Indy Gaming: Station Casinos disputes disciplinary complaint allegations but is replacing its sports betting system
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Less than a month after Nevada gaming regulators filed disciplinary action against Station Casinos over serious glitches in the company’s sports wagering system, the casino operator said the matter should be dismissed.
The company is also dumping the system and replacing it with new software.
In an answer to a two-count complaint filed by the Gaming Control Board on Sept. 13, attorneys for Station Casinos and its parent Red Rock Resorts said the company voided approximately 348 betting tickets wrongly issued for events where the outcome was already known.
Neither customers, the company nor the state “achieved any monetary gain or suffered any monetary loss as a result of the ostensible wagering transactions,” Station Casinos said in a 10-page response filed with the Control Board on Oct. 7.
The company said it disagreed with the “characterization” of the incidents listed by the regulators, who asked the Nevada Gaming Commission to impose a yet-to-be-determined fine.
“Because the Board cannot cite to a violation of any specific gaming statute or regulation by Station, because Station took actions in defense of the integrity of the gaming industry in order to stymie patrons seeking to game the system, and because there were no economic consequences whatsoever as a result of the ostensible transactions, there is no legitimate legal basis for disciplinary action against Station in this case,” Station attorneys wrote.
Still, the company’s troubled sports betting system, provided by Stadium Technology Group, is headed to the scrap pile.
Gaming software provider GAN Limited on Friday announced an agreement to build out the sports betting infrastructure for Station Casinos for the company’s retail sportsbooks, betting kiosks and the STN mobile app.
GAN announced the deal hours before a planned “investor day” with analysts and shareholders. GAN Vice President of Investor Relations Robert Shore termed the contract a “significant milestone” for the Southern California-based technology provider because it will be its first with a Nevada casino operator. The company currently provides technology for Station Casinos’ free play social gaming platform.
GAN’s sports betting platform is being used by sports betting operators in six states. The company provides the sports wagering technology for casino and racetrack operator Churchill Downs in five states, including recently launched operations in Arizona.
In Nevada, the GAN sports betting system still requires regulatory technical certification and licensing by the Control Board and the Nevada Gaming Commission.
The company, however, has caught the attention of the investment community as it moves to expand its presence in the ultra-competitive U.S. sports betting market. Currently, 28 states and Washington D.C. have legal and regulated sports betting, with four more states ready to launch.
B. Riley Securities gaming analyst David Bain suggested GAN’s move into Nevada could provide a showcase opportunity for the upstart company. He estimates Station Casinos has roughly 40 percent market share of the Las Vegas locals sports betting revenue.
Bain calculated the agreement as being worth $5 million in revenue annually to GAN starting in the second half of 2022.
Jefferies gaming analyst David Katz said GAN’s sports betting system offers additional tools and data services for operators.
“We believe the company's business-to-business offering presents a meaningful opportunity, as we expect expansion within the U.S. should support the company's product line,” Katz told investors in a research note.
Macquarie Securities gaming analyst Chad Beynon, who met with GAN officials during this month’s Global Gaming Expo, told investors the company is pushing into expanding sports betting markets in Canada and Latin America.
“Management continues to speak to a full pipeline and highlighted a meaningful level of conversations not only around new client opportunities but also displacement of incumbents,” Beynon wrote in a post G2E research note.
LVCVA land sale could lead to a Las Vegas casino ‘unlike any other’
Count Bo Bernhard, executive director of UNLV’s International Gaming Institute, among the supporters of a South American gaming company that wants to build a casino on the Las Vegas Strip.
Last week, the Las Vegas Convention and Visitors Authority agreed to sell a 10-acre parcel at the Strip and Elvis Presley Boulevard for $120 million to CB Investment SpA, a company owned by South American businessman Claudio Fischer.
The agreement requires the company to develop a resort or hotel on the site, which was part of the 26-acre Riviera Hotel site the LVCVA acquired in 2015 for $182.5 million. The Rat Pack-era resort was demolished a year later and the site now houses the Las Vegas Convention Center’s $1 billion West Hall expansion.
“We’ve been working for the past two-and-a-half years to market and sell the 10-acre parcel,” LVCVA CEO Steve Hill said at last week’s board meeting. “Towards the end of 2019, Claudio made an offer the LVCVA was prepared to accept in early 2020, then the pandemic hit. The conversations resumed in late 2020, early 2021 and that is what led us to where we are today with this land sale.”
Fischer is co-founder of Sun Dreams, the largest casino resort operator in Latin America, with 19 properties in Chile, Argentina, Panama, Colombia and Peru. The hospitality-focused company has gaming, hotels, 66 food and beverage outlets and convention centers.
Bernhard doesn’t know Fischer, but said he had visited both Sun Dreams and Monticello, the company’s primary Chilean resort, multiple times. He said the company would “bring a new flavor to the casino experience” in Las Vegas.
Bernhard compared the South American casinos to the Rio Resort’s once-popular “Masquerade Show in the Sky” aerial parade at the off-Strip casino. The show has been closed since 2013.
“Their casino floor is unlike any in Las Vegas,” Bernhard said. “Think of the Rio show in the sky but at ground level. It’s a party unlike any other in global gaming. They will add real creativity and fun to the Strip.”
Bernhard also noted executives from the company graduated from the International Gaming Institute’s annual Executive Development Program.
Fischer’s business portfolio ranges from casinos to residential and commercial real estate, primarily in South America.
Hill said Fischer has long been interested in Las Vegas. He and LVCVA Chief Financial Officer Ed Finger traveled to Chile to meet with Fischer a few months before the pandemic hit.
“We visited his flagship property, the Monticello, south of Santiago, Chile,” Hill said. “The property is beautiful and features a convention center, arena, and a hotel and casino in a really great setting.”
He added that Fischer has long had an interest in Las Vegas.
“Several of our companies here in town know Claudio, know him to be a very credible operator and someone who we would welcome to Las Vegas,” Hill said. “We think Claudio would be a great neighbor.”
The LVCVA plans to use proceeds from the sale for LVCVA capital projects, including the next phase to renovate older portions for the Las Vegas Convention Center’s 3.2 million square-foot campus.
Analyst wants to know if Penn National wants to operate a Strip resort
Does regional casino operator Penn National Gaming still have eyes for Las Vegas? The answer to that question may come on Nov. 4.
In an Oct. 14 research note to investors, J.P. Morgan gaming analyst Joe Greff brought up Penn’s purported interest in owning a Strip resort as one of a half-dozen items he will be paying attention to when the regional gaming company releases third-quarter results.
Penn National operates 43 casinos in 20 states, including M Resort in Henderson and two small casinos in Jackpot, located in the northeast corner of Nevada near the border with Idaho.
“Penn recently indicated interest in buying a Las Vegas Strip property? Is this interest still alive and how would it tie into its other businesses?” Greff wrote. The analyst didn’t respond to an emailed question on when Penn executives made that remark.
At least one property in which Penn National took an interest is off the market. The company was taking a hard look at the Cosmopolitan of Las Vegas, a source close to the casino operator told The Nevada Independent. “It’s a unique property,” the source said.
On Sept. 27, Blackstone announced it was selling the Cosmopolitan to an ownership group for $4.055 billion with MGM Resorts International paying Blackstone an additional $1.625 billion to operate the resort under a lease agreement.
In March 2020 — at the outset of the pandemic — Penn sold Tropicana Las Vegas to Gaming and Leisure Properties in a deal valued at $337.5 million. Penn, which bought the Tropicana in 2015 for $360 million, is still operating the casino under a lease agreement.
In April, Bally’s Corp. agreed to buy the resort for $308 million but the transaction is still awaiting Nevada regulatory approval.
Commercial casino industry nationwide headed toward a record year
The gaming industry’s nationwide post-COVID rebound didn’t slow down in August.
For the sixth consecutive month, commercial casinos in 25 states recorded more than $4.4 billion in gaming revenue, according to statistics compiled by the American Gaming Association (AGA).
Through August, the nation’s 2021 commercial gaming revenue was more than $34.15 billion, already surpassing the nearly $30 billion generated during COVID-19 ravaged 2020 and 18 percent ahead of the same period in 2019.
In 2019, commercial casinos collected $43.6 billion in gaming revenue, the highest-ever annual total.
Gaming revenue increased in 20 of the 25 states compared to August 2019. Four states saw modest revenue declines, but Louisiana casinos suffered a 28.2 percent drop after Hurricane Ida forced many of the state’s southeastern casinos to close toward the end of the month.
After the first eight months of 2021, 19 of 25 commercial gaming states are tracking ahead of 2019 gaming revenue levels, including Nevada, which is up 8 percent and on pace to crack the $12 billion annual revenue figure the casinos statewide have reached just three times, the last being in 2019.
According to AGA reports, gaming revenues from traditional land-based and riverboat casinos during August accounted for $3.92 billion of the monthly total. Sports betting revenues of $217 million from 22 states and Washington D.C., and online gaming revenues of $305 million from five states during August accounted for 11.7 percent of the nations’ commercial gaming revenue in the month.
Other items of interest
New Jersey became the first state to report single-month sports wagers of more than $1 billion, according to the New Jersey Division of Gaming Enforcement. The $1.01 billion figure in September was fueled by wagering on college and professional football.
Analysts said New Jersey’s large population and the state’s proximity to New York City helped boost the numbers. New York does not allow mobile sports wagering but many New York City residents have opened sports betting accounts with racetracks in Northern New Jersey and Atlantic City casinos and will often cross into The Garden State to make wagers. According to New Jersey gaming regulators, more than 90 percent of the wagers during September were placed through mobile devices.
“By embracing mobile sportsbooks and making sports betting more accessible than even Nevada, New Jersey has now achieved an important milestone of more than $1 billion wagered on sports in a single month.” Jane Bokunewicz, director of the Lloyd Levenson Institute at Stockton University, which studies the gambling industry, told the Associated Press.
New Jersey allows remote registration for mobile sports betting. Nevada requires customers to initially register their mobile sports betting accounts in person at casino sportsbooks.
Nevada’s single-highest month for sports wagers was in October 2020, when sportsbooks took in $659.6 million. According to the Gaming Control Board, Nevada sportsbooks have taken 36.7 percent more in sports wagers through August, compared to the same eight months of 2019, which saw a single-year record of more than $5.3 billion in sports bets.
Former Gaming Control Board Chairwoman Sandra Douglass Morgan was named to the board of directors of Las Vegas-based Allegiant Travel Company, the parent of Allegiant Airlines.
Morgan, an attorney who operates her own legal consulting firm, was the first African American woman to chair the Control Board after being appointed by Gov. Steve Sisolak in 2019. She spent two years as chairwoman and led the passage and implementation of cashless wagering regulations. Morgan also spearheaded the adoption of regulations that ensured all Nevada gaming licensees adopted policies prohibiting discrimination and harassment. Morgan was a member of the Nevada Gaming Commission before being named to the Control Board.
"She is a dynamic leader with a proven ability to navigate today's most complex industry issues, from labor regulations to cybersecurity,” Allegiant Chairman and CEO Maurice Gallagher said in a statement.
Morgan, who has held legal and government relations positions with MGM Resorts International, the city of North Las Vegas and AT&T Service, currently serves as an independent director with Fidelity National Financial.
The announcement last week of an easing on travel restrictions for vaccinated international visitors was met with optimism on the Strip. The White House said the new policy covers both air and land-border travelers, who will need to be fully vaccinated and show proof of vaccination.
Before the pandemic, McCarran International Airport had direct flights to and from 11 different countries. Through August, international airline passenger volume is down 87.2 percent compared to 2019, when McCarran saw more than 3.8 million international travelers, an average of more than 316,000 passengers per month.
Analysts have pointed to the lack of direct international visitors into Las Vegas as a missing component in visitation and gaming numbers. Through August, the only direct international flights to and from Las Vegas originated in Canada and Mexico.
The change in policy was saluted by American Gaming Association CEO Bill Miller.
“Kudos to the Biden administration for setting a concrete date for reopening international travel,” Miller wrote on Twitter. “Come Nov. 8, the American gaming industry is excited to welcome international guests once again.”