Will falling gas prices, rising consumer confidence help regional casinos?

Falling gasoline prices and rising consumer confidence mean good news for regional casino operators.

Whether this translates into more dollars in casino drop boxes is still up for debate.

Two analysts say the regional gaming markets — primarily those in the South and Midwest — are poised for a rebound in 2015, which could help the bottom lines of Boyd Gaming Corp., Pinnacle Entertainment and Penn National Gaming.

“Several data points have developed which could point to the beginning of a recovery,” Morgan Stanley gaming analyst Thomas Allen told investors last month.

Macquarie Securities gaming analyst Chad Beynon, who wrote in December that regional markets were poised for a comeback, reiterated that belief in January. A month earlier, combined regional gaming revenue jumped 5 percent.

“Solid data points continue to trickle in,” Beynon said.

According to travel services organization AAA, gasoline prices have fallen to an average of $2 per gallon nationwide, a level unseen since March 2004. In 27 states, average gasoline prices are below the $2 per gallon mark.

Allen said regional casino operators have seen signs of improved consumer spending and encouraging sentiment among low-end customers.

Morgan Stanley’s economic team, he said, predicts 2015 to be the best year since 2006 for the consumer, driven by improving liquidity, steady wage growth and rising home values.

Allen expressed some caution.

“Prior periods of improving trends have (proved) to be short-lived,” Allen said. “There are also several headwinds that could continue to negatively impact the industry.”

Regional gaming states have trailed the Strip in the recovery.

In Mississippi, gaming revenue fell 3.2 percent in 2014 and has decreased six of the past seven years. Ohio’s four casinos saw gaming revenue decline 1.5 percent last year. Colorado casino revenue fell less than 1 percent in the past 12 months.

In Pennsylvania, total gaming revenue exceeded $3 billion for the fourth consecutive year, but the market suffered a 1.4 percent drop compared with 2013.

There were signs of hope.

In Louisiana, Tilman Fertitta’s Landry’s spent $700 million to open the Golden Nugget on Dec. 7 in Lake Charles.

Instead of decimating the competition, the property boosted the western Louisiana market, which draws much of its customer base from the Houston area.

Lake Charles increased gaming revenue 66 percent in December, according to the Louisiana Gaming Control Board.

Both Pinnacle’s L’Auberge Lake Charles and the Isle of Capri Casino posted gaming revenue results in line with historical averages. The Golden Nugget exceeded the expectations Fertitta made public leading up to the opening, collecting $27.5 million from gamblers.

L’Auberge Lake Charles, which accounts for nearly a quarter of Las Vegas-based Pinnacle’s annual revenue, posted $32.8 million in December, which was in line with the property’s historical monthly average.

The initial results boosted Pinnacle’s prospects in the eyes of some analysts and investors.

The company, which doubled in size in 2013 when it acquired Ameristar Casinos for $2.8 billion, is moving its 15 casinos in eight states into a real estate investment trust.

Most analysts place Pinnacle high on their recommended investment opportunities.

“Given the favorable early trends at L’Auberge post the Golden Nugget opening, we believe the early results will allow management to reinforce its view that (Lake Charles) has considerable depth to absorb the new capacity,” Deutsche Bank gaming analyst Carlo Santarelli told investors.

Beynon also has a positive view of Pinnacle, which is dependent on regional markets. The company does not have a casino on the Strip and operates two small properties in Northern Nevada.

“We look to continued synergies and adoption of best practices from the Ameristar acquisition, the highest quality regional properties and healthy clientele to propel low-to-mid-single-digit cash flow growth in 2015,” Beynon said.

Boyd Gaming operates nine casinos in the Las Vegas area and the Borgata in Atlantic City, but the company also has 12 casinos spread across six regional markets.

Boyd said its regional properties grew cash flow 4 percent in the third quarter, but it was still seeing “softness” in casual gaming activity.

Beynon said he improved his outlook for Boyd, based on the Borgata’s market-leading position in Atlantic City. But the analyst sees the company growing results because of the “broadly improving” regional environment.

“For investors with a bullish economic outlook, we believe Boyd has the highest risk-versus-reward, given that a 1 percent increase in revenue results in $1 (of earnings per share) to the company’s stock,” Beynon said.

Boyd is also exploring dividing the company into a REIT, a move Santarelli does not favor. He would rather see the company sell under-performing properties and acquire better-producing regional casinos.

In 2011, Boyd spent $278 million on the IP Biloxi. A year later, the company spent $1.45 billion to acquire regional rival Peninsula Gaming, which operated five casinos in three states.

“We continue to believe a REIT structure is a long shot for Boyd and believe the company will instead focus on running the core business, deleveraging the balance sheet and pruning the portfolio,” Santarelli said.

“We view Boyd as both a buyer and seller of assets and believe the company could be aggressive in 2015 on this front,” he added.

Howard Stutz’s Inside Gaming column appears Wednesdays and Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871. Find him on Twitter: @howardstutz.

MGM Grand Plans To Add Retail And Dining To Its Strip Facade
MGM Grand President and Chief Operating Officer Scott Sibella said executives are “discussing redeveloping that entire frontage of the building out to the Las Vegas Strip.” (Todd Prince/Las Vegas Review-Journal)
Boyd Gaming planning new corporate campus
Casino operator Boyd Gaming Corp. has filed plans to build a new corporate campus. The plans call for two 10-story office buildings and a six-level parking garage in the southwest Las Vegas Valley. Boyd Gaming operates The Orleans, the Suncoast, downtown's California Hotel and other properties. The new headquarters would be just a mile from its current main office building.
Bellagio Conservatory transformed to celebrate Year of the Pig
The Bellagio Conservatory Team transformed the 14,000 square foot conservatory to commemorate Chinese New Year, the holiday that marks the end of the coldest days of winter. (Rachel Aston/Las Vegas Review-Journal)
CES 2019: Intro uses sound to connect people
Intro, a startup that is part of the Future Worlds Accelerator in the UK, has an app that uses ultrasonic sound to find people and companies nearby.
CES 2019 Video: CES wraps up another year
Time-lapse video of the action at CES 2019 in Las Vegas. (Mat Luschek/Las Vegas Review-Journal)
CES 2019: Create your own beauty products
Beauty Mix by BeautyByMe is a product that lets you create your own cosmetics and beauty products. (Mat Luschek/Las Vegas Review-Journal)
CES 2019: Picobrew’s home brew machine
Picobrew brings automation to homebrewing. (Mat Luschek/Las Vegas Review-Journal)
CES 2019: Surviving CES
What it's like to spend four days working the mammoth tech convention. (Jason Bracelin/Las Vegas Review-Journal)
Haier’s smart home
Haier presented smart home technology at CES 2019.
CES 2019 VIDEO: Foldimate makes laundry day easy
Foldimate has created a machine that will fold your laundry for you. Just feed it anything you need folded and it will do the rest. (Mat Luschek/Las Vegas Review-Journal)
CES 2019: Opte device corrects skin spots
Opte from Proctor and Gamble is a device for correcting spots and freckles from skin. It analyzes the area for spots and then covers them with a serum of matching skin tone. (Mat Luschek/Las Vegas Review-Journal)
Circa hotel-casino in downtown Las Vegas unveiled
Derek Stevens reveals Circa hotel-casino in downtown Las Vegas. He plans open by the end of 2020. (K.M Cannon/Las Vegas Review-Journal)
Circa, new casino coming to Fremont Street
Casino owner Derek Stevens announces his new property Circa, coming to Fremont Street in downtown Las Vegas in late 2020. (Michael Quine/Las Vegas Review-Journal)
Dreenk My Oeno makes wine suggestions
At CES 2019 in Las Vegas, the Dreenk My Oeno tells you all about wine.
Polaroid One Step Plus camera unveiled at CES 2019
Polaroid has moved into the digital age with its One Step Plus camera with Bluetooth. With the connected app, it turns your smartphone into a remote for the camera, along with filters and features.
Amazon is everywhere at CES 2019 in Las Vegas
Seemingly everything works with Amazon Alexa
LG Smart Mirror helps you dress snazzy
LG’s Smart Mirror is less of a mirror but more of an assistant to help get you looking snazzy. It takes your image and recommends clothes for you or matches existing clothes with new clothes, which can be purchased right from the mirror. (Mat Luschek/Las Vegas Review-Journal)
Underwater robots make waves at CES 2019 in Las Vegas
Robosea is a company dedicated to underwater robotics. They produce consumer robots for underwater filming as well as commercial products which can be used for underwater research. (Mat Luschek/Las Vegas Review-Journal)
CES 2019 - Victrola record players spin in Las Vegas
A new spin on an old favorite, Victrola record players are meeting a demand for retro products. The brand is also making furnitures with built-in speakers.
CES 2019: Slamtec robots ready to serve
Slamtec is a robotics company out of China whose goal is to provide solutions for laser localization mapping and navigation. They have created two autonomous robots that can be used in areas such as bars, restaurants and malls. (Mat Luschek/Las Vegas Review-Journal)
Mixologiq drink maker appears at CES 2019 in Las Vegas.
This is the Mixologiq drink maker.
CES 2019: Veritable smart garden
Let’s face it; not all of us have green thumbs. And herbs are particularly difficult to grow, considering their constant need for sunshine. Enter the Veritable smart garden from Exky, which does it all for you. (Heidi Knapp Rinella/Las Vegas Review-Journal)
Bonnie Springs Ranch near Las Vegas being sold to developer
Bonnie Springs Ranch near Las Vegas is being sold to a developer, set to close in March. Bonnie Springs, west of Las Vegas off State Route 159 — next to Spring Mountain Ranch State Park — spans more than 60 acres and was on the market for $31 million. The developer and his project partner are under contract to buy the ranch and plan to chop it up mostly into custom-home lots. The plans includes a 25-room motel, a restaurant and a 5,400-square-foot event barn.
Bone-conduction headphones form Aftershokz
Aftershokz offers bone-conduction headphones - headphones that don’t go in the ear.
CES Happy Hour party at Hangover Suite at Caesars Palace
Conventioneers mingled during the Hardware Massive CES 2019 Happy Hour Bash at The Hangover Suite at Caesars Palace in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Autonomous Cars and Futuristic Aircraft Rule CES
Day two of CES was dominated by autonomous cars and futuristic aircraft in the North Hall of the Las Vegas Convention Center.
TekNekSavr fights neck problems caused by smart phones
Atiya Syverson invented the TekNekSavr to help fight neck and head problems caused by strains while typing on smart phones. (Mat Luschek/Las Vegas Review-Journal)
New eyeglasses know if you fall and call for help
The French company Abeye has created eye glasses that will detect if the wearer falls and call for help. (Mat Luschek/Las Vegas Review-Journal)
Company that creates vibrator-like device claims genders bias against CES
Lora DiCarlo is a women-run start-up that creates a vibrator-like device designed for female pleasure called the Osé. This year they were awarded the CES Innovation Award in the Robotics and Drone Category, but a month later the Consumer Technology Association, which runs CES, rescinded the award and their booth. Haddock and her team believe it is a reflection of gender bias and sexism in an industry with a long history of male domination.
CES-Wagz has new pet products
Wagz has three new products to help create better lives for your pets in a digital world. One is a collar with LTE tracking and an HD camera. Also a smart pet door that only lets your pet in and out. Lastly, a device to humanely keep Fluffy out of certain areas of your home. (Mat Luschek/Las Vegas Review-Journal)
News Headlines
Home Front Page Footer Listing
You May Like

You May Like