Casino stocks are looking like a big gamble
By Paul R. La Monica, CNN Business
So much for the house always winning. Casino stocks have had a brutal year.
Penn National Gaming, which operates more than 40 US gambling locations, has plunged 40% this year. That makes Penn, which also owns a 36% stake in Dave Portnoy’s Barstool Sports betting and entertainment company, one of the worst performing stocks in the S&P 500 so far this year.
But Penn isn’t the only gambling firm hurting in 2021: Shares of Wynn Resorts and Las Vegas Sands are down more than 25% and 35% respectively.
Several factors are hitting the industry hard, and on a global scale. Covid-19 concerns are continuing to impact travel, particularly in Macao, the former Portuguese territory that is now a special administrative region of China and has become Asia’s gambling mecca. And now Beijing is cracking down on casino operators on Macao’s Cotai Strip — continued bad news for Wynn and Sands, which each own properties there.
Meanwhile, stateside, the brutally competitive gaming business is making it tough for companies to succeed even in Las Vegas. Earlier this year, Las Vegas Sands announced plans to sell the Venetian and other properties in Sin City in a more than $6 billion deal that’s expected to close in early 2022.
Even MGM Resorts — one of the few casino operators doing well on Wall Street, up more than 30% in 2021 — is scaling back in Las Vegas, too. MGM announced earlier this month that it plans to sell its famous Mirage casino on the Vegas Strip.
“We have enough of Las Vegas,” said MGM CEO Bill Hornbuckle during a conference call with analysts. The company still owns the Bellagio, Mandalay Bay and several other Nevada casinos.
Additionally Caesars, another gaming company that actually has done well this year with a 25% gain, is also looking to sell one of its casinos in Las Vegas but hasn’t disclosed which location. The company owns Harrah’s, Bally’s, Paris and Caesars Palace among others.
The industry is changing, and not just because of the pandemic’s impact on tourism. Casino companies are also wagering on sports gambling to diversify their revenue: Since the Supreme Court legalized sports wagering beyond Nevada in a landmark 2018 decision, several states have opened their doors for companies to establish both brick-and-mortar sportsbooks as well as online and mobile sports-betting apps.
But that business may also not be as lucrative as the casino companies once thought, and it’s also highly competitive. Just look at sports betting and fantasy leader DraftKings.
DraftKings stock is down nearly 25% this year, as several companies are leveraging splashy promotions and spending big marketing bucks in a fight to win customers.
The-CNN-Wire
™ & © 2021 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.
