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 to make any news or dramatic improvements in 2018.
Steve Wynn has decided to close Wynn Resorts.
He is generally credited with inventing modern Las Vegas. Without the resorts he designed, such as the Golden Nugget, Mirage, Treasure Island, Bellagio, Wynn and Encore, Las Vegas would be very different today. The Mirage revolutionized the casino center concept and paved the way for the mega-destination era in 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, with Caesars taking over the likes of Donald Trump before being bought by ITT in 1995. As a result, there was general skepticism about The Mirage’s potential profitability. The idea of an integrated mass and luxury center with no focus on gaming could not have caught on if Wynn’s design sensibility and financial prowess had shown it could be achieved.
As a result, Wynn’s departure 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 strike down PASPA, a 1992 law that bars states other than Nevada from making new bets, was the second major level of the year. Delaware has offered single betting since May (previously it only offered multiplayer), and New Jersey, Pennsylvania, Mississippi, West Virginia and Rhode Island have also started betting.
The betting hasn’t meant much in absolute dollars … yet. For example, in October, the states of Delaware, New Jersey, Mississippi and West Virginia (with a combined population of 14 million people) won almost half of all Nevada’s betting revenue. The population of Nevada is about three million people. What matters is how betting mixes 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 capture a much larger share of revenue in markets other than Nevada. This explains why both casino companies and manufacturers have rushed to enter the sports betting market. Although it is not currently a significant part of sales, it is growing,
REITs are on the rise.
REITs (Real Estate Investment Trust) have been a key part of the ownership structure of the casino industry. A REIT is a company that owns revenue-producing real estate, such as casinos, and leases it to operators (casino companies such as Penn National, MGM Resorts, and Caesars Entertainment). With REITs holding more than $3 trillion in assets across the United States, it’s no surprise that gaming companies with significant real estate holdings have moved into 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 scheme. Since then, GLPI has acquired casinos previously owned by other companies,
MGM Growth Properties and VICI, two other REIT plays, have exited MGM Resorts International and Caesars Entertainment. Both did well in 2018, adding properties (including properties not maintained by their predecessors, such as VICI’s Margaritaville in Bossier City, Louisiana) and paying monthly dividends. REITs may have come into their own in 2018, indicating that they will become a long-term staple in the gaming world.