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.
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Gasoline prices are at record highs, but resort executives and tourism leaders aren’t sounding the alarm bells.
They’ve traveled down this road before.
Las Vegas Convention and Visitors Authority Vice President of Research Kevin Bagger said Strip visitation has long weathered increases in fuel costs. But that historically hasn’t slowed traffic from Southern California along Interstate 15, which was up more than 2 percent in the first month of the year.
Still, Bagger said it was too early to determine if the current gas price increases have changed the travel plans for Las Vegas visitors.
“Over the years, there have been spikes in gas prices that historically haven’t had significant impacts on travel demand,” Bagger said in an interview earlier this month.
He said some of the feedback the tourism industry has received from Las Vegas visitors is that gas price spikes will cause people to adjust behaviors in their home life, such as carpooling more.
“It hasn’t necessarily affected trip decisions quite as dramatically,” Bagger said. “We are keeping an eye on it because inflation is at a level that we haven’t seen for quite some time.”
According to AAA, gasoline prices in the Las Vegas Valley averaged almost $5.37 for a gallon of regular unleaded. While the figure is $2 a gallon higher than a year ago and up roughly $1.30 from a month ago, gaming leaders don’t foresee any slowdown in visitation.
Nevada is second in the nation only to California for fuel price costs, with the Golden State averaging close to $6 per gallon.
Boyd Gaming Chief Financial Officer Josh Hirsberg told attendees at a recent investor meeting organized by Truist Securities last week that the company’s casinos haven’t experienced any material loss of business because of gas prices rising throughout the country.
In addition to the Las Vegas Valley, Boyd has casinos in nine regional gaming markets.
However, should the high prices continue unabated, he warned that could slow business in many drive-in gaming destinations across the U.S.
MGM Resorts International CFO Jonathan Halkyard made similar statements to Well Fargo Securities gaming analyst Daniel Politzer on March 23.
“Consumer demand recovered throughout the first quarter, with recent (hotel) occupancy trends better than expected,” Politzer wrote in a research note.
Politzer said Las Vegas has been a market with roughly 50 percent drive-in business versus 50 percent fly-in business, although MGM Resorts “skews more toward fly-in given in its premium room product.”
Despite his positive view toward the Strip, he did worry that any additional spike in fuel costs could “create some near-term demand choppiness for the leisure/transient customer.”
In an emailed statement, AAA said the cost of a barrel of oil has remained near $100. The high cost of oil has a direct effect that affects two-thirds of the cost consumers pay at the gasoline pump.
“Domestically, demand for gasoline has slowed at a time where we typically see demand go up which could be due to high gas prices and in turn is helping bring down the cost at the pump,” according to AAA.
The agency said its most recent online travel booking data still shows that people are traveling despite the high gas prices.
Overall February online bookings were up 42 percent over 2021 and up just 1 percent from pre-pandemic 2019.
“Las Vegas remains the top destination for hotel bookings,” AAA said.
Airport officials: International travel to Vegas ‘nearly restored’
Prior to the pandemic, Harry Reid International Airport had direct service to and from 11 countries, averaging more than 316,000 passengers per month.
Two years later, airport officials said 16 air carriers covering 17 international destinations have helped in nearly restoring international nonstop service to Las Vegas’ March 2020 figures.
In the last week, flights of airlines under the Lufthansa Group umbrella from Munich and Frankfurt, Germany and Zurich, Switzerland returned to Las Vegas.
Analysts have said international travel was one of the key components that had been missing in the Las Vegas economic recovery.
Reid Airport Chief Marketing Officer Chris Jones said the destination has seen consistently strong demand as pandemic restrictions have been lifted.
“It is really special to see the continued return of world travel after losing all of our international services virtually overnight in 2020,” Jones said in a statement.
He noted airline service between Munich and Las Vegas last took place in 2018.
“(Frankfurt and Zurich) enjoyed long-proven track records of carrying European visitors here to Las Vegas, and Munich is another trans-Atlantic gateway we’ve hoped to add back to our route map,” Jones said.
Lufthansa’s Eurowings Discover began twice a week service from Munich on Sunday, with normal operations taking place on Thursdays and Saturdays. The airline also resumed its four times weekly service from Frankfurt on Monday with additional flights planned on Tuesdays, Thursdays and Saturdays.
Eurowings Discover CEO Wolfgang Raebiger said in a statement that forward bookings to Las Vegas from the two German cities are already showing a high interest from German and European travelers.
Meanwhile, Lufthansa’s Edelweiss is planning flights three times a week through summer between Zurich and Las Vegas. The first landed Monday.
“We are extremely happy that after a break of almost two and a half years due to the pandemic, we can again connect one of the most fascinating cities in the world with Switzerland,” Edelweiss CEO Bernd Bauer said in a statement.
After the pandemic halted transcontinental flights to and from Las Vegas, Reid Airport’s total international destinations covered cities in just Mexico and Canada. Flights from the United Kingdom resumed in November after the White House lifted travel restrictions on many overseas markets.
By January, the airport had expanded international direct flight services between 13 cities in five countries, including the United Kingdom, the Netherlands and Panama.
Former MGM executive D’Arrigo named CFO of San Manuel
The San Manuel Band of Mission Indians, owners of the soon-to-reopen Palms Casino Resort, has named a longtime Strip executive to oversee the Southern California tribe’s business operations.
Dan D’Arrigo, who retired in 2019 after more than 23 years with MGM Resorts International, was named chief financial officer for the San Manuel tribe’s business enterprise, whose primary operation is the Yaamava’ Resort & Casino in San Bernardino County.
San Manuel is one of the largest employers in Southern California’s Inland Empire region and owns several small boutique hotels among its business operations that serve as a training ground for Yaamava’ workforce.
“One of Dan’s greatest strengths is his credibility with the investment community and capital markets,” San Manuel CEO Laurens Vosloo said in a statement. “We are very pleased that Dan is joining our team at a time when the tribe is experiencing tremendous growth and has such great potential for new opportunities.”
D’Arrigo retired as MGM’s CFO after 11 years in the position. He also served in corporate finance operations for the company. He was involved in MGM’s $4.4 billion purchase of Mirage Resorts in 2000.
Over his career, D’Arrigo oversaw financial strategies for much of MGM Resorts’ expansion, including the $7.9 billion acquisition of Mandalay Resort Group in 2005 and the financial structuring of the $9 billion CityCenter complex, which opened in 2009.
He also helped create real estate investment trust MGM Growth Properties in 2015, which is being purchased by rival VICI Properties. D’Arrigo played a role in MGM’s international growth.
“The tribe has achieved much success while also assembling a top-notch leadership team under Laurens’ direction,” D’Arrigo said of Vosloo, who joined the tribe’s gaming operations in 2014 after serving as executive director of finance for Las Vegas Sands Corp.
San Manuel leaders have said the tribe plans to reopen the off-Strip Palms this spring. The 703-room property, which was previously owned by Red Rock Resorts, has been shuttered for more than two years.
In December, Nevada gaming regulators approved the San Manuel Gaming and Hospitality Authority, a governmental entity of the tribe, to become the first American Indian-owned enterprise to own and operate a casino resort in Las Vegas.
Boyd expanding its online gaming presence through a $170M acquisition
On Boyd Gaming’s quarterly earnings conference call in February, CEO Keith Smith touted the company’s “considerable potential” from its online gaming business.
Boyd took a step toward expanding that segment on Monday, announcing it was buying Pala Interactive for $170 million.
The company, which was started by Southern California’s Pala Band of Mission Indians in 2013, provides the technology for real money online gaming and free-play social gaming to companies in eight states and Canada. Pala operates its own online casinos in New Jersey and in Canada.
In a statement, Smith said the Pala acquisition provides Boyd “full control over the technology, development and customer experience” as the company moves into “the next phase” of its online gaming strategy.
In 2021, Boyd said its cash flow from its digital operations was $24 million, a figure Smith said was expected to increase to $30 million in 2022. Boyd currently operates online gaming through its Stardust brand in partnership with FanDuel in Pennsylvania and New Jersey – two of just six states with online gaming.
“From a big picture perspective, we see the deal as Boyd’s way of preparing for the potential for longer-term (online casino) legislative expansion,” Deutsche Bank gaming analyst Carlo Santarelli told investors in a research note Tuesday.
Boyd operates 28 casinos in 10 states – including 10 casinos in Southern Nevada. Smith said Monday the company sees an opportunity to integrate online casinos with its existing land-based gaming operations as more states explore online casino legislation.
“Given our nationwide geographic distribution, significant database and established loyalty program, it makes sense for us to pursue a direct approach with our iGaming operations,” Smith said.
He added Boyd Gaming remained “fully committed” to its sports betting partnership with FanDuel, which operates both retail and online sports wagering in six states. Boyd, which owns 5 percent of FanDuel, operates sports betting in its Nevada casinos.
The Pala Tribe operates the Pala Casino Resort in northern San Diego County and began the online gaming business at the time when California was exploring online poker legalization.
Longtime online gaming executive Jim Ryan has been the CEO of Pala Interactive since its launch. He previously served as the top executive of several European-based online gaming networks.
Boyd’s purchase of Pala is expected to close in early 2023 following regulatory approval in several states and Canada.
Culinary questions Red Rock’s ‘lack’ of board diversity
Red Rock Resorts is the only publicly traded casino operator headquartered in Nevada without a female or minority board member, leading Culinary Workers Union Local 226 to question the five-person board’s make-up to the Securities and Exchange Commission.
The union said the lack of diversity is in conflict with an SEC-approved rule change last October that was initiated by Nasdaq. The stock exchange, which lists Red Rock’s shares, requires companies to have or publicly disclose why they don’t have at least two diverse directors. One director must be self-identified as female and at least one director who self-identifies as “an underrepresented minority or as LGBTQ+.”
The Nasdaq effort to boost board diversity requires the companies “to have, or explain why it does not have, at least two members of its board of directors who are diverse” by August 2023.
Culinary has a long-standing labor dispute with Red Rock Resorts subsidiary Station Casinos, whose origins go back 30 years, and wants the SEC to ask the company why Red Rock’s board, including company Chairman and CEO Frank Fertitta III, Vice Chairman Lorenzo Fertitta, and members James Nave, Robert Cashell Jr. and Robert Lewis, is still in violation of the new directive. All five have been on the board since the company went public in September 2015.
The union said Red Rock is the only one of the nine Nevada-based publicly traded casino operators that do not have female representation on the board.
In an emailed statement, a Red Rock spokesman said the company considers “many aspects of diversity relevant to our market, industry, and company strategy, including diversity of other personal characteristics, skills, and experiences” in evaluating board appointments.
“We believe that our board is diverse and effective on this basis, though we acknowledge the lack of gender diversity,” the statement said. “We also believe that while diversity is beneficial, the practice of endowing any particular category of diversity with precedence over other diversity characteristics is not an appropriate governance goal.”
An SEC spokesman did not respond to an emailed statement.
In its letter to the SEC, Culinary leaders noted in public filings that the pool of potential directors “is too small because of the gaming license process.”
However, eight of the nine publicly traded casino operators in Nevada have a combined 20 female board members. MGM Resorts International and Wynn Resorts each have four female board members. Women account for 40 percent of the Wynn board, the highest figure of the eight companies.
In its letter to the SEC, Culinary leaders said half of the 20 female board members have been appointed since 2018.
The board make-up issue is one of three launched by the union against Red Rock in the past few months.
On Tuesday, a lawsuit was filed against Station Casinos by 76 former employees who said the company violated provisions of the state’s “Right to Return” to work law.,
Last month, the union requested the Gaming Control Board open an investigation into the company after a federal judge ruled in July that it was “likely” the National Labor Relations Board (NLRB) would find Station Casinos had violated federal labor law during a campaign to defeat a union election by its non-gaming employees.
Through a spokesman, Gaming Control Board Chairman Brin Gibson declined to comment regarding the Culinary’s request for the agency to investigate Red Rock.
UNLV Boyd School of Law Professor Ruben Garcia, who specializes in labor law, said the union is “using legal methods to try and meet their objectives or reach their goals of actually getting a contract.”
Even after the union won six of seven secret-ballot elections administered by the National Labor Relations Board at Station Casinos properties between 2016 and 2019, the company continues to show no movement toward negotiating a contract.
Red Rock Resorts, through Station Casinos, operates six properties in the Las Vegas Valley but also has three properties that have been closed since March 2020 because of the pandemic. No time frame has been given for reopening the three casinos. The company broke ground this month on the $750 million Durango Casino & Resort in the southwest area of Las Vegas.
Other items of interest
Sightline Payments announced an agreement with J.P. Morgan Payments for the bank to become the primary processor for the company’s transactions covering online gaming, mobile sports wagering and cashless payments at casinos.
Sightline co-CEO Omer Sattar said the agreement with J.P. Morgan would help the company “solve some of the biggest payments challenges our industry faces.”
By adding a bank the size of J.P. Morgan, Sattar said Sightline could expand its cashless gaming systems beyond its current operations at casinos in Nevada, Indiana, Ohio and Pennsylvania.
Sattar said the partnership provides “real solutions to the millions of consumers who enjoy the modern, omnichannel gaming experience.”
Online poker players in Michigan can now win seats for events at the World Series of Poker in Las Vegas.
Caesars Digital, a division of Caesars Entertainment that oversees the World Series of Poker, went live in Michigan this week with WSOP.com. Along with daily tournaments and events, the site offers a 2022 WSOP satellite tournament that includes the chance to win entries for this year’s World Series of Poker, which begins at the end of May at Bally’ Las Vegas (soon to be renamed Horseshoe Las Vegas) and Paris Las Vegas.
Michigan joins Nevada, New Jersey and Pennsylvania where online WSOP.com players can win seats at the poker’s largest annual event.
To celebrate the launch, Caesars said 2009 World Series of Poker champion Joe Cada, a Michigan resident, was named as the company’s local poker ambassador.
Caesars operates online gaming and sports betting in Michigan through a partnership with the Grand Traverse Band of Ottawa and Chippewa Indians, who operate Turtle Creek Casino in Williamsburg, which is just east of Traverse City.
Caesars Entertainment’s casino resort in Black Hawk, Colorado is the company’s latest property to be targeted for a rebranding. The Las Vegas-based company said last week the Isle Casino Black Hawk will become Horseshoe Casino Black Hawk beginning this summer.
The Colorado casino joins Caesars’ properties in St. Louis and Indianapolis by taking on the Horseshoe name, whose origins go back to the Binion family and downtown Las Vegas. In January, Caesars said Bally’s Las Vegas would become Horseshoe Las Vegas later this year. Caesars, when it was known as Harrah’s Entertainment, acquired the three-casino Horseshoe Gaming in 2004 for $1.45 billion.
“We couldn’t be more excited to bring this legendary brand to Colorado,” Isle Black Hawk General Manager Norris Hamilton said in a statement.
Black Hawk is less than 40 miles west of Denver, the city’s primary feeder market.