The narrative that has grabbed the most headlines and inches of copy in 2018 is sports betting. The Supreme Court of the United States overturned the Professional and Amateur Sports Protection Act of 1992 in May, or as one clever headline put it – SCOTUS kicked PASPA to the curb. Following the demise of the sports betting prohibition, Delaware started taking bets. It was quickly followed by New Jersey, West Virginia, Rhode Island and Mississippi; and most recently Pennsylvania. The story will continue to be one of the most important gaming stories in the foreseeable future. Virginia, Maryland, Massachusetts and Michigan are likely to be taking bets in 2019. But taking the bets is only part of the story. Equally important in the narrative are the teams, the media and the major gaming corporations that are forming new alliances and creating new practices. MGM is also a part of the subtext of this story. MGM has signed agreements with the National Basketball Association, National Hockey League and National League Baseball. It also entered into a partnership with GVC Holdings, a bookmaking and online gambling corporation, to do the technical side of the wagering at MGM properties wherever it is legal.
New casinos up and down the East Coast and their attendant impact both positive and negative have been the second biggest story of 2018. It has been a good year for Maryland casinos, in fact, the last two years have been good for Maryland’s casino gaming. In December 2016, the $1.2 billion MGM National Harbor opened, adding an average of $50 million a month in gross gaming revenue to the state’s total. Maryland is not alone in having a record breaking 2018; New York and Massachusetts are having banner years. In each case, the reason is the same: added capacity, more casinos and more slot machines. In Massachusetts, MGM Springfield drove the revenue and the headlines. In New York, it was Resorts Catskills in the starring role. By way of contrast, Pennsylvania, Connecticut, Mississippi and Indiana are a long way from setting records this year. The growth and decline of gaming revenues in the region was the result of the new casinos, which took business from existing ones.
The “Me Too” movement also found its way into the gaming narrative in 2018. Early in the year, Steve Wynn was accused of sexual harassment. The accusations led to Wynn resigning from Wynn Resorts and selling his stock. Wait, did I just say Steve Wynn left the gaming industry? I did, Steve has been the face of innovation in gaming since 1978, but in 2018 he was forced out and for the first time in over 40 years Steve Wynn has no role in the gaming industry. In the wake of Steve’s exit, the company board of directors added several women and dropped a couple of long time board members. It also recruited Phil Satre to become chairman of the board in an attempt to shore up the company’s reputation. The company is in the process of building a $2 billion casino near Boston and the Massachusetts gaming commission is investigating. The commission wants to assure itself and the public that Wynn Resorts should be allowed to operate a casino in Massachusetts. The next hearing on the subject is scheduled for early January; it seems unlikely that after investing $2 billion in building the property that Wynn Resorts could lose the license, but it could happen. And if it does happen there are at least two suitors standing in the wings demanding a chance to take over.
Those are the three biggest stories of 2018. But there were others. Atlantic City has grabbed more than its share of the spotlight in 2018. There are two new casinos in the Boardwalk City – Hard Rock and Ocean Resorts. Actually they are old casinos that have been remodeled and rebranded. New casinos, sports betting and online gambling helped the struggling casinos in Atlantic City to show growth after years of decline. Pennsylvania did not have a record setting year for revenue, but it did set some records with legislation to expand gaming options in the state. Lawmakers in Pennsylvania authorized ten mini-casinos, slot machines in truck stops, online gambling and sports betting. Operationally nothing much has happened yet; only three casinos started taking wagers in 2018. The bulk of the expansion will take place in 2019 and 2020. When all of the new gambling options are built, opened and paying taxes, the gaming landscape will have been totally transformed.
The year might also be called the year of the REIT. Every major transaction in the industry during 2018 included a REIT component. Boyd, MGM, Eldorado, Caesars and MGM all wrapped up deals with REIT partners. The casino corporations own the operations and pay a lease fee to the REIT which owns the real estate. It looked like the perfect solution in 2018; whether REIT partnerships will be as attractive in a few years when capital expenditures and deferred maintenance becomes an issue is another question.
And there you have it, the gaming industry in 2018 in a few paragraphs. Sports betting goes national, new casinos open up and down the East Coast, Steve Wynn exits, Atlantic City gets a makeover, Pennsylvania opens Pandora’s Box and REITs come to town; what a year. The events of 2018 were enough to make a casual observer dizzy and the year fully deserves to be called a record breaker
