9 million, an increase of 23.1 percent.

Statewide, Nevada sports betting business set a monthly record during May for both revenues and total wagers. Sportsbook operators took in $477.4 million in bets during the month, an increase of 50.4 percent over 2019, while holding revenues of $27.1 million — a jump of 140 percent.

Mobile sports wagering accounted for 62 percent of all sports wagers in May.

Update at 6:06 p.m. on 6/30/2021: Las Vegas visitation numbers for May added.

Update at 10:53 a.m. on 6/30/2021: This story has been corrected to reflect that statewide gaming revenues for the first five months of 2021 were down (not up) 1.3 percent compared to the same period in 2019.

Nevada casinos’ take of $1.23 billion in May shatters nearly 14-year-old high

It seems there is something to the “pent-up demand” theory.

Nevada casinos collected a single-month record of $1.23 billion in gaming revenues during May, a stunning figure given that most casinos statewide were still operating under COVID-19 capacity restrictions that weren’t fully lifted until June 1.

The record figure, reported Wednesday by the Gaming Control Board, easily eclipsed the state’s previous single-month high of $1.165 billion recorded in October 2007.

Control Board Senior Research Analyst Michael Lawton said an all-time record on the Strip for slot machine revenues and a healthy month for the Strip’s high-end baccarat business fueled the results.

Lawton said all the sub-markets were up in May, “which can be attributed to strong demand, healthy consumers and leisure travel beginning to rebound.”

The $1.23 billion figure was up 25.3 percent over May 2019. The state is comparing monthly totals to 2019 because casinos statewide were closed in May 2020 during a 78-day shutdown of businesses during the pandemic.

On the Strip, gaming revenues of $655.5 million marked a 26.7 percent increase over May 2019. Strip resorts reported baccarat revenue of $105.9 million in May, an increase of 97 percent from 2019. Casinos played luckier during the month, holding more than 22 percent of all baccarat wagers, compared to a 7.7 percent hold in May 2019.

Record-busting slot machine revenues on the Strip came in at  $358.3,24.5 percent over May 2019.

“Sequentially, gross gaming revenues (on the Strip) showed a nice acceleration,” J.P. Morgan gaming analyst Joe Greff said in a research note. Even without including the baccarat, Greff said the Strip’s monthly revenue totals would have been up 19 percent with wagering volumes increasing 17 percent.

May marked the third straight month that Nevada gaming revenues eclipsed the $1 billion mark. For the first five months of 2021, statewide gaming revenues are up 1.3 percent compared to 2019, when the Nevada casinos collected more than $12 billion from gamblers, which was the first year the state hit such a lofty total since 2007.

Macquarie Securities gaming analyst Chad Beynon said he wouldn’t be surprised if the results from the last three months in Las Vegas carry over into the summer.

“Looking ahead, although a traditionally weaker month of the year, June hosted two noticeable events, the World of Concrete, the (city’s) first major convention on June 8-10, and the Resorts World Las Vegas opening on June 24, the first major opening on the Strip in more than 10 years,” Beynon said in a research note.

On the Strip, despite May’s total number, gaming revenues are down more than 13.6 percent compared to the first five months of 2019.

International travel still down

Baccarat totals for the month aside, the Strip is still missing a key business segment – high-end international customers.

During May, McCarran International Airport reported its highest single-month passenger total since February 2020, the last full month of operations before the pandemic. Still, the more than 3.5 million passengers flying during the month of May still marked a 23.3 percent decline over May 2019.

International travel continues to be a challenge for Las Vegas, with just 50,258 passengers recorded in May, a decline of 85.1 percent —  all of the passenger traffic coming from Mexico. Las Vegas once had direct flights between 11 different countries.

In May, a Senate Subcommittee on Tourism, Trade, and Export Promotion co-chaired by Sen. Jacky Rosen (D-NV) discussed ways to bring back the international travel market.

At last week’s grand opening event for Resorts World Las Vegas, Gov. Steve Sisolak acknowledged the need for international travel to help fill Las Vegas Strip hotel rooms.

Resorts World is owned by Malaysia-based Genting Berhad, which operates several large gaming properties throughout Asia.

“We’ll get international travel back in time,” Sisolak told The Nevada Independent. “It’s a key market. International customers spend more and stay longer.”

Sisolak said he discussed international travel issues with Genting Chairman K.T. Lam, who said the company has international customers who live in California and New York who will come to Resorts World Las Vegas.

For the first five months of 2021, McCarran’s passenger volume is down 41.7 percent over the same time frame as 2019.

Good news outside the Strip

Casinos in downtown Las Vegas recorded their combined second-highest all-time monthly revenue total during May – $75.2 million – an increase of 37.2 percent over May 2019. The figure fell just below April’s single-month record of $76.3 million in gaming revenue.

Analysts have credited the opening last year of Circa Casino Resort as helping to bring additional business downtown. For the year, downtown gaming revenues are up 21 percent over 2019.

In Washoe County, casinos recorded the region’s highest monthly gaming revenue total since August 2008, $91.9 million, an increase of 23.1 percent.

Statewide, Nevada sports betting business set a monthly record during May for both revenues and total wagers. Sportsbook operators took in $477.4 million in bets during the month, an increase of 50.4 percent over 2019, while holding revenues of $27.1 million — a jump of 140 percent.

Mobile sports wagering accounted for 62 percent of all sports wagers in May.

This story will be updated later today with Las Vegas visitation numbers for May.

PHOTOS: After more than a decade of starts and stops, $4.3 billion Resorts World Las Vegas is open

The opening last week of Resorts World Las Vegas added to the landscape on the Strip’s north end and ended an 11-year-drought of new megaresort unveilings in Las Vegas. Since 2007, the 88-acre land parcel has had two owners and for eight years was an unfinished structure that sat untouched.

Thursday evening’s grand opening celebration for Malaysia-based Genting Berhad’s $4.3 billion property included a traditional Asian lion and dragon dance, drum performances and a ribbon cutting. But the big event in the porte-cochère of the Conrad Hotel portion of Resorts World will not be the last ceremonial event at the property.

Three areas – a 5,000-seat theater in partnership with AEG, Zouk Nightclub and the property’s spa – are being held back until the fall and winter months while additional enhancements are completed. Singer Celine Dion will open the theater in November.

Genting Chairman KT Lim, during his prepared remarks, also teased that the company is already planning for a second phase on the undeveloped portion of the site.

Lim was praised in remarks during the event by Resorts World Las Vegas President Scott Sibella, Hilton Hotels CEO Chris Nassetta, Rep. Dina Titus (D-NV), Clark County Commission Chairwoman Marilyn Kirkpatrick and County Commissioner Tick Segerblom, whose district includes the hotel-casino complex.

Segerblom complimented the construction workers who continued to build the resort during the pandemic. Sisolak said following the ceremony that maintaining construction as an essential business last year when other businesses, including gaming, were ordered closed turned out to be the correct decision.

During the pandemic, construction workers finished – along with Resorts World – Allegiant Stadium, the Las Vegas Convention Center’s West Hall expansion, Circa Casino Resort in downtown and a remodel of Virgin Hotels Las Vegas.

“All those properties have opened, and we’re on our way back,” Sisolak said. “That is something no other city can say they have.”

Sisolak has attended every event associated with Resorts World site: The implosion of the Stardust and the subsequent groundbreaking for Boyd Gaming’s Echelon, both in 2007; the announcement of the sale of the halted Echelon project and site to Genting in 2013; and a ceremonial groundbreaking for Resorts World in 2015.

“It’s done, and (Genting) went through a lot with the property,” Sisolak said. “Who back then would have thought we would have a pandemic to also deal with?”

During Thursday evening and well into Friday morning, Genting and Resorts World executives basked in the adulation from several thousand invited guests participating in a VIP extravaganza throughout the 117,000-square-foot casino. The party progressed onto the five-and-half-acre pool deck, where guests were entertained by celebrity DJs on the sixth-floor outdoor pool area that overlooks the Strip. Images from the evening were shown on the property’s 100,000 square foot LED screen attached to the south facing hotel tower.

During the evening, party guests sampled items from many of Resorts World’s 40 restaurants, including breakfast-centric Sun’s Out Buns Out, Japanese-themed Kusa Nori and Los Angeles chef Ray Garcia’s Mexican oriented Viva!

Resorts World’s food court, dubbed Famous Foods Street Eats, offered guests items of Filipino, Japanese, South Indian, Chinese and Singapore origin, as well as Texas barbecue and Italian cuisine. 

Shortly after a fireworks display from atop Resorts World Las Vegas’ roof, the doors were opened for thousands of visitors waiting to visit the Strip’s first new resort in more than a decade.

Here are some photos from the opening.

A dragon dance procession leads the first customers during opening night at Resorts World Las Vegas on Thursday, June 24, 2021. (Jeff Scheid/Nevada Independent)
Genting Berhad Chairman KT Lim paints a dragon during the Resorts World Las Vegas grand opening party on Thursday, June 24, 2021. (Jeff Scheid/Nevada Independent)
Gov. Steve Sisolak holds a souvenir following the Resorts World Las Vegas ribbon cutting on Thursday, June 24, 2021. (Jeff Scheid/Nevada Independent)
Rick Hilton with his daughters Paris, left, Nicky and wife Kathy during the Resorts World Las Vegas grand opening party on Thursday, June 24, 2021. (Jeff Scheid/Nevada Independent)
Guests mingle around the digital sphere during the opening night at Resorts World Las Vegas on Thursday, June 24, 2021. (Jeff Scheid/Nevada Independent)
An employee prepares a roulette table during opening night at Resorts World Las Vegas on Thursday, June 24, 2021. Jeff Scheid/Nevada Independent)
The scene in the casino area during opening night at Resorts World Las Vegas on Thursday, June 24, 2021. (Jeff Scheid/Nevada Independent)
Guests mingle at Gatsby’s during the Resorts World Las Vegas grand opening party on Thursday, June 24, 2021. (Jeff Scheid/Nevada Independent)
An Elvis impersonator stands in front of luxury cars at the Resorts World Las Vegas on Thursday, June 24, 2021. (Jeff Scheid/Nevada Independent)
Former Nevada Gov. Brian Sandoval, now UNR president, with his wife Lauralyn during the Resorts World Las Vegas grand opening party on Thursday, June 24, 2021. (Jeff Scheid/Nevada Independent)
Guests mingle in front of Viva! during the opening night at Resorts World Las Vegas on Thursday, June 24, 2021. (Jeff Scheid/Nevada Independent)

Resorts World unveiling ‘seems like an old-school Las Vegas resort opening’

The comparisons between the opening of Resorts World Las Vegas and the launch of The Mirage almost 32 years ago can’t be ignored.

Like its predecessor, the $4.3 billion Resorts World ends a decade-long lull of new Las Vegas Strip hotel-casino development. When it opened in 1989, The Mirage was the Strip’s first all-new casino resort in 15 years.

That’s where the similarities end, though.

Resorts World’ predecessor, Boyd Gaming’s Echelon project, was conceived at the apex of the Strip’s massive development phase in the mid-2000s, only to be halted 14 months after construction began as the Great Recession gripped the casino industry.

The site sat untouched for five years until Genting Berhad – the holding company for Malaysia-based Genting Group – acquired the property and added the Resorts World name. Construction started slowly in 2015 but didn’t kick-off in earnest until a few years later.

Thursday’s opening comes at an auspicious time in Las Vegas. The gaming industry has fully rebooted following 15 months of casino closures, operating restrictions and capacity limitations brought about by the COVID-19 pandemic. Tourism and gaming numbers have been picking up since March, and the Resorts World opening is creating a buzz.  

A private party will kick off the evening until the public is allowed in around 11 p.m. Resorts World’s communications team have teased the potential for celebrity appearances and social media influencers on opening night.

Truist Securities gaming analyst Barry Jonas found the 3,500-room hotel, casino and entertainment complex has the highest room rates on the Strip heading into next week’s July 4th holiday weekend.

The connections are not lost on Resorts World Las Vegas President Scott Sibella, a long-time MGM Resorts International executive who moved into his role in 2019, shortly after departing a similar position he held for eight years with MGM Grand Las Vegas.

“I wish I could say I was a smart guy and that I planned it this way. But we planned a summer 2021 opening last year, either way, hoping things were going to be better,” Sibella said.

When Resorts World activated its 100,000-square-foot LED screen on its west tower on Independence Day a year ago, providing a digital fireworks display for a Strip audience scaled down because of the pandemic, the interest took hold.

“In many ways, it seems like an old-school Las Vegas resort opening,” said Bo Bernhard, who grew up in Las Vegas and is now executive director of UNLV’s International Gaming Institute and the university’s vice president of economic development.

The difference, Bernhard said, is the company behind the project. Genting’s Resorts World brand and concept are new to the Strip. The company has seven integrated Resorts World properties, primarily in Asia, including Resorts World Sentosa in Singapore and Resorts World Genting in Malaysia.

“This is an entirely new company with new ideas, and in this case, global ideas. It’s tremendous expertise that will help grow this market,” Bernhard said.

A view of Resorts World Las Vegas from the West Hall of the Las Vegas Convention Center on the Strip. (Jeff Scheid/The Nevada Independent)

Denstone Group CEO Oliver Lovat said Resorts World is “the most international property that has ever opened in Las Vegas.” The real estate advisor and casino industry consultant said American visitors won’t be disappointed.

“It is designed and structured for international visitors as well as the U.S. market in a way no other resort in Las Vegas has ever been built,” Lovatt said. “It’s a fusion of casino development from North America and Asia.”

Sibella cautioned that tapping the overseas Asian customer market, the bulk of Genting’s database, is challenging because of COVID-19 travel restrictions. It’s an issue for all Strip properties that have a large Asian customer connection.

“We have an edge from our properties over there (in Asia), but we know it won’t change overnight,” Sibella said. “My hope is it gets better by the end of the year, and we see the next Chinese New Year as a big celebration. But we’re not counting on that right away.”

More than just casinos

Genting was founded in 1965, and its first Resorts World property opened in Malaysia in 1971 as a 200-room hotel.

The company is more than just casinos. During a presentation to Nevada gaming regulators in May, Genting highlighted its place as a multinational conglomerate with energy, agriculture and real estate holdings in addition to its leisure and hospitality business. The company’s assets have an equity worth of $25 billion.

Global Market Advisors Partner Brendan Bussmann said New Yorkers recognize Resorts World’s gaming approach through its casinos in the Catskills and at the Aqueduct Racetrack in Queens.

“While the local leadership team has strong experience on the Strip, Resorts World is looking to make its own splash and be a competitive product in the resort corridor,” Bussmann said.

Resorts World Las Vegas and Hilton partnered to bring three of Hilton’s premium brands in Las Vegas Strip’s newest resort. (Jeff Scheid/The Nevada Independent)

Quintessential megaresort

Resorts World Las Vegas is the first classic megaresort associated with the Strip’s growth in the three decades since The Mirage opened.

The 117,000 square foot casino will have 1,400 slot machines, 117 table games and a sportsbook. A high-end gaming area associated with Crockfords, a European gaming brand owned by Genting, is a part of the casino floor along with three 66th floor private gaming salons. Two other private gaming salons are on the fifth floor.

“Crockfords is an iconic brand for gamblers in the U.K.,” Lovatt said. “It will have an immediate resonance with the gaming customer.”

Last week, Resorts World announced it would be the first casino in Nevada to offer cashless gaming capabilities for slot machines, table games and sports betting, as well as non-gaming activities throughout the property, such as retail, restaurants and entertainment.

The casino partnered with five gaming technology providers in the effort.

Through a franchise agreement, Resorts World is utilizing Hilton Hotel’s brands, expertise, technology and the lodging company’s 115 million-member Hilton Honors program to fill the 3,500 rooms and suites.

All of Resorts World’s rooms are in the Hilton system under the Hilton name, the high-end Conrad brand or ultra-luxury LXR Hotels, which has been paired with Crockfords.

The property also will unveil the bulk of its 40 restaurants and beverage options, including an Asian street-themed food court. Resorts World’s five-and-half-acre pool deck and 300,000 square feet of convention and meeting space also are opening this week.

Three areas – the 5,000-seat theater built in partnership with AEG, Zouk Nightclub and the spa – are being held back until the fall and winter months because “additional scope has been added.” Singer Celine Dion will open the theater in November followed by singer Katy Perry and country music stars Carrie Underwood and Luke Bryan.

“Everything we do here is nontraditional,” Sibella said. “We try to say, ‘let’s not do it the way people have done it before.’ Let’s be forward thinkers.”

Sibella said the bulk of the planned 5,000-person workforce had been hired as of early June. He said staff training has been taking place inside the property’s convention facility. Resorts World has “strongly encouraged” its workforce to be vaccinated against COVID-19.

“We have a clinic where we are offering vaccines,” he said.

Remembering Echelon

Boyd Gaming CEO Keith Smith could see the progress of Resorts World Las Vegas from his office in the Hughes Center. He had an obvious interest in the development: The company actually started construction on what is now Resorts World.

“It looks like they took all the infrastructure we had in place, and built it from there,” Smith said.

Beginning in the 1980s, Boyd owned the iconic Rat Park-era Stardust, eventually adding a 32-story hotel tower to the resort. The company then purchased several adjacent lots next to the Stardust, creating an 87-acre site.

In November 2006, Boyd closed the Stardust and imploded the property four months later to make way for Echelon, a planned $4.8 billion resort envisioned with five hotels of varying sizes totaling 5,000 rooms and suites, all connected to a 140,000-square-foot casino.

A formal groundbreaking took place in June 2007. However, as the economy began to struggle and credit markets dried up, Boyd halted Echelon’s construction in August 2008. The project, a mix of steel structures and an unfinished parking garage, sat silent until Genting Berhad acquired the site for $350 million.

“First and foremost, there was a great confidence in the people that took over the property with the money they have invested and what they have built,” Smith said. “Las Vegas has a history of making these big incremental steps every so many years and giving customers more reasons to continue to come and visit. I think (Resorts World) will help grow the overall market in the long term. It’s very much a positive step for the city and our community.”

Boyd has 28 casinos in 10 states. It retained the Stardust name and trademarks, which are being used at the company’s growing online casino business in Pennsylvania.

A portion of the former Echelon project remains unfinished near the Sammy Davis Junior Drive entrance to Resorts World Las Vegas. Seen on June 16, 2021, it's expected to be included in an expansion phase. (Howard Stutz/The Nevada Independent)

Mirage comparison

When The Mirage opened, the $565 million cost left many aghast. At the time, it was the most expensive hotel-casino project ever built in Las Vegas.

That record for a single resort now belongs to Resorts World, at $4.3 billion, although the 2009 opening of CityCenter, which included multiple hotels, high-rise residential and retail, carried a $9 billion price tag. The last all-new hotel-casino on the Strip was the Cosmopolitan of Las Vegas, which opened in 2010 at a cost of $3.9 billion.

The Mirage’s opening was followed in 1990 by Excalibur. Over the next nine years, the Strip’s landscape dramatically changed as 11 new properties were added to the resort corridor, including MGM Grand in 1993, Bellagio in 1998 and the Venetian, Mandalay Bay and Paris in 1999.

Analysts said Resorts World won’t have the same influence when it comes to stimulating new casino development, but it’s success could lead to sales and renovations of existing Strip hotel-casinos. Derek Stevens opened Circa Casino Resort last fall – downtown Las Vegas’ first all-new resort in 40 years – and Virgin Resorts remodeled the former Hard Rock Las Vegas.

UNLV’s Bernhard noted the emergence of Genting may pave the way for other operators to join the Strip. For example, Rhode Island-based Bally’s Corp. is buying the Tropicana and Southern California’s San Manuel Indian Tribe is purchasing the Palms Casino Resort.

“Historically, gaming innovation has been outbound from Las Vegas. Now, the innovation is inbound with new operators,” Bernhard said. “The Strip is going to be better off because of that change.”

He likened the addition of Genting to the Strip’s roster to the change the late Sheldon Adelson brought to Las Vegas when he built the Sands Expo and Convention Center, along with the Venetian.

Bussmann noted that Genting’s move to develop a site started by Boyd was a good sign for Strip. The company completed a project at the north end of Las Vegas Boulevard that will add to the Las Vegas Convention Center expansion and the remodeled Sahara.

“While the future is still hazy for Fontainebleau and another parcel in the area, it definitely extends the experience for the leisure and business customer,” Bussmann said.

‘It’s been a difficult year’ – MGM’s Murren discusses hotel-casino sales, financial challenges and company layoffs

The famous MGM lion

Jim Murren won’t flat-out predict an economic downturn is about to hit the U.S., but the chairman and CEO of MGM Resorts International said the signs are there and he isn’t taking any chances.

That is one of many reasons the company agreed last Tuesday to sell Circus Circus Las Vegas to rival casino operator Phil Ruffin for $825 million and struck a sale-leaseback deal for Bellagio with Blackstone Real Estate Income Trust for $4.25 billion.

The net proceeds from the transactions – roughly $4.3 billion after taxes – goes directly to MGM’s balance sheet, allowing the casino giant to reduce a portion of its $15 billion in long-term debt and allow the company to focus on “high growth potential” opportunities.

“These transactions make us far less vulnerable in any global economic cycle,” Murren told The Nevada Independent a day after the deals were announced. “We’re late in that economic cycle and we need to be prepared for the unforeseen.”

The casino sales, which are expected to close by the end of the year, had been rumored for months and didn’t take the investment community by surprise. MGM Resorts announced in January it had formed an ad-hoc committee of its board that was tasked with evaluating the company’s Las Vegas Strip real estate.

Murren said the potential for other casino sales and leasebacks allows MGM to continue to “unlock and monetize” the value of its real estate. 

Murren is hopeful the Bellagio and Circus Circus deals will financially fortify two of MGM’s endeavors: The effort to win one of three Japanese integrated resort licenses and expansion of the company’s position in the growing U.S. sports betting market.

People watch the fountains of Bellagio on Monday, March 20, 2017.
(Jeff Scheid/The Nevada Independent)

During a 40-minute interview, Murren acknowledged the first nine months of 2019 have been challenging. The company was under pressure from investors wanting to see a boost in MGM’s stock price. Activist hedge funds, including Starboard Value and Canyon Capital Advisors, acquired small positions in the company and were trying to force some changes in MGM’s structure, such as the sale and leaseback of Bellagio and balance sheet improvement. 

The MGM 2020 plan, a companywide cost reduction effort to build cash flow, reduce costs, and streamline operations, led to layoffs of more than 1,000 employees, most of whom were management level.

Two years after the largest mass shooting event in U.S. history, MGM also announced a settlement agreement to resolve litigation. The casino operator will pay between $735 million and $800 million to more than 4,400 individuals and families who sought compensation for a range of physical and psychological harms after a lone gunman fired multiple weapons from the 32nd floor of Mandalay Bay across the Strip onto the Route 91 Harvest Music Festival. MGM owns both the resort and the festival grounds and has insurance coverage of $751 million to fund the settlement.

“It’s been a difficult year,” Murren said. “And the year is not over. We have tried to accomplish a lot, and I believe this puts us to where I think we need to be as a company.”

Murren, 58, was named CEO in 2008 and has held the titles of president, chief financial officer and chief operating officer during his 21 years with MGM Resorts. The company almost went bankrupt in his first year as CEO because of the recession, which exacerbated the financial complexities surrounding construction of the $7.9 billion CityCenter complex.

“I lived through the last recession, and we take responsibilities to our community seriously,” Murren said. “We’re a Nevada-based company and MGM Resorts is the largest private employer (a workforce of 55,000) in the state. We know the economy is not going to grow every year. Whatever happens, we have to be prepared, and we need to do so in a position of strength. Our goal is to build a good balance sheet and reinvest in high-growth opportunities.”

More deals

Murren said the work of an ad-hoc committee — three board members with real estate expertise — is ‘ongoing,” naming MGM Grand Las Vegas and the two properties MGM operates within CityCenter – Aria and the non-gaming Vdara – as the company’s last three potential sale and leaseback opportunities on the Strip.

Murren said the committee, which is headed by board member Paul Salem, senior managing director emeritus of Providence Equity Partners, “invested a lot of time on super-complicated issues. The committee will continue to seek more opportunities.”

Six of MGM’s Strip resorts and the Park Entertainment District are owned by MGM Growth Properties – the company’s real estate investment trust spin off. The REIT also owns MGM properties in Mississippi, Michigan, Ohio, Maryland, Atlantic City and New York. Only the MGM Springfield in Massachusetts is not under REIT ownership. MGM Resorts, which owns 68 percent of MGM Growth, leases the properties and pays annual rent.

The sale and leaseback of Bellagio to Blackstone was at a multiple of 17.3 times the annual rent of $245 million MGM will pay. According to gaming analysts, the figure was the highest multiple ever seen in a gaming REIT transaction.

Murren looked at the deal in another way. When then-MGM Grand Inc. acquired Mirage Resorts in 2000, the company paid $6.4 billion for eight operating or planned resorts.

“We just sold the real estate of one of those resorts for $4.25 billion,” Murren said. “Another way to look at it: Mirage spent $1.8 billion to build Bellagio. We always believed our real estate was undervalued by the investment community.”

Several analysts agreed with Murren.

“We see the transaction as a positive for any operator looking to potentially sell Las Vegas Strip real estate given the high multiple paid, though we do note the Bellagio is a premier Strip asset and may not be a strong comparison for other Strip assets potentially up for sale,” said SunTrust Bank gaming analyst Barry Jonas.

Deutsche Bank gaming analyst Carlo Santarelli said, “MGM is effectively selling $245 million in annual rent for $4.25 billion.” MGM Resorts is also receiving a 5 percent ownership in the Blackstone REIT. Santarelli said that stake was valued at $50 million. 

Murren said the key takeaway from the Bellagio deal was that customers and employees “will not see any changes whatsoever at Bellagio, which will remain an MGM-operated resort and we’re responsible with paying the annual rent check.”

Added Union Gaming Group analyst John DeCree, “Based on these asset sales, we believe MGM's remaining real estate portfolio should be re-rated, particularly the MGM Grand, which could be monetized in the future.”

Circus Circus land

The sale of Circus Circus included 103 acres, more than half of which covers a recreational vehicle park, festival grounds and undeveloped parcels.

“We were surprised to the up side by the sale price of Circus Circus,” DeCree said.

Murren said the “handshake deal” between him and Ruffin was simply a matter of parting ways with a property that doesn’t fit into the company’s overall plans. Ruffin, who acquired Treasure Island from MGM in 2008, will pay $662.5 million in cash and $162.5 million in notes due in 2024. 

Circus Circus, Las Vegas, Nevada.
Wikimedia Commons photo by Clément Bardot via Creative Commons (CC BY-SA 4.0)

Murren recalled advice given to him by the late Kirk Kerkorian, the company’s founder, who said anything that is good for Las Vegas is good for MGM Resorts.

“Kirk said to never stand in the way of someone else’s idea if it attracts capital,” Murren said. “’If the tide rises, MGM’s boat will rise,’ Kirk would tell me. Phil has a vision for Circus Circus that I believe will benefit the community. He has the passion and financial means to do something with that property, and that’s healthier and better for the community.”

Japan

MGM’s efforts to win a license to build and operate an integrated resort casino in Osaka, Japan is the largest beneficiary of the two transactions. By strengthening the balance sheet and reducing debt, the company is in an improved financial position to finance a development, which could cost upward of $10 billion.

Osaka government leaders want to see an integrated resort built in time for an international Expo in 2025.

In 2017, Japanese lawmakers approved legislation for three integrated resort complexes, which would include casinos, hotels, restaurants and non-gaming attractions, such as retail, conference facilities and entertainment venues. Japan still has still not formulated the request for proposal process nor settled on locations. Analysts predicted the market could become the world’s largest gaming destination behind Macau.

MGM Resorts adopted an “Osaka First” strategy and has not wavered from the plan. In January, the company named former Nevada Gov. Brian Sandoval as president of global gaming development.

In the last six weeks, MGM’s U.S. competition for Osaka has evaporated. Las Vegas Sands, Wynn Resorts and Hong Kong-based Melco Entertainment decided against bidding against MGM and focused efforts on Tokyo, Yokohama and other Japanese cities. Caesars Entertainment abandoned its Japan licensing process altogether.

Murren said he’s not taking anything for granted, though. Malaysia-based Genting Berhad, which is developing the $4 billion Resorts World Las Vegas, and Hong Kong-based Galaxy Entertainment, which acquired 5 percent of Wynn Resorts last year, are still in the running for Osaka.

“We want to win. Japan is the single biggest opportunity for this company,” Murren said. “As of today, we have tremendous financial capital. We have a tremendous partnership with Orix (a Japanese company with a strong presence in Osaka) and we have other partners we haven’t disclosed yet. We feel very strongly about the merits of the market.”

Osaka, Japan.
Photo via Wikimedia Commons by Hisat ana and shared under the Creative Commons Attribution-Share Alike 3.0 Unported license.

Global Market Advisors Partner Brendan Bussmann, who has followed the Japan licensing process, said MGM is in a strong position for Osaka’s. The balance sheet improvement through the Bellagio and Circus Circus deals “solidify” that spot.

"There's no doubt in my mind that MGM will have competition from strong international operators such as Galaxy and Genting,” Bussmann said. “But this week’s developments to enhance their level of cash is necessary to be competitive in Japan because of the term of the license and the expense of the project.”

Sports betting

MGM Resorts, through the development of T-Mobile Arena, played a big role in bringing the NHL’s Vegas Golden Knights to Las Vegas. Two years ago, the company acquired San Antonio’s WNBA franchise, rebranding the team as the Las Vegas Aces.

Murren is placing that same energy into the growth of sports betting. “We have a very strong belief that sports betting increases our connection to our customers."

Since the Supreme Court ruling in May 2018 that opened the U.S. to legal and regulated sports gambling, MGM has been active in establishing partnerships with three of the four major professional sports leagues. The company has struck marketing deals with several teams, including placing the MGM Resorts logo on the “Green Monster” outfield wall in Boston’s Fenway Park, home of the Red Sox. In September, MGM announced a sports betting partnership with the Buffalo Wild Wings sports bar franchise.

MGM and UK gaming giant GVC Holdings each invested $100 million to launch Roar Digital, a sports betting platform that operates PlayMGM, a mobile sports betting app now operating in Nevada and New Jersey. Separately, MGM and Boyd Gaming have a sports betting deal with Boyd Gaming Corp. for access to the companies’ regional casinos. 

Change the operating model

The company-wide layoffs drew increased attention and criticism through headlines and social media platforms, but Murren said he viewed the staffing reductions as necessary to begin the foundation for a centralized corporate operating model and a more streamlined organization. Leadership in the individual properties still have autonomy over their staff and customer service efforts.

Many veteran executives, such as chief financial officer Dan D’Arrigo and longtime corporate spokesman Alan Feldman, took early retirement buyout packages.

“A reorganization had to start from the top down,” Murren said. “My own hallway (the corporate offices at Bellagio) had some wholesale changes. It was difficult, but vital to establish the reorganization.”

He said the staffing reductions also allow “pathways for career progression” for the employees who remained.

1 October shooting

“Our goal has always been to resolve these matters so our community and the victims and their families can move forward in the healing process,” Murren said earlier this month about settling the litigation surrounding the shooting. The fenced-off site on the Strip was a lingering reminder.

In September, MGM Resorts said it would build a community and athletic center on a portion of the land, along with a memorial to 58 victims who died in the shooting. However, the company plans to use the majority of the 15-acre site as a parking lot to service the nearby $2 billion Allegiant Stadium.

Murren said he understood the community concerns, which is why the company “didn’t make early decisions on what to do with the property."

“First and foremost was to secure the site and work with law enforcement,” Murren said, because it was a crime scene. 

Before it was turned into a festival grounds, the site was an employee parking lot.

“Our belief was that it would be put to good use toward something that would benefit the community,” Murren said. “We know there are some unmet needs in our hometown. We will find a way forward to include a memorial there, something that would complement the work at the healing garden (in downtown Las Vegas).”

Howard Stutz is a freelance gaming reporter for The Nevada Independent and the Executive Editor of CDC Gaming Reports. He has been a Nevada journalist for 30 years. He can be reached at howardmstutz@gmail.com. On Twitter: @howardstutz