Indy Gaming: Companies still finding the public markets a willing source to fund new debt

Good morning, and welcome to the Indy Gaming newsletter, a weekly look at gaming matters nationally and internationally and how they 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


Macau’s slumping gaming market didn’t stop Las Vegas Sands from floating more than $1.93 billion in new debt through its Hong Kong-based subsidiary that operates the company’s holdings in the region.

But they weren’t alone in tapping into the investment community last week.

Real estate investment trust VICI Properties (which announced plans to acquire rival MGM Growth Properties last month) issued 115 million shares of stock priced at $29.50 on the New York Stock Exchange, raising more than $3.39 billion. And Caesars Entertainment said it was raising $1.2 billion in new debt.

The three companies have different reasons for shaking up their balance sheets, such as paying down debt or funding expansion efforts.

Caesars, for example, launched Caesars Sportsbook last month through a national advertising campaign. The company plans to spend more than $1 billion to grow its sports betting and online gaming business and acquire new customers.

Ahead of the debt raise, Caesars said in a Securities and Exchange Commission filing that its revenues for the first two months of the third quarter (July and August) were between $1.8 billion and $1.85 billion. The company’s Las Vegas resorts accounted for 37 percent of that total.

“We continue to see Caesars as well-positioned for a leisure-based Strip recovery,” Truist Securities gaming analyst Barry Jonas wrote in a Sept. 9 research note. He added that Caesars’ regional gaming presence in 16 states could protect the company from any “reasonable COVID-19 resurgence.”

Caesars announced its debt raise two days after agreeing to sell the non-U.S. operations of United Kingdom gaming operator William Hill for $3.04 billion to Gibraltar-based online gaming giant 888 Holdings. The casino operator plans to use nearly $2 billion from the sale to pay down debt, resulting in net proceeds of $1.2 billion. Caesars had $14.7 billion in debt at the end of June.

Sands focusing on Asia

Las Vegas Sands is waiting on regulatory approval for the company’s previously announced $6.25 billion sale of its Las Vegas Strip holdings to a combination of VICI and Apollo Global Management.

The debt offering on behalf of Sands China is expected to close Sept. 23, and the company plans to use the proceeds and cash on hand to redeem $1.8 billion in debt that comes due in 2023. The newly acquired debt has a range of maturity dates – $700 million due in 2027, $650 million due in 2029 and $600 million due in 2031. At the end of June, Las Vegas Sands had total debt of $14.42 billion.

Similar to Caesars, Sands provided investors some insight into its Macau operations during July and August in an SEC filing. Its Macau resorts lost $108 million during the two months, which the company blamed on tighter border restrictions that slowed visitation between the Special Administrative Region and mainland China’s Guangdong Province, a key feeder market to Macau’s casinos.

Macau’s total gaming revenue is down 69 percent through the first eight months of 2021, compared to 2019. Analysts said COVID-19 outbreaks across mainland China caused the downturn. As a whole, Macau casinos produced just $554 million in gaming revenue during August, the market’s lowest single-month total since September 2020.

“Admittedly, it’s tough to be near-term bullish on the Macau sub-sector,” JP Morgan gaming analyst Joe Greff told investors in a Sept. 8 research note.

After the sale of the Venetian, Palazzo and Sands Expo and Conference Center, Las Vegas Sands won’t have any holdings in Las Vegas and will be an Asian facing company with six casinos in Macau and the Marina Bay Sands in Singapore.

“Investors who are patient should like (Las Vegas Sands’) laggard profile, both in the share price and fundamental recovery,” Greff wrote in his research note. “The key issue for both Macau and Singapore is travel mobility, which is going to be directly tied to infection and vaccination rates and ensuing travel policies changes, all of which are tough to predict.”

Las Vegas Sands has opened the first phase of The Londoner Macau, which is a $2.2 billion renovation of the Sands Cotai Central complex. The company is also spending $3.3 billion at the Marina Bay Sands to add an all-suite hotel tower, additional convention and meeting space and other non-gaming amenities.

In the SEC filing, Las Vegas Sands noted it had more than $2.56 billion on its balance sheet — $556 million in cash and $2 billion of borrowing availability.

“We view this liquidity position as more than ample to ride out a tough short-term travel impacted period,” Greff said.

Pedestrians walk towards the Palazzo with the under-construction MSG Sphere in the background on Sunday, May 30, 2021. (Jeff Scheid/The Nevada Independent)

VICI buying up the Strip

VICI said it plans to use the proceeds from the stock sale to help fund its part of the Las Vegas Sands purchase. The REIT also is paying $4 billion to acquire 63 acres along the Strip and the 19 acres that house the under-construction $1.8 billion MSG Sphere project. Apollo is paying $1.25 billion to acquire the Venetian Operating Company.

VICI’s $17.2 billion acquisition of MGM Growth includes ownership of the land housing nine gaming and non-gaming properties operated by MGM Resorts International.

Macquarie Securities gaming analyst Jordan Bender told investors in a Sept. 10 research note that the market is unconcerned about any additional debt VICI will have to add to its balance sheet. At the end of June, VICI had total debt of $6.9 billion.

“Management continues to prove its ability to grow the business in an accretive manner while growing revenues,” Bender said. VICI is predicting its current deals, which are expected to close in 2022, will give the company expected annual revenues of $2.8 billion. In 2019, VICI’s total revenues were $900 million.

“We expect (VICI’s) dividend to grow by roughly 30 percent over the same period,” Bender said.

Deutsche Bank gaming analyst Carlo Santarelli, in a research note Monday, said VICI is “underappreciated” relative to other REITs. However, following the acquisition of Sands and MGM Growth, Greff suggested VICI will be among the largest REITs in terms of annual cash flow in the RMZ, a market capitalization index.

“(It’s size) will put the company on additional radars and drive incremental value for existing shareholders,” Santarelli said.

Viva Las Vegas? Seminole Gaming CEO taking part in G2E keynote panel

Seminole Gaming CEO/Hard Rock International Chairman Jim Allen in front of the Guitar Hotel at the Hard Rock Hollywood in Florida. (Courtesy photo)

The appearance of Seminole Gaming CEO Jim Allen on a Global Gaming Expo keynote panel next month could touch off questions about potential Las Vegas expansion plans for the Florida tribal gaming operation.

Allen, who is also chairman of Hard Rock International, is speaking alongside Wynn Resorts CEO Matt Maddox and MGM Resorts International CEO Bill Hornbuckle during G2E on Oct. 6 at the Sands Expo and Convention Center. CNBC anchor Contessa Brewer will moderate the discussion.

The session is billed as a conversation about the ever-evolving commercial and tribal gaming landscape. In that vein, the talk could cover the recent tribal gaming push into Las Vegas.

The Seminole Tribe has owned Hard Rock International since 2007 and has grown the brand into a worldwide gaming, hospitality, dining and entertainment presence. Hard Rock currently has 14 casino properties in the U.S., Canada and Punta Cana in the Dominican Republic.

The tribe lent the Hard Rock name and brand to an off-Strip property that went through several management changes over the course of more than two decades. The property has since been rebranded as Virgin Hotels Las Vegas.

Speculation about a new Hard Rock Las Vegas arose in March 2020 when Hard Rock announced it had acquired the rights to the name Hard Rock Hotel Casino Las Vegas, along with the former property’s music memorabilia, signage and merchandise, intellectual property rights for affiliated restaurant and entertainment trademarks, and website domain names.

Allen, who has spent more than 20 years with Seminole Gaming, said in a February interview it was important to the company to control the brand but offered no hints of a Las Vegas landing site.

“We’re not involved in any transaction at this point,” he said.

After that interview, Connecticut-based Mohegan Gaming & Entertainment – the business arm of the Mohegan Indian Tribe – began operating the 60,000-square-foot casino space inside Virgin Hotels Las Vegas, becoming the first tribal gaming enterprise licensed by Nevada gaming regulators to operate a casino within the Strip corridor.

In May, Southern California’s San Manuel Band of Mission Indians said it would acquire the off-Strip Palms Casino Resort for $650 million from Red Rock Resorts. The transaction is expected to close by the end of the year pending regulatory approval.

Seminole Gaming operates six of the state’s seven tribal casino properties, including Hard Rock Tampa and Hard Rock Hollywood near Fort Lauderdale. In 2019, Hard Rock opened the $1.15 billion Guitar Hotel expansion at the Hollywood resort. The 638-room tower is shaped like the body of a guitar.

Other items of interest

Stanley Mallin, AGA Hall of Fame member. (Photo Courtesy AGA)

Stanley Mallin, the long-time business partner of Las Vegas casino personality Jay Sarno, died Saturday in Las Vegas at age 98. Mallin, who was inducted into the American Gaming Association's Gaming Hall of Fame in 2019, was an essential executive in the opening of two Strip resorts conceived by Sarno: Caesars Palace in 1966 and Circus Circus in 2008. The bombastic and larger-than-life Sarno was the face of the Strip developments while Mallin was the quiet behind-the-scenes operator who managed the properties in the 1960s and 1970s. Sarno was part of the Gaming Hall of Fame’s inaugural class in 1989, but it took 30 years to enshrine Mallin. Oliver Lovat, CEO of gaming industry advisor Denstone, said Mallin was “the last of the great Las Vegas pioneers.” On the Strip, Mallin is still memorialized. Stan Mallin Drive runs parallel to Jay Sarno Way, with both connecting from Frank Sinatra Drive into the back end of Caesars Palace.

Gaming equipment provider International Game Technology has moved its online gaming and sports betting businesses into a newly formed Digital & Betting operating segment. The two businesses were originally part of the company’s Global Gaming division. The move gives IGT three business sectors: Global Lottery, Global Gaming and Digital & Betting. IGT is headquartered in London but has significant production, sales and marketing divisions in Nevada. IGT CEO Marco Sala said Enrico Drago will serve as CEO of the Digital & Betting division. Drago, 44, previously had oversight of IGT’s online gaming, online lottery and sports betting operations. "These businesses have become strategically important to IGT as they afford us the opportunity to leverage the global reach and strong customer relationships of our Global Gaming segment,” Sala said. “The new structure gives us more flexibility in our product and solutions portfolio.”

Trey Wingo and JB Smoove. (Photo Courtesy Caesars Sportsbook)

Former ESPN anchor Trey Wingo made his first appearance last week as the chief trends officer and brand ambassador for Caesars Sportsbook. The sports betting arm of Las Vegas-based Caesars Entertainment launched operations in Arizona earlier this month. Wingo, who left ESPN in 2020 after 23 years with the network, was at Chase Field in Phoenix with Caesars officials, Arizona Diamondbacks representatives, Arizona Gov. Doug Ducey and actor J.B. Smoove, who stars as “Caesar” in the company’s nationwide advertising campaign. Wingo, who hosted NFL Live and for the NFL Draft for the network, will create original sports betting content and analysis for Caesars that will be broadcast across the company’s media channels. Wingo is among a growing roster of former athletes, media personalities, and celebrities who are now “brand ambassadors” for sportsbook operators who oversee the activity that is now legal and operating in 26 states and Washington D.C. “I want to tell the stories behind the odds,” Wingo said.

Caesars Sportsbook did have one hiccup on Sunday. According to the Las Vegas Review-Journal, an outage halted mobile sports wagering in Nevada just before kick-off for the 10 a.m. NFL games. On Sunday afternoon, once power to the apps was restored, Caesars gave two free $25 wagers to its customers and apologized for the inconvenience via email.

BetMGM has come up with a new solution for customers to fund their sports wagering accounts: gift cards. BetMGM, a 50-50 partnership between MGM Resorts International and Entain Plc, said a partnership with payments firm TAPPP will allow gift cards in $25 and $50 denominations to be sold at major convenience and grocery retail chains in states that offer legal sports betting. Currently, the cards are sold in 6,000 locations in eight states. "One of the biggest pieces of feedback we get from our customers is that they want a simple and convenient way to fund their accounts," BetMGM Head of Payments Maria Tomlinson said in a statement. The gift cards help avoid deposit failures, she said.

Indy Gaming: Former Strip investor Paulson partners with MGM Resorts on Puerto Rico sports betting

Good morning, and welcome to the Indy Gaming newsletter, a weekly look at gaming matters nationally and internationally and how they 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


MGM Resorts International partnered with an old friend to gain a foothold into Puerto Rico’s planned sports betting business.

However, it might take until next year before BetMGM oddsmakers will set the first line in the unincorporated U.S. territory.

Through BetMGM, its 50-50 joint venture with Entain Plc., MGM Resorts said last week it will launch retail and online sports betting at Casino del Mar at La Concha Resort in San Juan, Puerto Rico’s capital city. The agreement is BetMGM’s first venture outside the mainland U.S., where the company operates in a dozen states.

BetMGM is expected to launch mobile sports betting operations in Arizona on Thursday in conjunction with the NFL’s Arizona Cardinals, which includes a retail sportsbook at 63,400-seat State Farm Stadium in the Phoenix suburb of Glendale. The company is also expected to soon expand sports betting into Canada.

In a presentation to investors in April, BetMGM CEO Adam Greenblatt said the company was on track to be operating in 20 states by the end of the year and will produce $1 billion in net revenues by the end of 2022.

Puerto Rico is months away from being part of that equation.

Global Market Advisors Partner Brendan Bussmann, who has been following the Puerto Rico process, said it may take until the week of Super LVI next February before the territory has its process in place. He said Puerto Rico will also require sports bettors to register at that casino, which is an additional challenge to the market.

“There is still a lot of ground to cover with the approval of the regulations, licensure and launch of the market,” Bussmann said,

La Concha Resort has 248 oceanfront rooms and a 235-suite hotel tower. Casino del Mar is Puerto Rico’s newest gaming establishment. The properties are owned by Paulson & Co., a New York investment fund controlled by billionaire John Paulson.

Paulson is a familiar name in the Las Vegas gaming and real estate markets from his investments over the last decade.

In June 2010, his hedge fund took a 9 percent ownership in MGM Resorts through a $480 million stock purchase. At the time, the stake trailed only the 37 percent controlled by MGM founder Kirk Kerkorian, who was then a member of the company’s board, and the 9.9 percent interest owned by Dubai World, the investment arm of the Persian Gulf emirate that was MGM Resorts’ partner in CityCenter.

At the same time, Paulson spent $40 million for a 4.6 percent ownership in Boyd Gaming and exchanged $710 million in bonds for a 9.9 percent ownership in Harrah’s Entertainment.

Then-MGM Resorts Chairman and CEO Jim Murren and Paulson had long been acquaintances in New York when both were Wall Street analysts. Murren said in a 2010 interview that Paulson is “one of the purest analysts I know.” 

“There is nothing mysterious about his objective. He wants to make money and he is betting on companies that would benefit from an economic recovery,” Murren said.

Paulson supported MGM Resorts’ efforts to create real estate investment trust MGM Growth Properties in 2015, which separated management of the hotel-casinos from ownership of the real estate. MGM Growth is being bought by rival gaming REIT VICI Properties in a $17.2 billion deal announced last month.

In 2012, Paulson spent $17 million to purchase 875 acres of the struggling 3,600-acre Lake Las Vegas master-planned community in Henderson. The firm acquired additional acreage over time, including the Reflection Bay Golf Club in 2014.

Much has changed in Paulson’s gaming universe over the last six years.

According to the company’s most recent Securities and Exchange Commission 13F filing, Paulson & Co. no longer owns any MGM Resort shares. In August, the fund acquired 1 million shares of casino operator Bally’s Corp., which operates the recently launched BallyBet, an online sports betting business that competes with BetMGM.

Paulson initially invested into the Puerto Rican tourism industry in 2014.

“Sports are part of the everyday life in Puerto Rico, with a huge following and a passionate fan base in almost every sport,” Paulson said in a statement announcing the partnership with BetMGM. “As such, it's natural that we are the first market outside the continental United States in which our guests will be able to place bets with BetMGM.”

The territory legalized casinos in 1948 along with other forms of gaming, including cockfighting. In 2019, the Puerto Rico Legislature approved both land-based and online sports betting, and outlawed cockfighting. The territory fell under the Supreme Court’s 2018 ruling that opened the U.S. to legal sports betting.

However, COVID-19 and economic difficulties slowed the process. Parts of the island have also been slow to recover from 2017’s Hurricane Maria.

Puerto Rico is roughly 1,000 miles southeast of Miami and attracts between 3 million and 4 million annual visitors, the bulk of whom come from the U.S. The territory has a residential population of nearly 3.3 million.

Bussmann said Puerto Rico’s tourist attractions offer U.S. gaming customers unique incentives.

“Would you rather watch and wager on the Super Bowl or March Madness in the cold and snow, or on a beach or a golf course in Puerto Rico?” Bussmann asked.

Earlier this year, Connecticut’s Mashantucket Pequot Tribal Nation said it would help reopen the casino at Puerto Rico’s Fairmont El San Juan Hotel under the tribe’s Foxwoods brand.

In a statement provided by MGM Resorts, Puerto Rico Gaming Commission Executive Director Orlando A. Rivera Carrión said the addition of BetMGM helps the territory in “implementing a public policy that encourages the development of new jobs and maximizing the income and resources of the Government of Puerto Rico.”

An interior view of the planned Caesars Sportsbook at Chase Field in Phoenix. (Courtesy photo)

Report: Caesars close to selling William Hill’s non-U.S. businesses

Caesars Entertainment is close to finalizing the sale of William Hill’s European sports betting and online gaming holdings, which the casino company acquired in April when it purchased the gaming giant for $4 billion.

Caesars officials made no secret of the company’s desire to concentrate solely on William Hill’s U.S. operations. Through a 2018 deal, Caesars already owned 20 percent of William Hill and saw value in having 100 percent of the sports betting and online gaming business.

“We control our own destiny and what I continue to believe is an extraordinarily exciting opportunity for the company,” Caesars CEO Tom Reeg said in May.

Last month, Caesars announced the nationwide launch of Caesars Sportsbook, the company’s retail and online sports betting business that is nearing operations in 20 states. Reeg said Caesars would spend more than $1 billion over the next 18 months to grow the business.

Caesars Sportsbook has announced several sports betting partnerships with multiple entities, including the naming rights to the Caesars Superdome in New Orleans. The company is also one of three official sports betting partners with the National Football League.

The growing U.S. market is the reason the international side of William Hill didn’t fit into Caesars’ plans.

Bloomberg News reported last week that Gibraltar-based online gaming giant 888 Holdings and New York hedge fund Apollo Global Management were the finalists in the bidding war after Luxemburg-based CVC Capital Partners withdrew from the process. 888 reportedly had the highest bid, but both firms are still in talks with Caesars.

Caesars plans to use the funds from the sale to pay down a portion of its long-term debt, which stood at $14.7 billion at the end of June.

“It should come as no surprise that we will begin to aggressively pay down debt,” Caesars Chief Financial Officer Brett Yunker said in May. The company also plans to sell at least one of its Strip resorts next year to pay down debt.

In May, Reeg was clear the company had little desire to operate online gaming outside the U.S.

“One of my pet peeves when I was an investor (was) companies that didn't know what they were good at,” Reeg said. “I can't tell you we're good at running a non-U.S. digital business. I can tell you that there are almost certainly people out there that will do it better than us and see opportunity there.”

Reeg put a halt on international casino expansion when Caesars’ $17.3 billion merger with Eldorado Resorts was announced in June 2019. He said the company would end its decade-long quest to land an integrated resort license in Japan, and told analysts earlier this year the company ended its partnership in a casino-resort venture in South Korea.

“I can deploy that capital into businesses that I know will drive better returns to shareholders,” Reeg said. “So, no, we've not had a moment's pause in terms of selling the non-U.S. business.”

However, Caesars still has nearly a dozen international operations – gaming and non-gaming – in Canada, the United Kingdom, Dubai and Egypt. 

Other items of interest:

AGA CEO Bill Miller. (Photo courtesy AGA)

When the NFL season kicks off Thursday, eight more states than a year ago will have legal sports betting. With another five states expected to launch during the season, a growing number of NFL fans will have increased access to legal sports betting opportunities. The American Gaming Association said Tuesday it expects 36 percent more Americans will legally wager on NFL games than a year ago. Research conducted by the Washington D.C trade organization found that 45.2 million Americans plan to wager on the NFL this year. “When the 2021 NFL season begins, more than 111 million American adults will be able to wager safely with regulated sportsbooks in their home states rather than with the predatory illegal market,” said AGA CEO Bill Miller. Sports betting is currently legal in 32 states and Washington, D.C., with 26 jurisdictions already operating. Arizona, Washington and South Dakota are expected to launch by this weekend. Currently, 16 of the 23 states with NFL teams have legal sports betting.

Note: AGA CEO Bill Miller and MGM Resorts CEO Bill Hornbuckle are participating in a panel discussion on the future of online gaming at IndyFest 2021, Oct. 2-3. For more information, follow this link.

Sightline Payments co-founder Omer Sattar was named the Las Vegas-based company’s co-CEO last week. He will work alongside co-CEO Joe Pappano. In this new role, Sattar will oversee internal operations including product and compliance. Pappano will continue to lead Sightline’s strategy, sales, client services and marketing. Sattar co-founded Sightline Payments in 2011 and has served as executive vice president. He helped drive digital payments acceptance in gaming, including the company’s deals with Resorts World Las Vegas and Boyd Gaming. Sightline has received some $400 million in funding over the past 10 months. “The past year has been transformative for Sightline, and we have no intention of slowing down our progress to revolutionize payments in the gaming and hospitality industries,” Sattar said. Pappano said the timing of the move, “allows Sightline to focus our resources on meeting the incredible demand we are seeing in the market.”

Photo of The Cosmopolitan Las Vegas
The Cosmopolitan Las Vegas. Allen McGregor/Courtesy under Creative Commons

The ownership of the Cosmopolitan of Las Vegas may be changing. New York-based investment firm Blackstone is said to be shopping the Strip resort with an asking price of $5 billion. Sources told Bloomberg that Apollo Global Management, which is buying the Venetian and Palazzo operations from Las Vegas Sands, has an interest in the hotel-casino. Blackstone put the Cosmopolitan on the market in 2019 and was reportedly seeking $4 billion. The Cosmopolitan opened in 2010 at a cost of $3.9 billion when it was owned by Deutsche Bank. Blackstone paid $1.73 billion for the property in 2014.

Macau casinos produced $554 million in gaming revenue during August, the Chinese gaming market’s lowest single-month total since September 2020. Macau’s Gaming Inspection and Coordination Bureau said the figure was a nearly 48 percent decline compared to July’s numbers and 76 percent below August 2019. Through the first eight months of 2021, Macau’s gaming revenue is down 69 percent compared to 2019. Analysts said COVID-19 outbreaks across mainland China caused travel restrictions to and from Macau. “While we continue to be encouraged by visitation trends during periods of less restrictive travel mandates, until we see stronger correlation into higher gaming revenue, we feel like it makes sense to be more conservative with our assumptions,” Stifel Financial gaming analyst Steven Wieczynski wrote in a research note. “As we have indicated before, we believe investors just have to write off 2021 and start to focus on 2022. With additional virus lockdowns potentially in play, we believe any material recovery is now a 2022 story.” Las Vegas Sands, Wynn Resorts and MGM Resorts International operate casinos in Macau.

Wisconsin may soon have its first legal sports betting operation. Las Vegas-based International Game Technology (IGT) said last week it had signed an agreement to provide the sports betting platform to the Oneida Casino on the Oneida Nation Reservation in Green Bay. The Oneida Nation is the first tribe in Wisconsin to receive approval from the state to operate sports betting. Wisconsin is one of nine states that legalized sports betting but has yet to launch operations. The Oneida Casino will offer both a retail sportsbook and mobile sports betting. "We're committed to supporting Oneida's sports betting vision,” said IGT Senior Vice President Enrico Drago. Oneida General Manager Louise Cornelius said the casino looks forward “to partnering with IGT'' and “becoming the first casino in Wisconsin to operate a sportsbook.”

Quotable:

“Based on commentary from management teams and our checks, we are expecting the remainder of the year to see solid trends for Las Vegas. July gaming revenue was up 46 percent versus July 2019 and assuming typical seasonality for August and September, we believe third quarter 2021 gaming revenue will be up better than 30 percent.”

Macquarie Securities analyst Chad Beynon in a research note discussing the potential for a recovery of business on the Las Vegas Strip that was lost because of COVID-19.

Indy Gaming: Major Strip casino operators snubbing downtown Chicago gaming project

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


Chicago gave potential casino developers another two months to submit a proposal for an integrated resort in the downtown area of the nation’s third-largest city.

The extra time, however, won’t change the opinions of Las Vegas’ largest gaming companies, who have taken a pass on the Chicago opportunity.

"Extending the deadline for interested bidders will allow the city to collect as many robust, impactful and transformative proposals as possible,” Chicago Mayor Lori Lightfoot said in a statement released Friday. “I look forward to seeing these bids roll in and working very closely with whichever team is ultimately chosen to develop Chicago's first-ever casino."

In reality, the mayor may only see a handful of offers.

The proposals won’t come from MGM Resorts International, Las Vegas Sands, Wynn Resorts and Caesars Entertainment. The four large Strip operators decided against submitting bids for a project that Lightfoot and other Chicago leaders said was designed to attract Las Vegas Boulevard’s best-known occupants.

What has scared them away is the tax structure for the deal – 40 percent on gaming revenues – and competition in Illinois, a state that currently has 10 casinos and more than 40,000 video gaming terminals operating in 7,670 locations.

Four casinos in nearby northwest Indiana draw business from Chicago-area residents. Meanwhile, the city of Waukegan, just 35 miles north of downtown Chicago, is considering bids for a gaming development from three casino operators, including Las Vegas-based Full House Resorts. Waukegan is one of five locations slated for a casino project as part of Illinois’ 2019 gaming expansion legislation.

The word “oversaturated'' best describes gaming in the state.

That’s not to say expansion is slowing. The state’s venture into sports betting created some unique partnerships, including a deal announced last year between the Chicago Cubs and DraftKings that will land a sportsbook at historic Wrigley Field.

According to ESPN, the Commission on Chicago Landmarks unanimously voted last week to approve the plans for a two-story sportsbook adjacent to the landmark stadium.

Illinois-based Rush Street Gaming, which operates Rivers Casino in Des Plaines – just 20 miles north of downtown Chicago —  seems to have the hometown edge. But Lightfoot, back in April when the request for proposals effort was launched, was hopeful the Strip would come knocking.

The idea seemed inevitable based on the response the city saw when it announced a request for information on ideas for the integrated casino resort.

The MGM Grand hotel and casino sign
The MGM Grand hotel/casino and New York/ New York as seen on Monday, March 20, 2017. (Jeff Scheid/The Nevada Independent)

According to the summary that was released in December, MGM Resorts International and Wynn Resorts, along with Hard Rock International and Rush Street, were among 11 companies, real estate developers, consultants, and a neighborhood group that provided input to what the city termed as the first step in the planning process.

The attraction was there – a metropolitan area of 9.5 million people and annual visitation of another 60 million people.

Among the opportunities for the winning bidder is a license to operate a temporary casino for up to 24 months – which is subject to a 12-month extension – until the permanent casino opens.

Also, the casino operator can operate slot machines at the city’s two major airports – Chicago Midway International Airport and Chicago O’Hare International. Between the casino and the airports, the combined number of gaming positions (table games and slot machines) allowed is 4,000.

But it wasn’t enough for the Strip companies.

MGM Resorts was the first to drop out.

“Chicago is just complicated,” MGM Resorts CEO Bill Hornbuckle said this spring. “The history there in Chicago, the tax and the notion of integrated resort at scale don’t necessarily marry up. We’re not overly keen or focused at this point in time there.”

Las Vegas Sands CEO Rob Goldstein never mentioned Chicago when asked in July about potential casino developments around the country, instead citing New York City, Texas and Florida – even though none of those locations are currently considering casino expansion.

Wynn Resorts spokesman Michael Weaver reiterated his company’s position that was made last month to the Wall Street Journal.

“We will not participate in the RFP for Chicago,” he said in an email Monday to The Nevada Independent.

Last week, Caesars Entertainment CEO Tom Reeg was equally blunt when asked about a Chicago integrated resort during his company’s quarterly conference call.

“I’ve got no interest in Chicago,” Reeg said. Instead, he touted the company’s planned Harrah’s casino at a racetrack in Columbus, Nebraska.

Chicago is not deterred.

The city’s upbeat statement that accompanied Lightfoot’s remarks said the extension gives potential bidders “more time to fully assess the Chicago casino opportunity; conduct additional due diligence; assemble more competitive bid packages; and explore financing opportunities.”

That might not solve the problem with lack of interest.

The sportsbook at Caesars Palace in Las Vegas. (Photo courtesy Caesars Entertainment)

Analyst, unenthusiastic on sports betting, praises recent moves

In July, Stifel Financial gaming analyst Steven Wieczynski was hesitant to endorse the effort by Las Vegas Sands to expand into sports betting through the company’s recently announced push into digital gaming.

“What we don’t want to see Las Vegas Sands do is chase this sports betting/iGaming euphoria, which is going on right now,” Wieczynski told investors following the company’s second-quarter conference call. “Given their lack of a domestic presence, we believe they would just be overpaying for an opportunity which would probably not be overly relevant to their cashflow base at the end of the day.”

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

Last week, the Baltimore-based analyst had an opportunity to weigh in on two other billion-dollar sports betting efforts. But his lack of enthusiasm for the storyline – “We aren’t the biggest sports betting bulls as we have indicated numerous times” – altered slightly.

Caesars Entertainment plans to spend $1 billion to expand its sports betting and iGaming presence in the U.S. as it integrates the company’s customer loyalty program within an online presence acquired through its nearly $4 billion purchase of William Hill in April. Meanwhile, Penn National Gaming said it was spending $2 billion to acquire Canadian sports betting provider theScore to capitalize on an emerging market north of the border.

“Will investors feel comfortable having Caesars invest that much to grow their sports betting/iGaming business?” he asked in a research note. “This will be the most debatable subject around this story moving forward given the mixed results we have witnessed from other sports betting entities.”

But Wieczynski found positives in both announcements.

He said Caesars, which operates 16 casinos in Nevada, isn’t planning to spend more than 10 figures just on acquiring customers.

“We believe only a small percentage is being allocated toward that and we continue to hold the belief that Caesars is in the best position from a customer acquisition standpoint given their massive Total Rewards program,” Wieczynski said.

Prior to earnings, Caesars unveiled a rebranding of its combined legacy and William Hill operations in the U.S. as Caesars Sportsbook. The company expects mobile wagering to be live in 14 states by the end of the year and has an advantage heading into the upcoming football season as one of three official sports betting partners of the National Football League.

“While we aren’t the biggest believers in the sports betting opportunity, we are the biggest believers in this management team and trust their judgement that this investment will pay massive dividends down the road,” Wieczynski said, adding Caesars exceeded all forecasts for cash flow following last year’s $17.3 billion buyout by the former Eldorado Resorts.

“We are hoping the same comes true a couple years down the road, that this ‘new’ opportunity can produce more than their current $500 million to $1 billion (cash flow) projection,” Wieczynski said.

As for Penn National, Wieczynski said acquiring theScore is more than just about capitalizing on the Canadian sports betting market. Integrating the platform created by theScore with Penn’s current U.S sports betting operations with Barstool Sports will be an added boost.

“For many investors we talk to, the one thing missing from the Penn online story thus far has been a full, in-house technology stack,” Wieczynski said. “Not only did Penn check that box today, they also greatly expanded their content/brand-based top of funnel customer acquisition opportunities and secured a likely leading position in Canada.”

He said theScore reportedly had interest from other buyers without needing the supplemental technology.

“We expect Penn to derive significant value from the content/brand and positioning in Canada alone, with upside on the margins from taking remaining technology in-house,” Wieczynaki said.

Penn is in the process of expanding its Barstool Sports betting presence to at least a dozen states by the end of 2021, but Nevada is not part of the growth plan. The company operates M Resort in Henderson and two small casinos in Jackpot near the northeastern Nevada border with Idaho, but is giving up its management of Tropicana Las Vegas, possibly by late fall.

Penn sold the Tropicana Las Vegas, which it has owned since 2015, to Gaming and Leisure Properties at the outset of the pandemic last year. The real estate investment trust leased the Strip resort back to Penn, but the operations are being sold to Bally’s Corp.

Other items of interest:

AGA CEO Bill Miller. (Photo courtesy AGA)

The American Gaming Association said Tuesday the casino industry nationwide is on track to eclipse 2019’s record revenue total of $43.6 billion after just six months. The Washington D.C.-based trade organization said casinos nationally collected just under $25 billion in gaming revenues, an increase of 15.3 percent from this point in 2019. The AGA credited sports betting revenues of $1.8 billion through June, which has already surpassed 2020’s yearly total revenues of $1.5 billion. AGA CEO Bill Miller added that brick-and-mortar casino gaming, “the backbone of this industry,” had record slot machine and table game revenues. Nevada, according to the Gaming Control Board, has seen gaming revenues increase 1.5 percent through June compared to 2019, but with zero help from the Strip, which is down 11.3 percent in the year’s first four months.

Accel Entertainment CEO Andy Rubenstein said the company’s $140 million acquisition of Nevada slot machine route operator Century Gaming would be delayed until the first half of 2022 due a “large backlog of licensing applications.” The Illinois-based company had hoped to close the transaction by the end of this year. Century is the second-largest route operator in Nevada and the largest in Montana. Rubenstein said during Accel's second-quarter earnings release last week that the backlog is in “several states.” Century also provides games in South Dakota, West Virginia and Louisiana. Accel is Illinois’ largest slot machine route operator with 2,527 locations and 13,177 video gaming terminals. The company said its revenue total of $202 million was the company’s highest-ever for a single quarter. Gaming legislation in 2019 allowed Illinois slot routes to offer higher betting limits and add a sixth game per location.

Scientific Games is looking to sell its lottery business and sports betting operations, but don’t look at International Game Technology as a potential buyer. During IGT’s second quarter conference call last week, Truist Securities gaming analyst Barry Jonas asked CEO Marco Sala how the potential deal relates to the rival company. “We are focused on serving governments and licensed private operators as a [business-to-business provider]. And this role can expand that to comprise a full house lottery operation where appropriate.” Scientific Games is looking to use a sale to reduce a daunting $9.2 billion in long-term debt.

On the same day DraftKings stole the sports betting headlines with its $1.56 billion acquisition of Golden Nugget’s online and sports betting operations, two rivals had their own announcements. BetMGM announced two deals to give the company access into Arizona’s sports betting market that is expected to launch this fall. The sports betting arm of MGM Resorts International said it will place sportsbooks in three Phoenix-area casinos operated by the Gila River Indian Community. Also, the company signed a deal with the NFL’s Arizona Cardinals to build a sportsbook at State Farm Stadium in Glendale, which is near Phoenix. The deals also include mobile sports betting access through BetMGM. While the tribal casino sportsbooks will open this fall, the stadium sportsbook is targeted for 2022.

Also, WynnBet, Wynn Resorts’ sports wagering entity, signed 15-time NBA All-Star and media personality Shaquille O'Neal as a brand ambassador. O’Neal will be featured in WynnBET's advertising campaigns and will attend in-person events for fans. To comply with NBA rules, O’Neal will sell his ownership stake in the Sacramento Kings.

Speaking of DraftKings, the company is a major proponent of remote registration for sports betting, where a customer doesn’t need to visit a casino in order to sign up. Most of the major mobile sports betting states, such as New Jersey and Michigan, have remote registration. Mobile sports betting is often 80 percent to 90 percent of all wagers in those states. Nevada, where more than 60 percent of all sports wagers are made on mobile devices, does not allow remote registration. Las Vegas locals gaming companies have fought any change in the regulation. Could DraftKings move the needle in favor of a change? “The presence of DraftKings in Nevada will add another voice to the chorus calling for the authorization of remote sports betting registration and online casinos in the state,” Eilers & Krejcik gaming analyst Chris Grove said. “On the other hand, the entrance of DraftKings may further entrench stakeholders who are opposed to expanding online gambling in Nevada. On balance, it's likely to move the state closer to an expansion of online gambling, but not necessarily to a material degree.”

Sales of sports betting and lottery divisions on the horizon for Scientific Games

Las Vegas-based Scientific Games, which saw a change in control last fall through the stock sale and departure by the gaming equipment provider’s billionaire chairman, said Tuesday it plans to sell its legacy lottery business and a sports betting operation the company spent millions of dollars to develop.

The announcement was not surprising to the investment community.

Scientific Games officials said last year the company was conducting a “strategic review” of its five corporate operations 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.

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

“Management has stated repeatedly the goal is to deleverage rapidly and unlock value across the business segments,” Katz said.

Scientific Games is considered one of the three largest slot machine providers to the U.S. casino industry, along with International Game Technology (IGT) and Australia-based Aristocrat Technologies. In addition, the company provides equipment and technology to a large contingent of U.S. state-run lottery businesses, where it also competes with IGT.

Truist Securities gaming analyst Barry Jonas predicted that Scientific Games' approach could have “wider ramifications” for the gaming equipment supplier industry as a whole. Other companies, such as IGT and Everi Holdings, could sell off pieces of their operations, for example.

“Scientific Games' new deconsolidation strategy highlights how most operator buying decisions are very specific today, with less opportunities for bundling and more decisions based on quality of each product,” Jonas told investors.

Shares of Scientific Games, traded on the Nasdaq, hit a 52-week high Tuesday of $80.81, before closing at $77.68, up $1.72 or 2.26 percent.

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.

Deutsche Bank gaming analyst Carlo Santarelli said those three businesses provided the company with a combined $1 billion in cash flow in 2019.

During a conference call Tuesday, Scientific Games CEO Barry Cottle said the digital gaming market, including online casino gaming, could produce annual revenues “comparable” to the company’s land-based gaming revenue stream in just three years. Cottle said the company’s platforms support 24 percent of all igaming business in the U.S. However, Cottle didn’t say whether the growth would occur through new markets or other means.

Scientific Games said it was considering several possibilities for unloading the lottery and sports betting divisions, including an outright sale of both businesses, an initial public offering through a special purpose acquisition company (SPAC) or a strategic combination with another business.

“We have a range of options, but we want to streamline our portfolio,” said Scientific Games Chairman Jamie Odell.

Analysts questioned the announcement’s unusual timing, coming as Scientific Games’ second quarter closes Wednesday. Normally, a company would drop such major news during a quarterly conference call.  Cottle and Chief Financial Officer Michael Eklund, however, hinted that the company could be making another announcement shortly.

“At this point, the market is going to determine the timing, the value (and) the final structure of the deal,” Eklund said. “We are very well advanced in the process. We think we can move pretty quickly.”

Scientific Games has 9,000 employees worldwide, with roughly 4,200 in the U.S., according to its most recent annual report. The company did not say how many employees are working at its corporate headquarters and production facility south of McCarran International Airport.

J.P. Morgan gaming analyst Joe Greff said Scientific Games’ effort to bring down its debt was positive news for the company. Accelerating its debt pay-down will bring its leverage figures “into a level more comparable to (its) peers,” he said.

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

Ronald Perelman pushed the growth

Scientific Games has been through numerous significant changes and rapid expansion going back to 2013, when the lottery-centric company acquired slot machine developer WMS Industries for $1.3 billion. A year later, the acquisition of Bally solidified its focus on the casino gaming industry, and Scientific Games moved its headquarters from Georgia to Las Vegas. The lottery headquarters remained in Alpharetta, Georgia, which is just outside Atlanta.

Scientific Games was long controlled by billionaire Ronald Perelman, the company’s chairman who owned 39 percent of the outstanding stock through his MacAndrews & Forbes Holding Co. 

Perelman, currently No. 103 on the Forbes 400 list with a net worth of $3.7 billion, engineered the deals in order to drive Scientific Games to the top of the gaming equipment sector.

During that time, the company was led by four different CEOs. Cottle has been in the position since 2018.

Perelman sold his stock and stepped down as chairman last year. Odell, a former CEO of Aristocrat from 2009 to 2017, who had been an advisor to Perelman and Cottle, became chairman and announced the strategic review.

Sports betting and lottery divisions

As the U.S. embraced legalizing sports betting, Scientific Games built an operation that would provide technology and back-of-the-house services. In January 2018, the company spent $625 million to acquire NYX Gaming Group, which created “OpenBet,” a digital sports betting platform. Later that year, the company paid an undisclosed price for Don Best Sports Corp. The company, which provided oddsmaking and real-time sports data, was incorporated into OpenBet.

During the quarter that ended March 31, Scientific Games said it was providing its sports wagering platform to 24 sportsbooks in 12 states with three more locations coming online in the next three months.

The company’s lottery business also has continued to grow. During the first quarter, the company said its instant game lotteries experienced double-digit sales growth in 43 of 45 states where technology and lottery products were provided. Scientific Games said instant lottery game sales in the United Kingdom also increased 10 percent.

“We think the sale of lottery and sports betting makes sense, given the argument could be made that the market has not given either full value relative to (comparisons),” Jonas told investors. He added that both divisions have large contracts with renewal or rate contraction risks.

Jonas suggested “operators” might be the “potential acquirers” of the company’s sports betting division.

Las Vegas-based PlayStudios deal with Murren-led company follows slot machine industry growth pattern

people in office

Arriving late to the party oftentimes has benefits.

Just ask Jim Murren.

PlayStudios CEO Andrew Pascal was well into the process last fall of taking the Las Vegas-based social gaming provider public through a merger with a special purpose acquisition company (SPAC). PlayStudios’ financial advisors, J.P. Morgan and LionTree Advisors, had identified several candidates. SPACs, which are also known as blank-check companies, are publicly traded shell vehicles used to take another company public.

Murren, the former CEO of MGM Resorts International, considered PlayStudios a potential candidate for Acies Acquisition Corp., a SPAC he created with two former Morgan Stanley executives.

Social gaming is one of three gaming industry niche sectors, along with live entertainment and online gaming/sports betting, where he believes there is exceptional growth potential.

“We got ourselves inserted into a very competitive process,” Murren said. “[Social gaming] is so much larger than the casino gaming market. It’s a global market with far less friction in terms of the ability to acquire customers.”

Murren and his team may have landed late, but his personal and professional relationship with Pascal and his first-hand knowledge of PlayStudios changed the course. The company has long held the exclusive social gaming and mobile platform rights to casino properties operated by MGM Resorts.

“We had a great collection of interested parties and we were very far down in the process when Jim expressed interest, “Pascal said. “They had a lot of work to do to catch up and be considered. But we felt they were the right partner and the best outcome.”

Murren, 59, and Pascal, 54, share a similar vision: growing PlayStudios into a larger presence in the social gaming sector. By becoming a public company, PlayStudios will have the funds to acquire other game developers or license new products that would be added to the company’s expanding game library.

Screen shot of myVegas Strip home page for customers of MGM Grand Las Vegas. (Photo courtesy PlayStudios)

It’s a similar approach followed by Nevada’s slot machine industry, which Pascal noted was a “fair observation.”

He founded Silicon Games in the late 1990s and developed slot machines that made their way onto casino floors in Nevada and other states. He sold the company to IGT in 2001.

“We see a lot of opportunities to partner up with really great game makers that have great products that might be under-resourced,” Pascal said of potential mergers and acquisitions activity. “Even existing companies that are chasing scale and are looking to really invigorate their products, we are looking to bring our whole model there and partner up with them.”

Prior to creating PlayStudios in 2011, Pascal served as president of Wynn Resorts’ two Las Vegas properties, Wynn Las Vegas and Encore. His aunt is Elaine Wynn, the largest stockholder in Wynn Resorts. 

The company has moved to the social gaming forefront, offering the platform’s more than 4.2 million users “real world rewards” that are earned for points and game play.

“We have a proven model, platform and tool and now we’re ready to scale it,” Pascal said.

According to PlayStudios’ investor presentation, customers spend an average of 56 minutes a day playing games on the platform, often paying nominal fees for virtual tokens or other game enhancements. In addition to casino games through the myVegas platform, PlayStudios offers a large library of casual video games in the brain and puzzle, adventure, arcade, simulator and role-playing categories.

The rewards are provided by more than 80 partners and 275 entertainment, retail, travel, leisure and gaming brands. To date, PlayStudios users have collected in-app loyalty points to purchase more than 10 million rewards with a retail value of nearly $500 million.

In addition to its Las Vegas headquarters in Summerlin, PlayStudios has offices and design studios in Burlingame, California; Austin, Texas; Hong Kong; and Tel Aviv, Israel.

Gaming analyst Adam Krejcik, a partner in the advisory firm Eilers & Krejcik Gaming, said PlayStudios has some “unique and differentiating attributes,” but cautions that social gaming is an extremely competitive business.

“Everyone seems to have the same playbook strategy; raise money to pursue strategic (mergers and acquisitions), and do so even after going public,” Krejcik said. “I think executing on (mergers and acquisitions) is going to be very difficult, not just for PlayStudios, but everyone in the industry.”

The deal

Growing and expanding PlayStudios was at the center of the Feb. 1 announcement that several institutional investors – including MGM Resorts – are providing private investment of $250 million. Acies is contributing 89.1 million shares of the SPAC’s stock and up to $150 million in cash.

PlayStudios will emerge as a publicly traded company on the Nasdaq by the end of the second quarter.

The transaction valued PlayStudios at $1.1 billion based on two-and-a-half-times the company’s projected 2022 revenue of $435 million. The company said its expected revenues in 2020 will exceed $270 million.

PlayStudios shareholders will own 64 percent of the company and the institutional investors will own a combined 18 percent. Murren and the Acies sponsors will own 3 percent, and 15 percent of the company will be available on the open market.

Murren said he will become an “active shareholder” in PlayStudios, providing Pascal and his team “everything I can to ensure success.”

Murren, who led MGM Resorts casino expansion on the Strip and throughout the U.S. during his tenure as CEO that began in 2008, credited company founder Kirk Kerkorian with one of the reasons he was drawn to PlayStudios and Pascal.

“Mr. Kerkorian taught me to bet on people and I made a big bet on Andrew and his management team,” Murren said. “I love the space and it was exciting that Andrew was willing to engage and put us in the mix.”

He and Pascal have been acquainted personally and professionally for more than two decades. Both men are involved in helping Nevada deal with the ongoing COVID-19 pandemic. Murren heads the state’s COVID-19 Response, Relief and Recovery Task Force that secured personal protective equipment, medical supplies and testing kits for the state. 

Pascal and members of his PlayStudios team collaborated in the development of COVID Trace, a digital contact tracing app designed to slow the spread of coronavirus. COVID Trace is positioned to become the most effective exposure notification solution in the U.S. and a model for other states working to control the spread of the virus.

SPACs and the gaming industry

Sports betting operator DraftKings went public in April through a merger with Diamond Eagle Acquisition Corp. in one of the gaming industry’s more high-profile SPAC deals. The company’s stock price soared 10 percent above the initial projections in its first day of trading.

Since then, Golden Nugget online gaming, Rush Street Interactive and Genius Sports signed on to SPAC deals. Previously, slot machine developer Inspired Gaming and Illinois video gaming terminal provider Acel Entertainment went public through SPACs.

“I'd expect an increasing number of companies, including those with exposure to the U.S. online gambling opportunity, to seriously examine taking the SPAC route to public markets,” said Chris Grove, an analyst for Eilers and Krejcik Gaming.

The same day the PlayStudios deal was announced, Houston billionaire Tilman Fertitta announced a $6.6 billion SPAC transaction with Fast Acquisition Corp., to put his Landry’s restaurant chain and five Golden Nugget casinos – including the Golden Nuggets in downtown and Laughlin – into the public market.

Competition in the social gaming space

The worldwide social gaming space is crowded with traditional gambling companies and non-casino providers such as Zynga. DoubleU Games, which was sold by IGT, offers free non-monetary versions of real money gambling through DoubleDown Casino.

Australia-based Aristocrat and its Las Vegas-based subsidiary Aristocrat Technologies operate a social games division through the wholly owned Big Fish Games.

In 2019, slot machine developer Scientific Games spun off its social games division into SciPlay, a separate public company traded on the Nasdaq. The Las Vegas-based gaming equipment provider maintained a 17 percent ownership stake in the new company.

Israel-based Playtika, a developer of mobile games including social casino titles such as Slotomania and WSOP, was acquired by Caesars Entertainment in 2011. It operated as an independent division under Caesars Interactive until it was sold for $4.4 billion in 2016 to a group of Chinese investors, that included a private equity firm founded by Alibaba Group founder Jack Ma.

In January, the owners took Playtika public on the Nasdaq in an $11 billion deal.

Upping its presence

During the COVID-19 pandemic when stay at home orders were issued, PlayStudios launched an advertising campaign in Las Vegas and Denver dubbed In Is The New Out, which followed a young couple practicing social distancing at home and includes them playing the myVegas slot games for entertainment.

Pascal said at the time the MGM partnership allowed the company’s customers to play slot and table games in a virtual Las Vegas setting. With casinos closed, the games on myVegas, including myVegas Blackjack, offered MGM Resorts a way to maintain its presence with customers.

PlayStudios struck a partnership with Konami Gaming for KonamiSlots. In 2016, PlayStudios acquired Tel Aviv-based game studio Scene53 and launched its Pop! Slots mobile app.

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

A gambler at heart: Derek Stevens opening first all-new resort in four decades in downtown Las Vegas

Las Vegas casino owner Derek Stevens gained a reputation for high-stakes sports wagers and a hands-on operating style that evokes memories of the Glitter Gulch gambling proprietors of a bygone era.

But Stevens credited his father, a retired architect from Michigan who is conservative by nature, with planting the seed for the biggest bet taken on downtown Las Vegas in 40 years.

On Wednesday, Stevens opens Circa Resort Casino at the corner of Main Street and the Fremont Street Experience. The project, the first all-new built-from-the-ground-up hotel-casino in downtown since 1980, will be unveiled more than two months ahead of schedule.

Circa Resort & Casino in downtown Las Vegas. (Jeff Scheid/The Nevada Independent)

Circa encompasses a full city block – 2.78 acres – with a striking 44-story hotel structure that is second only to the Strat Tower in height among downtown buildings.

Stevens is opening the casino and its three-level sportsbook, restaurants, massive roof-top swimming pool attraction and other public portions just after midnight. He’s holding back on the initial 512 hotel rooms until late December.

In true gambler’s style, he’s wagering that interest in Circa will be a welcome relief in the face of a global pandemic that has diminished visitation to Las Vegas and led many analysts to predict a lengthy financial recovery that could leave scars until 2024.

Circa is the first Las Vegas resort that requires guests to be age 21 and over, a move Stevens said will enhance the guest experience.

A Detroit native, Stevens, 53, has been enamored with Las Vegas since the 1980s when he first visited the Rat Pack-era Dunes on the Strip while on a break from his studies as a University of Michigan student.

He has been active in downtown Las Vegas since 2006. Stevens, in partnership with his brother Greg, owns the Golden Gate and the D Las Vegas. Coincidentally, the D was the last all-new downtown casino when it opened in 1980 as the Sundance.

In 2013, Stevens acquired the shuttered Clark County Courthouse for $10 million and converted the nearly 3-acre site into an outdoor events venue. He also owned the Las Vegas 51s (now Las Vegas Aviators) for four years, selling the minor league baseball team to Howard Hughes Corp. for $20 million in 2013.

Stevens’ Circa Sports operates sports betting at all his casinos and will take over the sportsbook at the off-Strip Tuscany early next year. Circa Sports launched its first location outside Nevada this summer in Colorado.

Circa Resort & Casino's three-story sportsbook can seat 1,000 people. (Jeff Scheid/The Nevada Independent)

Stevens views Circa name and theme as the “accumulation” of his personal Las Vegas moments: winning his first $20 wager at the Dunes, his initial impression of the Las Vegas Hilton Superbook and the first time he walked through The Mirage atrium.

It was early in Circa’s development process that his father John Stevens suggested his son not hold back on the design when conceptualizing plans for the site. He told Derek to go big on the parcel, calling the site “the most valuable piece of real estate outside Times Square.”

Derek Stevens said he took his father’s advice to heart.

“He saw the city block as one of the most important pieces of land in Las Vegas,” Stevens recalled during an hour-long interview with The Nevada Independent. “He told me to think about how many people alone will be walking in front of one side of this property.”

The name Circa, which Stevens announced in January 2019 to a packed audience at his Downtown Events Center following Mayor Carolyn Goodman’s State of the City address, symbolizes the history of the Las Vegas casino business leading up to the 21st century gaming industry.

The focal points in the 1.25 million square foot resort include the race and sportsbook with a three-story multiple screen television and a studio for VSiN, a Las Vegas-based sports betting network. Stadium Swim is the fifth-floor pool deck that will operate year-round with six temperature-controlled pools and two spas. The space includes a 14-million-pixel television screen to show live sports and special events. Stevens expects upward of 4,000 customers a day paying the entrance fee to the attraction.

Circa Resort & Casino's Stadium Swim has a 40-foot-tall high-definition screen, six pools and can accommodate 4,000 people. (Jeff Scheid/The Nevada Independent)

Taking dad’s advice into account, Circa has an outdoor bar area spanning much of the frontage along the Fremont Street Experience.

“In a crazy year like 2020, this is a positive,” Stevens said. “We want to make sure when people visit, from anywhere in the world, that they have that ‘wow’ moment.” Circa’s rooftop Legacy Club offers guests “the opportunity to see the city of Las Vegas, downtown, and the Strip light up before your eyes.”

Last month, Stevens launched a nationwide television campaign for Circa during the Major League Baseball playoffs. He narrated the 30-second advertisement and appears at the end, gazing up toward Circa’s tower from his car window. The message was both an introduction of the resort and a tribute to the allure and mystique of Las Vegas.

A welcome addition

His downtown neighbors don’t view Circa as competition, but an attraction that will bring more visitors to the market. Downtown casinos reported their highest 12-month gaming figures in 26 years in 2019 before the pandemic crushed their businesses.

As part of the development, Stevens acquired a vacant parcel on Main Street from Boyd Gaming, directly across from the Circa site. It is now home to Garage Mahal, a 982-space parking facility and will also serve as a rideshare hub for downtown. The garage is connected to the resort via an above-ground pedestrian bridge.

“From our viewpoint, any long-term investment in downtown benefits the city, other operators, and by default, Boyd,” said Steve Thompson, who oversees Boyd’s three downtown casinos and has worked in the market since 1985. “One of the benefits is that our properties are only 60 to 90 feet from your neighbors. It gives guests a variety of options.”

Plaza CEO Jonathan Jossel has watched Circa rise across Main Street since the Las Vegas Club was demolished a few years ago. He said the new resort is a “downtown game changer” that will help the area’s economic recovery.

Las Vegas Convention and Visitors Authority CEO Steve Hill said the opening is a positive declaration for a market still dealing with COVID-19 business restrictions. Hill said Circa is good for downtown and will present upbeat messages for Las Vegas and the tourism industry’s recovery.

“This kind of event is important during this environment and makes a great statement about Las Vegas,” Hill said.

Saginaw's, a 24-hour delicatessen from Ann Arbor, Michigan, opened its first Las Vegas restaurant inside Circa Resort & Casino. (Jeff Scheid/The Nevada Independent)

Circa financing

Stevens, who operates privately held businesses, has never revealed a price for Circa.

The land acquisitions were completed with other privately held entities. The acquisition of the Garage Mahal land from Boyd – a public company – was not material enough for Boyd to report the transaction, said a company spokesman.

During his Nevada licensing proceedings, the cost was revealed to regulators, but remained confidential.

Stevens’ chief financial officer, Susan Hitch, said Circa, D Las Vegas, and Golden Gate are all part of the collateral package for the construction loans and will help service the debt. A six-month cushion has been built into the company’s reserves.

“We will outperform the numbers projected for our lending proposal,” Stevens told the Gaming Control Board on Sept. 9. “We will significantly outperform the numbers in our loan agreement.”

To be on the safe side, Stevens is holding back seven floors in Circa’s planned 777-room hotel tower for at least a year in order to determine the best use for the space.

The challenge for Stevens in obtaining the financing was convincing analysts that downtown Las Vegas was a good bet. Financial comparisons on the Strip were easy because of the multiple developments by public companies. In downtown, Golden Nugget owner Tilman Fertitta built a hotel tower addition with his own money while the Downtown Grand expansions were privately financed.

“Because there is not a lot of public debt downtown, none of the analysts really paid attention,” Stevens said.

But the proof was in the numbers – $684.9 million in pre-tax gaming win in 2019 – and visitors statistics reported by the LVCVA, especially the figure showing 54 percent of all Las Vegas visitors spend part of their trip downtown.

Stevens also had another ace up his sleeve: A database of active customers for D Las Vegas and Golden Gate that is pushing 6 million.

“We spent a long time educating (the analysts) on what we were doing and how we bring people down here,” Stevens said. “Nowadays, it’s tough to open anything without a database.”

The value in the land

Stevens, who is still CEO of his privately held Michigan-based auto parts company, began investing in gaming in the 1990s. His initial purchases included stock in slot machine maker International Game Technology (IGT) and an investment in the privately held Rio Casino Resort, long before its purchase by Caesars Entertainment.

“Some of the investments were small companies people hadn’t heard of,” he said.

Stevens became a stockholder in the Riviera in the early 2000s, but with the aging resort languishing, he acquired some of the company’s debt. He viewed the Riviera’s 26-acre Strip location as the most valuable piece of the business.

“We always thought the land would hold its value,” Stevens said. “At the time, the price per acre on the Strip was something like $5 million, so I thought the 26 acres was a pretty good backstop.”

Following Riviera’s bankruptcy reorganization, Stevens became one of the resort’s four non operating owners. In 2015, the LVCVA paid $191 million for the Riviera, which was demolished to make way for the current convention center expansion.

Meanwhile, Stevens carved out his space downtown.

He acquired a 50 percent stake in the Golden Gate in 2006, eventually buying out former owner Mark Brandenburg in 2010. At the time, he explored acquiring the aging Las Vegas Club across the Fremont Street Experience from the Golden Gate. But he couldn’t come to an agreement with the Tamares Group, owner of several downtown buildings including the Plaza.

Instead, Stevens turned to Fitzgerald’s, which he purchased in 2011. The property was remodeled into the D Las Vegas, paying homage to Stevens’ Detroit roots.

But the Las Vegas Club, which had closed, was never far from his mind.

He bought the property in 2015 with the idea of remodeling the building whose low-rise exterior resembled a baseball stadium. He spent nine months working with structural engineers to see if it could be done.

During that time, Stevens struck a deal to acquire the adjacent acreage from owner Steve Burnstine. The site included a small office building, a surface parking lot, Mermaid’s casino, and a strip club. The deal also included La Bayou Casino which was renovated into an expansion for the Golden Gate.

The transactions changed the scope of the project, then referred to as 18 Fremont. Instead of renovating the Las Vegas Club, which had “great bones,” Stevens said it made more sense to demolish the entire site and start from scratch.

“It got to a point where piecemealing everything together causes you a lot more long-term problems,” Stevens said. “There were certain elements of the Las Vegas Club I liked, but I didn’t want to spend the money to fix.”

He took his father’s advice to heart.

“My dad said a city block like that was begging for a major investment,” Stevens said.

Circa Resort & Casino. (Jeff Scheid/The Nevada Independent)

A hands-on operator

Derek’s brother Greg Stevens shuns the limelight. He lives in Michigan and is an engineer by trade. He visits Las Vegas a few times a month and has been key in helping turn the two aging downtown casinos into entertainment attractions.

Derek Stevens is proud that his operating team is small and oversees all elements of the casinos and sports betting. They have been together for several years.

He also knows his customers because he spends time with them. When casinos reopened after the 78-day shutdown, Stevens was at the D’s Long Bar, wearing a mask and sitting among his guests. His corporate office is now at Circa, but he loves to walk Fremont Street between his three properties, stopping to talk with downtown visitors.

He also speaks regularly to his more than 21,500 followers on Twitter. Think of legendary downtown operators Benny Binion and Jack Binion, Sam Boyd and Bill Boyd, and Jackie Gaughan, all in the social media era.

Stevens’ outside-the-box promotions draw attention.

In 2018, he stood to win $1 million on a $25,000 wager he made on Michigan winning the NCAA basketball championship. He fell a game short.

When he brought a replica of Belgium’s Manneken Pis statue to the D’s entrance off Third Street in 2015, he teased the announcement with a two-minute YouTube video of a pseudo board meeting that included scantily clad Party Pit dealers and juggling bartenders.

Ahead of June’s casino reopenings, Stevens paid for 2,000 one-way flights to Las Vegas from more than three dozen U.S. destinations on five airline carriers between June 3 and June 5. Visitors were responsible for their return flights and hotel rooms.

He estimated fewer than a quarter of the guests stayed at either the D or Golden Gate.

“Whether people decide to visit my casinos or explore other parts of the city, this is a strong indicator of how Las Vegas can quickly be restored to its former glory,” Stevens said. “I just wanted to jump in and support 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

Reno airport authority: Planned Trump rally ‘may not proceed,’ violates state’s 50-person limit on public gatherings

The Reno-Tahoe Airport Authority has advised the company that leases the hangar where President Donald Trump had planned to hold a campaign rally on Saturday that the event is in violation of a state directive limiting gatherings to 50 people and that it cannot proceed.

Tina Iftiger, senior vice president and chief commercial officer for the airport authority, in a letter to Hangar 9, LLC on Tuesday said that the company’s decision to enter into a contract to use the hangar for a 5,000 person rally violates Gov. Steve Sisolak’s emergency directive on public gatherings. The company’s lease of the hangar requires the company to “comply with all applicable state laws and directives,” Iftiger wrote.

“Such a rally is a violation of this directive,” she said.

Iftiger added that the airport authority will be “unable to ensure the safety and security of its operations with a rally of such scope” and that Hangar 9 in its lease “agreed not to interfere with or impede the operations of the” airport authority. Any protests and counterprotests associated with the rally would further strain the airport authority’s operations, she said.

“Given the above, you are hereby advised that you may not proceed with the proposed gathering,” Iftiger said.

Claude Cognian, one of the managers of Hangar 9, in an email to Iftiger Wednesday morning, confirmed that the company had offered the hangar to Trump and his campaign for a rally and in return that the campaign had offered to pay to move aircrafts and prepare the space. However, Cognian said the company was withdrawing its offer for the campaign to use the hangar in response to the airport authority's letter.

"Based on our conversation yesterday that, if we were to proceed we will be in violation of our lease with the RTTA and create a default and, we would found ourselves with no hangar for the aircrafts in the future," Cognian wrote. "Then, this leave us with no other option than to communicate to President Trump and his campaign that we cannot help him/them and we are withdrawing the offer to use the hangar."

Hangar 9 LLC is also managed by Ranson Webster, chairman of the Nevada Policy Research Institute, a right-leaning think tank, and Charles Mathewson, the former chairman of IGT.

Trump had planned to hold two rallies in Nevada this weekend, one at the Reno-Tahoe International Airport on Saturday afternoon and another at Cirrus Aviation at McCarran International Airport on Sunday evening. The Trump campaign has been holding large rallies at airports amid the ongoing coronavirus pandemic.

Chris Jones, spokesman for McCarran, said Wednesday that the airport was never contacted by Cirrus for permission to hold the rally. All hangar leases require that non-aviation events be approved by the airport. Representatives from Cirrus did not immediately respond to a request for comment.

Trump campaign spokesman Tim Murtaugh said in a statement that the president still plans to travel to Nevada on Saturday and Sunday as planned and that "additional details will be announced soon." Adam Laxalt, the former Republican attorney general and one of Trump's campaign co-chairs in Nevada, tweeted earlier Wednesday morning that Trump's "rally venues" in Nevada had been "canceled.”

Murtaugh, in the statement, also accused Democrats of putting the president's airport rallies in limbo.

"Democrats are trying to keep President Trump from speaking to voters because they know the enthusiasm behind his re-election campaign cannot be matched by Joe Biden — a historically weak candidate controlled by the radical left who could hold a campaign event in a broom closet," Murtaugh said.

However, according to the White House's own recommendations, gatherings in "red zone" counties, like Clark County, where Las Vegas is, should be limited to 10 people or fewer, while gatherings in "yellow zone" counties, like Washoe County, home to Reno, should be limited to 25 — restrictions even more stringent than the state’s.

Gov. Steve Sisolak's office, in a statement, said that it has had no "involvement or communication with the event organizers or potential hosts" regarding the planned Trump campaign rallies.

"Current statewide emergency directives include mandatory face coverings, limitations on public and private gatherings to no more than 50 people, and other measures to mitigate the spread of COVID-19," the governor's office said. "The Nevada-specific White House recommendations have consistently included recommendations to limit the size of gatherings for weeks now."

Daren Griffin, president and CEO of the Reno-Tahoe Airport Authority, said in a statement that their decision "has nothing to do with politics."

"The letter we sent is about directives and safety and not political campaigns," Griffin said. "“We would hold our tenants to the same standard whether it was a Democratic or Republican rally or any other type of gathering."

Trump’s visit will mark the president’s second trip to the state of 2020. He attended a Hope for Prisoners graduation ceremony and hosted a rally in Las Vegas in February in advance of the Democratic presidential caucus in Nevada.

Sisolak makes second appointment to the Gaming Control Board

Gov. Steve Sisolak has appointed Phil Katsaros, an executive with Certus Gaming USA, to the Gaming Control Board, bringing his career full circle.

It marks Sisolak’s second appointment to the three-member Gaming Control Board this year. In January, the governor selected Sandra Douglass Morgan to be the new chair of the regulatory board for the casino industry.

A press release from the governor’s office noted that Katsaros, who lives in Reno with his wife and two daughters, has extensive experience with international gaming markets. He previously worked for Inspired Gaming’s Virtual Sports business and IGT. His first job in the gaming industry was as an agent in the tax and license division of the Gaming Control Board.

“Phil brings over two decades of gaming experience, making him an outstanding addition to the Gaming Control Board,” Sisolak said in a statement. “I’m thrilled to appoint him and am confident he will use his diverse expertise to strengthen our gamingregulation system and promote Nevada’s gaming industry as the gold standard worldwide.”

Katsaros will replace former board member Shawn Reid, who did not seek reappointment when his term expired at the end of January.