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State of the Union: NJ, Scientific Games, Caesars, IN and more

Insight | Analysis

This week’s State of the Union, in partnership with Segev LLP, includes quarterly financial results from some of the US casino industry’s largest operators and suppliers. Also covered are the latest sports betting figures from New Jersey and two Midwestern states, all of which have been impacted by Covid-19.

Covid-19 disruption erodes NJ revenue in April

The New Jersey Division of Gaming Enforcement has reported a 68.9% year-on-year drop in gaming revenue for April, after the novel coronavirus (Covid-19) pandemic shut down casinos and suspended sporting events.

Overall gambling revenue in the state amounted to $82.6m in April, down from $265.4m in the same month last year and also a drop of 49.5% from $163.5m in March of this year.

Casinos in New Jersey were unable to generate any gaming revenue during the month, having been forced to close from March 16, in line with state-wide orders to help combat the spread of coronavirus. Land-based casinos posted $207.6m in revenue in April of last year.

Scientific Games Q1 revenue declines amid Covid-19

Scientific Games saw revenue decline 13.0% to $725m and losses increase to $159m as the novel coronavirus (Covid-19) hit the business in terms of both lower revenue and higher impairment costs.

The supplier made $422m through gaming services, down 8.1% year-on-year, while product sales fell 29.5% to $168m. Instants contributed a further $135m, down 3.6%.

Of its $725m in revenue, Scientific Games made $318m through its land-based division SG Gaming down 25%. This decline in gaming revenue was largely due to the effects of Covid-19, which led to casino closures across the globe.

Caesars returns to profit in Q1 despite revenue drop

Caesars Entertainment Corporation (CEC) reported $123m in comprehensive profit for the first quarter of 2020, despite experiencing a year-on-year drop in revenue due to enforced casino closures as a result of the novel coronavirus (Covid-19) outbreak.

Net revenue for the three months through to March 31, 2020, totalled $1.83bn, down 13.6% from $2.12bn in the corresponding period last year.

CEC said the business had performed well over the opening two months of the year, with revenue in January and February rising by 12.0% year-on-year, primarily due to growth in Las Vegas and Indiana.

Indiana sportsbook handle falls further in April

Indiana sportsbook revenue and handle continued to decline due to novel coronavirus (Covid-19), with sportsbooks in the state reporting revenue of $1.6m for April, down 71.7% from March.

Betting handle declined to $26.3m, 64.8% below March’s figure, which was already down 60% from February. Both revenue and handle figures were record lows since sports betting became legal in Indiana on 1 September 2019.

The state took in tax of $148,189, down 71.6%.

Louisiana Senate passes sports betting referendum bill

The Louisiana State Senate has passed a bill to legalize sports betting in the state, by a margin of 29-8, and now passes to the House of Representatives for further scrutiny.

SB130 – proposed by Senator J. Cameron Henry – aims to hold a parish-by-parish referendum on whether to allow sports betting in Louisiana. Only those jurisdictions that vote in favour will be permitted to offer wagering.

The proposition would appear on the ballot of the 3 November, 2020 election.

Eldorado Resorts swings to Q1 loss amid Covid-19 shut-down

Casino operator Eldorado Resorts posted a $175.6m net loss for the first quarter of 2019 after a strong start to the period was hindered by the closure of its venues as a result of the novel coronavirus (Covid-19).

Eldorado chief executive Tom Reeg explained that the business had enjoyed a very strong start to the year, with revenue for the first two months up 6.6% year-on-year, and earnings before interest, tax, depreciation and amortisation (EBITDA) up 24.7%.

“However, the strength in January and February was offset by Covid-19 related weakness due to the mandated closure of all our properties by March 18, 2020,” Reeg said. “As a result, Eldorado generated first quarter same-store net revenues of $473.1m and EBITDA of $102.5m, down 17.5% and 33.0% year over year, respectively.”

Iowa sportsbook revenue plummets 87.2% in April

The Iowa Racing and Gaming Commission (IRGC) has reported an 87.2% month-over-month decline in sports betting revenue for April, after the novel coronavirus (Covid-19) pandemic all but cleared the sporting calendar and shuttered the state’s casinos.

Revenue for the month dropped to $150,331, with amounts wagered dropping to $1.6m, down from $19.6m in March. This was by far the lowest monthly handle reported since the market opened, and exclusively generated online, after the bricks and mortar venues shut from March 17.

Furthermore, prospective new online customers are required to register in person at a land-based facility before they can place bets via websites and apps, meaning there was no way to sign up new customers.

Twin River sees Q1 momentum checked by Covid-19 closures

Casino operator Twin River Worldwide Holdings has reported a 9.5% year-on-year decline in revenue for the first quarter of the year, after a strong performance in January and February was offset by casino closures in March.

For the two months to February 28, revenue was up 23.4% at $90.3m, with the business benefiting from the addition of Dover Downs and the acquisition of the Golden Gates, Golden Gulch and Mardi Gras casinos in Colorado.

This was offset partially by the underperformance of the Twin River Casino Hotel in Lincoln, Rhode Island, though that property had shown signs of recovery during that two month period.

Delaware reports igaming revenue rise for April

The Delaware Lottery has revealed a 39.0% year-on-year rise in online gambling revenue for April, aided by a hike in new registrations over the month.

The three licensed operators in the state – Delaware Park, Dover Downs and the Harrington Raceway – together generated $856,182, up from $615,772 in the same month last year and also higher than $514,959 in March 2020.

Video lottery games were again the main source of income, generating $591,442 in revenue during April, ahead of table games on $180, 706 and poker rakes and fees with $84,034.

MGM Resorts reveals safe reopening plans for US casinos

MGM Resorts has set out a new strategy for safely reopening its casinos, having been forced to close venues in March due to novel coronavirus (Covid-19).

The operator has devised a seven-point safety plan, based on advice from medical and scientific experts, to deter the spread of the virus, protect customers and staff, and respond to potential new cases.

“Preparing for the moment we can re-open our doors, MGM Resorts focused on developing a plan that puts health and safety at the centre of everything we do,” MGM Resorts acting chief executive and president Bill Hornbuckle explained.

AGS slips to loss in Q1 as Covid-19 casino closures hit

Gaming technology supplier AGS has said that enforced closures as a result of the novel coronavirus (Covid-19) global pandemic were to blame for it posting a loss of $22.6m in the first quarter.

Revenue in the three months to March 31, 2020, totalled $54.3m, down 25.6% from $73.0m in the same period last year.

Michigan casino revenue down 39.2% in opening four months

The Michigan Gaming Control Board has revealed that revenue generated by the three commercial casinos in Detroit was down 39.2% year-on-year during the four months to the end of April 2020.

Revenue for the year-to-date period amounted to $299.2m, down from $492.1m in the same four months last year. This was down to the closure of the three casinos since March 16 as a result of novel coronavirus (Covid-19).

OIGA suspends two members over state compacts

The Oklahoma Indian Gaming Association (OIGA) has voted to suspend two of its members after they signed new gaming compacts to offer Class III games, including sports betting, in the US state.

The Otoe-Missouria Tribe and the Comanche Nation have had their membership put on hold, following a vote by the OIGA board and membership to amend its bylaws to allow the suspension.

GAN raises $62.4m from US IPO

Gambling software provider GAN has revealed that it was able to generate a total of $62.4m from its US initial public offering, signficantly more than it had initially anticipated.

GAN sold 7,337,000 ordinary shares, priced at $8.50 per share. This included the underwriters’ option to buy 957,000 ordinary shares, which was taken up in full.