Gambling Stock Roundup: Macau Woes Continue, Wynn Resorts and Boyd Gaming Dominate Headlines

Though there were no major developments in the past week, it seems that casino operators continued their efforts to survive amid tough market conditions. While Wynn Resorts Ltd. (WYNN) received a long-awaited license approval for a casino in Everett, Penn National Gaming Inc. (PENN) announced the opening of the Hollywood Gaming at Mahoning Valley Race Course in Ohio – marking the fourth holiday facility in Ohio.

In one other development, Boyd Gaming Corp. (BYD) made a few senior management changes while re-affirming its EBITDA guidance in the current weak environment, which is commendable. Meanwhile, Caesars Entertainment Corp. (CZR) is in talks with more creditors to shed its debt.

However, a weak environment in Macau continued to impede the efforts made by companies in this space to overcome challenges. A sluggish outlook for the region -- along with lowering of ratings, estimates and target prices -- resulted in a continuous decline in share prices of gambling industry firms. (Read last week’s development: Gambling Stock Round Up for Sep 15, 2014)

Recap of the Week’s Important Stories:

1. Wynn Resorts has reportedly won the race for the lucrative $1.6 billion Boston-area casino license. Wynn Resorts and Connecticut-based Mohegan Sun were under strict scrutiny by gambling regulators for a casino license in Boston area. The Las Vegas-based casino giant triumphed over rival Mohegan Sun mainly on its financial strength. Mohegan Sun had proposed a $1.1 billion casino at the Suffolk Downs horse racing track in Revere. MA. However, the Massachusetts Gaming Commission finally voted in favor of Wynn Resorts’ plan to turn a former chemical plant site on the Mystic River in Everett into a casino resort. (See: Wynn Resorts Wins Lucrative Boston-Area Casino License)

2. Boyd Gaming announced a few senior management changes and re-affirmed its EBITDA guidance in the range of $580 to $600 million for 2014. Effective immediately, Keith Smith, President and Chief Executive Officer will replace Chief Operating Officer Paul Chakmak who is leaving the company. In July, the company had made a few executive changes to strengthen its operations leadership team. All members in those positions will now report to Smith.

3. Penn National Gaming announced the opening of Hollywood Gaming at Mahoning Valley Race Course in Ohio. This $250 million property features 850 Video Lottery Terminals, a variety of food and beverage options plus a sports bar and entertainment venue. A one-mile racing track is also set to open on Nov 24. It will also have an advanced simulcast theater through which patrons can wager on races throughout North America. The company expects this gaming complex to attract one million patrons per year.

This property will mark the opening of the fourth holiday facility in Ohio and second over a period of three weeks. On Aug 28, the company announced the opening of Hollywood Gaming at Dayton Raceway in Ohio.

In one other development, Penn National Gaming announced that Timothy J. Wilmott – Chief Executive Officer of the company has been included in the board of directors, subject to customary regulatory approvals. This appointment would increase the number of board members to seven. Wilmott joined Penn National Gaming in Feb 2008 as President and Chief Operating Officer and was appointed Chief Executive Officer in Nov 2013.

Over the eleven-month period -- since the company separated its real estate assets from operating assets -- Wilmott, with his efficient team management, has consistently delivered strong margins from existing operations, successfully opened new facilities and developed exciting expansion opportunities in new markets, including Ohio, Massachusetts and California.

4. Caesars Entertainment is now reportedly in talks with more lenders to shed its debt load. Earlier the company was in talks with some senior creditors to restructure a portion of its $24.2 billion long-term debt. Currently, it is working constructively with creditors to deleverage its most indebted unit, Caesars Entertainment Operating Company and create a sustainable capital structure. This marked the beginning of the company’s official attempts to restructure at least $12 billion of bonds and $6.2 billion of loans.

Caesars has not been able to post profits for a very long time, failing to recover from its debt load since the recession. The company has made attempts to get rid of its debts earlier, as well.

Performance

Share prices of most of the stocks declined last week. In the last five trading sessions, Boyd Gaming lost the most with its share price declining 3.2%, followed by MGM Resorts International (MGM) and Melco Crown Entertainment Ltd. (MPEL). Meanwhile, Caesars Entertainment was the top gainer with a 13.4% increase followed by Wynn Resorts, which gained 1.5% on approval of a license.

Over the last six months, all gambling stocks have declined with Caesars Entertainment and Caesars Acquisition Company (CACQ) declining the most – 48.1% and 36.6%, respectively.

Company	Last Week	Last 6 months
WYNN	1.5%	-22.8%
LVS	-0.6%	-24.8%
MGM	-2.7%	-11.8%
MPEL	-2.5%	-34.2%
CACQ	-0.1%	-36.6%
BYD	-3.22%	-20.2%
CZR	13.4%	-48.1%

What’s Next in the Gambling World?

Since no major development is expected next week, the performance of gambling stocks is not expected to change significantly.

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