The last week was quite an eventful one for the gambling industry with revenues in Macau for September rising more than anticipated. This marked the second consecutive month of growth, following the extended slump of over two years.
However, the Nevada Gaming Control Board announced a decrease in revenues in the region in August.
Meanwhile, Boyd Gaming Corp. (BYD - Snapshot Report) recently announced the completion of the acquisition of ALST Casino Holdco, LLC, the holding company of Aliante Casino Hotel and Spa.
On the other hand, Iao Kun Group Holding Company Ltd. provided an update on the strategic initiatives undertaken for the Macau region, after taking into account the dim prospects of recovery in the VIP market.
Recap of the Week’s Most Important Stories
1. Gross gaming revenues (GGR) for the month of September rose 7.4% on a yearly basis to approximately $2.3 billion or 18.4 billion patacas, per the Macau Gaming Inspection and Coordination Bureau. This second successive rise in September, after 26 months of consecutive decline, continued the revival in Macau.
Notably, new resorts including Wynn Resorts Ltd.’s (WYNN - Analyst Report) Wynn Palace (opened on Aug 22) and Las Vegas Sands Corp.’s (LVS - Analyst Report) subsidiary, Sands China Ltd.’s The Parisian (opened on Sep 13), attracted visits by tourists and leisure gamblers which helped boost revenues. Moreover, the rise compared favorably with the 1.1% rise recorded in Aug 2016 and the median estimate of a 4% increase by Bloomberg analysts.
Meanwhile, GGR in Macau for the first nine months of 2016 plummeted 7.5% year over year. Notably, gaming revenues in Macau have been falling since Jun 2014, given the crackdown on corruption in China. This compelled Macau officials to impose restrictions on high rollers to stop billions of dollars from being siphoned off illegally from mainland China to Macau.
Consequently, this lowered footfall at local casinos. A slowdown in China, tighter visa policies, political unrest and a smoking ban on mass market gaming floors compounded the woes.
Nonetheless, efforts undertaken by Macau operators to revive revenues by adding more non-gaming facilities in order to attract tourists and recreational gamblers have finally started yielding results, as witnessed by the positive gambling revenue numbers in the past two months.
2. According to the Nevada Gaming Control Board, Nevada gambling revenues in Aug 2016 decreased 5.2% from the year-ago period to $860.7 million. The decline reverses the solid performance witnessed in June and July. More specifically, casino revenues in the Las Vegas Strip – which accounts for more than half of Nevada’s total revenue – were down 14.8% year over year in the month. Meanwhile, Reno recorded a mere 0.04% rise in casino revenues.
3. Boyd Gaming recently completed the acquisition of ALST Casino Holdco, LLC, the holding company of Aliante Casino Hotel and Spa. Notably, Aliante marks Boyd Gaming's tenth casino property in the Las Vegas Valley and first in North Las Vegas, NV.
Boyd Gaming now possesses and operates 22 casino properties in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana and Mississippi. The company believes that being the leading gaming asset in North Las Vegas, Aliante offers an incredible opportunity to partake in the long-term development of the northern part of the Las Vegas Valley. Boyd Gaming currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
4. Iao Kun Group announced that per its all-inclusive strategic review of the VIP gaming room operations in Macau, the company has shut down its VIP gaming room at Le Royal Arc Casino, effective Sep 29. It expects the closure of the facility to bring in annual overall savings of roughly $750,000. Notably, the company had earlier announced the closure of some other VIP gaming rooms as well. With this restructuring, the company aims to enhance its operating performance.
The following table shows the price movement of the major gambling stocks over the past week and the last six months:
Last 6 Months
Over the last five trading sessions, share price movement of the major gambling stocks witnessed a mixed trend. While Boyd Gaming gained the maximum at 4.1% followed by MGM Resorts International’s (MGM - Analyst Report) rise of 2.6%, Wynn Resorts recorded a decline of 3.4%.
However, over the last six months, the price performance of gambling stocks was predominating positive. Among the stocks that appreciated the most were Caesars Acquisition Co. and Isle of Capri Casinos, Inc. (ISLE - Snapshot Report) , witnessing an increase of nearly 114.1% and 54.7%, respectively.
What’s Next in the Gambling Space?
We note that gambling stocks have oscillated between gains and losses in recent sessions and investors can expect this volatility to continue in the coming days.
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