With the year almost over, it’s time to think about the most significant events of the year in the casino industry. The gaming industry, which continues to adapt to changing social and economic conditions, failed due to news or dramatic improvements in 2018.
Steve Wynn has decided to close Wynn Resorts.
He has usually been awarded the invention of modern Las Vegas. Without the resorts he designed, such as Golden Nugget, Mirage, Treasure Island, Bellagio, Wynn and Encore, Las Vegas would be very different today. Mirage revolutionized the concept of a casino center and paved the way for the mega-target era of the 1990s. His departure from Wynn Resorts is undeniably important.
The Las Vegas Strip would have expanded in the 1990s with or without Wynn. However, without him, the new resorts would have favored Excalibur over Caesars Palace. After all, Circus Circus Enterprises was a huge success, and Caesars was the takeover of Donald Trump (among others) before ITT bought it in 1995. As a result, there was general skepticism about The Mirage’s potential profitability. The idea of an integrated mass-luxury center with no focus on gaming could not have been caught up if the sensitivity and financial acumen of Wynn’s design had shown that it could be achieved.
As a result, Wynn’s distinction from the business that bears his name and has led the industry in many respects is significant.
You can now bet on sports!
The Supreme Court’s decision to repeal PASPA, the 1992 law banning states other than Nevada from placing new bets, was the second major tier of the year. Delaware has been offering straightforward betting since May (previously it only offered multiplayer games), and New Jersey, Pennsylvania, Mississippi, West Virginia and Rhode Island have also started sports betting.
Betting hasn’t meant much in absolute dollars yet… yet. In October, for example, the states of Delaware, New Jersey, Mississippi, and West Virginia (with a combined population of 14 million people) won nearly half of all Nevada betting revenue. Nevada has a population of about three million people. The key is how betting blends with other gambling options available in the state. Sports betting accounted for less than 3% of Nevada’s gaming revenue in October. Betting generates nearly 5% of revenue in New Jersey, indicating that it has the ability to have a much larger share of earnings in markets other than Nevada. This explains why both casino companies and manufacturers have rushed to enter the sports betting market. While it is not a significant part of sales at the moment, it is growing, which is often more valuable to shareholders.
REIT is on the rise.
REITs (Real Estate Investment Trust) have been a key part of the ownership structure of the casino industry. REIT is a company that owns revenue-generating real estate, such as casinos, and leases it to operators (casino companies such as Penn National, MGM Resorts, and Caesars Entertainment). With REITs owning more than $ 3 trillion in funds across the United States, it’s no surprise that gaming companies with significant real estate ownership have moved to REITs. Penn National Gaming created the first gaming REIT, Gaming and Leisure Properties Inc., in 2013. GLPI bought most of Penn National’s assets and leased their management back to Penn, which has become a gaming REIT plan. Since then, GLPI has acquired casinos previously owned by other companies and has played a significant role in the restructuring of the industry.
MGM Growth Properties and VICI, the other two playing REITs, have exited MGM Resorts International and Caesars Entertainment, respectively. Both did well in 2018 by adding real estate (including those not maintained by their predecessors, such as VICI’s Margaritaville in Bossier City, Louisiana) and paying monthly dividends. The REITs may have become their own in 2018, indicating that they will become a long-term staple in the gaming world.