July 2015 Las Vegas Stock Recap

With the calendar now showing August 2015, let's take a look back and see how Las Vegas stocks did in the month of July.

Boyd Gaming increased by almost 15 percent as the company reported strong second quarter earnings.

MGM Resorts International had a very eventful July. They first sold Circus Circus Reno and Silver Legacy to Eldorado Resorts. Then came the news that showtimes were being cut at the Mirage Volcano. The bombshell came when it was reported The Mirage was sold to Starwood Capital. All of this resulted in a 7.5 percent increase to the stock price. It should get even more interesting when MGM reports earnings next week.

Las Vegas Sands reported strong Las Vegas trends in the face of a stabilizing Macau market.

Wynn Resorts stock was up almost five percent on their second quarter earnings report. The earnings conference call got interesting as Steve Wynn talked about lowering craps odds to 2X.

Penn National had another good month, up almost four percent. Along with reporting strong earnings, Penn has plans for the Tropicana which could include the potential for a new hotel tower in the future.

July was a roller coaster ride for Caesars Entertainment. The month started out with Gary Loveman officially being replaced as CEO by Mark Frissora. Later in the month the company's stock jumped up 22% in one day on positive bankruptcy news only to fall 40% the very next day on negative news. The end result was the stock down fifteen percent in July. Next week could be even more volatile as Caesars reports earnings and Frissora has his first conference call.

Company	Symbol	Start	End	Change
Boyd	BYD	14.95	17.09	+14.31%
MGM	MGM	18.25	19.62	+7.51%
Sands	LVS	52.57	56.04	+6.6%
Wynn	WYNN	98.67	103.23	+4.62%
Penn	PENN	18.35	19.08	+3.98%
Caesars	CZR	6.12	5.21	-14.87%

The Cromwell eKey

I had heard about The Cromwell allowing guests to use their iPhones as their room key, but never really saw how it would work until I stumbled upon this video today.

In the future everything will be on your phone, so this is just one step closer to that reality.

While I'm fairly accepting of new technology I have to wonder if this is really more convenient. I've never swiped a hotel room key before and thought, "You know, this would be so much better if I had to download an app and then enter a pin to open my door."

The potential to skip a check-in line could be the real game changer (buzzword alert) with this app - especially if Caesars Entertainment brings it to other Las Vegas hotels. Not having to wait an hour to check in at The Rio during peak times would be fantastic.

One downside - skipping check-in doesn't give you a chance to give the desk clerk a crisp twenty dollar bill in hopes of getting a "free" upgrade. This little known secret is called "The $20 trick" and you heard it here first.

Steve Wynn talks about Craps Odds

Yesterday I wrote a blog post about the Wynn Resorts second quarter earnings call. Mentioned in that post was the discussion of limiting craps odds to 2X. Many people seem to be interested in that topic, so I figured I would write a follow up post and include a transcript.

Steve Wynn talking about craps and more on the Wynn Resorts second quarter 2015 earnings conference call:

"I'm in the casino every day, and on the phone with my people. We've readjusted our floor. On the 4th of July. Interestingly enough, many of the games in Las Vegas have become marginally profitable.

Years ago down at Binion's they started at the crap table of giving ten times odds. If you bet a hundred dollars on the line you could bet a thousand dollars on the free odds behind the line - if you bet the pass line.

I'm getting a little technical, but in the old days in dice whatever you bet on the line you could bet the same amount behind the line. And that was a hold percentage of a little under one percent.

Then they started giving double odds compared to the amount of money you bet on the pass line, and that lowered the house percentage to point five seven.

Then it became a pattern on the Strip of what's called the three-four-five. Depending on what numbers you were betting on the crap table, to come up before number seven came up. You could get three times odds, four times odds, or five times odds. You know there are pairs of numbers on a dice table. Four and ten have two to one odds. Five and nine have a different set of odds, and six and eight are six to five. Well depending on what number you were trying to get, you could get three, four, or five times odds. That became a house advantage of point three seven.

With three dealers and a box-man, and half of a floor man for every table - craps is not a really profitable game at that level.

So I changed the casino. In effect I raised the price. And I went to double odds only. Except for extremely high play with a thousand dollar minimum bet.

I also rearranged the floor in the casino to put our specialty games that are very popular with the public - that have a higher margin - and I put them in the hundred percent location. And I moved my games with less of a margin to secondary locations. Those changes have worked out favorably to us in the past three weeks, and that kind of re-examination... our slot floor has been re-done. We win more money with less games now. These are some of the reasons why we make more money than anybody else in Las Vegas.

Now, some of the operators will copy us. You know we're not allowed to talk to one another because of obvious legal implications of price fixing, but we don't really care what the other guys do. We run our own business the way we see we should, and we're not in business to offer games that don't make money. And I don't mind saying that publicly. So we've done quite a bit of work in tightening up the way the casino works.

I know our competitors are on the call and they probably, everybody knows it the minute you make a change like that in Las Vegas it goes around town like wildfire. But those are some of the things we're doing, and it touches every aspect. We're constantly re-examining everything we do here. We sit in my office and discuss the most fundamental aspects of this industry every single week. We are not so much concerned with what has been, or what is, as we are concerned about what might be. And that's a principal truth of our company whether it's in China or in Las Vegas, or Boston or wherever."

Wynn Palace Macau Opening Date June 25, 2016

UPDATE: November 18, 2015 - The opening date has been moved to June 25, 2016.

Wynn Resorts today reported financial results for second quarter 2015. Macau operations were down 35.8% which was to be expected given the trends in that market. Las Vegas operations were down 6.2% overall with casino revenue down 26.2% due to a large drop in baccarat business.

On the earnings conference call Steve Wynn announced that Wynn Palace in Macau will have a targeted opening date of March 25, 2016.

Talking about Las Vegas - Wynn said the company is enjoying "comfortable" growth, but it's not an explosive growth market by any means. Lower gaming numbers being offset by strong non-gaming.

Steve also talked about his decision to limit craps to 2X odds saying, "We are not in business to offer games that don't make money." After overhead costs craps isn't a very profitable game according to Wynn, and he thinks 2X odds might spread throughout the Strip. He also talked about moving higher margin games to higher traffic areas of the floor while moving lower margin games to the back of the casino.

When asked about possible mergers or acquisitions, Wynn said there aren't any imminent discussions going on. He would only make a deal if it made sense going forward, "I'm more interested in tomorrow's newspaper than yesterday's newspaper."

After all the analyst questions were asked, Wynn took a moment to talk about the Boston / Everett project saying, "I'm an eternal optimist. It will feel good when they stop hitting us."

June 2015 Revenue and Visitation Numbers

June 2015 Gaming Revenue and Visitor Statistics have been released.

Las Vegas visitation was up 2.4% in June. Average room rates were pretty flat with the exception of Downtown, where they dropped 22.5%. I'm not exactly sure why rates dropped so much downtown but it's a welcome trend for bargain hunters.

Gaming numbers were hurt by lackluster high roller play as statewide baccarat was down 56% from last June. That 56% figure is huge, but this period in 2014 was exceptionally strong for baccarat, so a decline wasn't altogether unexpected. The weak baccarat resulted in Las Vegas Strip revenue down 16.31% overall.

It appears some of the factors that have caused a decline in Macau gaming could have reached Las Vegas. Those include tighter anti-corruption regulations that might prevent Chinese VIP players from travelling overseas. The strong dollar has also been mentioned as a part of the equation.

Downtown table games were strong across the board while slots were down - the combined total resulted in gaming revenue up 2.26%. The strength in the Las Vegas locals market continued on the Boulder Strip which was up 6.28% while North Las Vegas was down 0.13% year over year.

Aside from the soft baccarat numbers it looks like June was a pretty average month for both visitation and gaming statistics.

Mirage Sold to Starwood Capital Rumor

Update: August 4, 2015. Jim Murren just said on the MGM 2nd quarter earnings call that "The Mirage is not on the market." While a property can't be on the market if it's already sold, it's looking more and more like the below report was just a rumor and unlikely to happen.

The Mirage has been sold to Starwood Capital Group - although the official announcement won't be made for a few weeks according to a Las Vegas Advisor report.

LVA is also reporting that Paragon Gaming will operate the casino once the deal is complete.

MGM Resorts International is the parent company of The Mirage. They have been selling off a number of assets recently, including exiting the Reno market by selling Circus Circus Reno and Silver Legacy a few weeks ago.

The question is WHY is MGM selling assets?

This could be a shot in the dark but my guess is Japan. There have been a few rumblings recently about Japan possibly opening up for gambling. Las Vegas Sands CEO Sheldon Adelson and Boyd CEO Keith Smith have both made comments about Japan within the past week.

MGM has their own Japan ties - as the Bellagio fountains will be hosting a Japanese Kabuki performance in August. An MGM co-sponsored Kabuki festival is also being planned for Las Vegas in 2016.

Even if Japan isn't the reason for selling assets - MGM currently has the $1.2 billion MGM National Harbor starting construction, along with Massachusetts and Macau projects underway - so the extra cash from the Mirage sale will be put to good use either way.

Vegas Chatter is Closing

Popular Las Vegas blog vegaschatter.com will be shutting down at the end of the week.

Vegas Chatter is owned by publishing giant Condé Nast. While they clearly had a strong readership, it appears the blog wasn't making enough money for the parent company. I've also read rumors that Las Vegas wasn't a highbrow enough location for the upper crust Condé Nast image.

The blog was criticized for their puff pieces, but they did a few things very well. The first was posting constant content. Being a corporate owned blog they were obligated to make multiple posts per day, and they certainly did just that. The hardest part of blogging is keeping it updated, but Vegas Chatter never suffered from a lack of content.

Vegas Chatter was also able to employ several local Las Vegas writers who were able to go and report on new Vegas establishments shortly after they opened. While other Las Vegas blogs claim to have better insight and commentary, many of them are located outside of Las Vegas and lack that "man on the street" quality.

Cosmopolitan Pool Deck Fire

A fire broke out at The Cosmopolitan Bamboo Pool on Saturday, July 25, 2015. Artificial palm trees and cabanas reportedly caught fire after a lit cigarette was allegedly discarded from a balcony above the pool deck.

Smoke from the poolside fire could be seen throughout the Las Vegas valley. Thankfully the fire did not result in any deaths. One person was reportedly hospitalized for smoke inhalation.

The Bamboo Pool and other areas of the hotel were temporarily closed, but damage appeared to be relatively minor and could have been much worse. Cosmopolitan's other two pools (Marquee Day Club Pool and Boulevard Pool) were not affected and remain open.

Fires like this bring back memories of the tragic MGM Grand (now Bally's) fire in 1980 that took 87 lives and caused stricter fire regulations to be adopted in Las Vegas hotels. The last major fire at a Las Vegas hotel was at the Monte Carlo in 2008.

John Wells on YouTube captured this dramatic footage of the Cosmopolitan pool deck fire: