BETZ extended its year-to-date lead over the S&P 500 Index, which lost momentum and closed slightly lower last week amid fears of escalating trade tensions.

This Week’s Biggest Gains:

Esports Entertainment Surges Despite Financial Struggles

Esports Entertainment Group was the top gainer among the gaming stocks in our coverage universe, gaining 21.6% over the past week. 

The stock has been highly volatile over the past few weeks. Two weeks ago, it was down 16.2%, but following last week’s gains, the stock is up over 56% for the year. Still, it trades approximately 30% below its 52-week high.

The company, which voluntarily delisted from Nasdaq last year and now trades OTC, has stopped publicly reporting earnings. The stock’s low trading volumes and high volatility make it prone to manipulation and speculation. 

Despite last week’s rally, the company remains in severe financial distress, with ongoing losses, mounting debt, and negative shareholder equity.

DraftKings Rebounds on Valuation Optimism

DraftKings was among the other major gainers with the stock rising 5.4% last week. 

It was among the biggest losers in the preceding week on fears that the provisions of the One Big Beautiful Big Act (OBBBA) would dampen gambling activity.

For context, the Act mandates a 90% deduction for losses (versus the previous regime of 100% deduction), which could result in gamblers paying taxes even if they don’t make a profit.

Investor sentiment improved after analysts argued the sell-off was overdone. 

Morgan Stanley raised its target price to $52 while maintaining the “overweight” rating, while Citi maintained its “buy” rating and $58 target price on DraftKings. 

The brokerage sees DraftKings shares as undervalued in light of Flutter’s acquisition of Boyd Gaming’s 5% equity stake in FanDuel, which values FanDuel at $31 billion. 

According to Citi, DraftKings trades at a 7% discount to the implied valuation of 17.4x 2026 EV-EBITDA for FanDuel.

Mizuho also echoed similar views and said that while FanDuel and DraftKings have similar market share, the former’s implied market capitalization of $40 billion in the transaction is roughly twice DraftKings’ market capitalization.

Wynn Resorts Extends Gains

While it didn’t repeat the 14% growth from last week, Wynn Resorts’ stock rose over 5.2% last week, which extended its year-to-date gains to 29%. 

On Monday, Wynn Resorts stock rose nearly 3% after Goldman Sachs reinitiated coverage with a Buy rating and $122 price target.

Goldman Sachs joined JPMorgan, which also initiated coverage of gaming stocks last month. Apart from Wynn, Goldman Sachs put a “buy” rating for Caesars Entertainment and a “neutral” rating for Las Vegas Sands. The brokerage, however, rated MGM Resorts as a “sell.”

Golden Entertainment Turns Positive for the Year

Golden Entertainment stock gained nearly 5% last week, even as there wasn’t any company-specific news. The company did pay a 25-cent dividend the previous week, but its record date was June 25. Nonetheless, after last week’s rise, the stock has turned positive for the year.

Golden Entertainment is focused on deleveraging its balance sheet through the sale of non-core assets, allowing the company to focus on its operations in Nevada primarily.

The Week’s Biggest Losers

Skillz Sinks on Broader Market Weakness

Skillz was the worst-performing stock in our coverage universe and lost over 7% last week. While there was no company-specific news last week, the stock traded on a weak note amid broader market weakness. 

Moreover, as a loss-making enterprise, Skillz was particularly under pressure last week. It has a 5-year beta of 2.7x, which means that it is 2.7x as volatile as broader markets.

The company’s paying monthly active users have fallen by over 41% over the last two years. It has been cutting marketing and operating expenses to reduce cash burn, but it has yet to show evidence of a turnaround.

Gambling.com Declines Amid Tariff Fears

Gambling.com Group Ltd was another major loser, falling nearly 5% last week. The stock was roughly flat for the week but fell over 4% on Friday amid US-EU tariff escalation rumours, which led to a market sell-off.

Playtika Slides Further

Playtika Holdings is back on the list of the biggest losers as the stock lost 4.8% last week, despite no major company-specific news. 

The stock is now down 32% for the year amid concerns that the company’s user base is shrinking due to its reliance on older mobile game titles and questions about long-term growth prospects. 

Penn Entertainment Falls on Regional Revenue Drop

Penn Entertainment rounded up the top losers, shedding 3.5% for the week. The stock was in the green until Thursday but fell 7.6% on Friday after Indiana and Iowa reported a year-over-year decline in gaming revenue for June.

Additional tariff-related worries further pressured the stock, which underperformed compared to rivals such as Sands Las Vegas, DraftKings, and MGM Resorts. 

Other Major Industry Developments Last Week

On Wednesday, Blackstone-backed gaming company Cirsa went public in Barcelona. 

While the IPO was oversubscribed multiple times, it closed at the IPO price of €15 on its first trading day and has remained flat since then, closing at the same level last week. 

While the IPO saw strong interest from investors, concerns over the company’s high debt pile, heavy reliance on Latin American markets and online gaming, and rich valuations dampened sentiments.

In another development, Senate Republicans blocked attempts to roll back the gambling tax provisions in the OBBBA. The new rules, which will take effect next year, are expected to generate $1.1 billion in tax revenue over the next eight years.

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Golden Entertainment has since addressed the issue and released a notice which details the incident, the measures taken, and some of the steps to take in response.

This details: “Golden Entertainment’s investigation into an email phishing incident determined that an unauthorised individual obtained access to some employees’ email accounts. 

“Golden Entertainment immediately took steps to secure the email accounts, launched an investigation, and a cybersecurity firm was engaged to assist.”

The investigation undertaken by Golden Entertainment led to the finding that access was obtained to the email accounts multiple times between 30 May 2019 and 6 October 2019.  

Despite the findings in regards to the dates of access, the investigation was unable to determine either the emails or attachments that were accessed and as a result conducted a further review of the emails and attachments in the employees’ email accounts. 

This further review then result in the findings that an email or an attachment contained personal information of some of Golden Entertainment’s customers, employees, and vendors – This included names, Social Security numbers, passport numbers, government ID numbers, driver’s license numbers, dates of birth, usernames, passwords, payment card numbers, expiration dates, card security codes (CVV), financial account numbers, routing numbers, health insurance information, and health or treatment information.

The statement continued: “Golden Entertainment takes the security of personal information very seriously. To date, we have no evidence that any information has been misused, but we wanted to make our customers, employees, and vendors whose information was contained in the email accounts aware of our findings. 

“On November 7, 2019, we began mailing letters to individuals whose information was involved and continued to mail letters through January 31, 2020, as we found additional addresses and identified additional email accounts involved. 

“Golden Entertainment has also established a dedicated call center to answer questions about this matter. If you believe your information was involved and have not received a letter by February 7, 2020, please call 1-855-946-0123, Monday through Friday, 9:00 a.m. to 6:30 p.m. Eastern Time.”

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140

Entain looked to further its compliance campaign after announcing that it would be pulling out from over 140 international markets. 

According to a report from the Financial Times, the group has ceased operations in markets where the likelihood of an appropriate regulatory framework is dwindling, including Argentina, Russia and Ukraine. 

The operator’s chair Barry Gibson underlined that the moves were progressive for the business as it seeks to overhaul operations. 

The move comes after Entain reached a £585m deferred prosecution agreement with the Crown Prosecution Service (CPS) after being subject to a bribery investigation by HM Revenue & Customs. The case was related to its previous Turkish business, which it sold in 2017.

Entain emphasised that it has since transformed as a company and it is a legacy issue for the company as the illegal activity occurred before its 2020 rebrand when it traded as GVC Holdings. 

Gibson commented on that case: “This legacy issue pertains to a business divested by a past management team six years prior. The company has undergone significant changes since then, and the DPA process has underscored the profound evolution from the GVC of the past to today’s Entain. 

“We remain focused on advancing our operations exclusively within regulated markets and are acknowledged as a leading, responsible entity with unparalleled corporate governance across our business.”

18.58

The latest Eilers-Fantini report into North American online casino performance debuted the researchers’ first-ever Canadian report, which saw Pragmatic Play lead the supplier charts with the highest percentage of theoretical win – 18.58 per cent.

The studio came ahead of Evolution’s 16.07 per cent, IGT’s 15.23 per cent and Light & Wonder’s 11.13 per cent, showing that the US’ top three are just as prominent in Canada. 

For top games by GGR, Pragmatic Play took the maiden first place in Canada’s December charts with Sweet Bonanza, while its Gates of Olympus slot also rounded out the top five. 

In between those Pragmatic Play titles, Light & Wonder’s Jin Ji Bao Xi Endless Treasure title took second place, Live Dealer Roulette from Evolution took third place and Cash Eruption took fifth – making it the only title to appear in both the US and Canada’s top five games by GGR. 

Anaxi’s Buffalo slot title stampeded the competition to claim the number one spot in the US report for December’s top games by gross gaming revenue, with IGT’s Blackjack title pipped at the post for consecutive months. 

6

The UK Gambling Commission ordered Gamesys Operations Limited to pay a £6m penalty due to an investigation into the firm that discovered social responsibility and anti-money laundering failures.

Following a compliance assessment in May 2022, the UKGC discovered several social responsibility and AML failures at Gamesys taking place between November 2021 and July 2022.

In terms of social responsibility failures, the commission noted that the operator was “not always identifying customers at risk of experiencing harms associated with gambling”. 

The UKGC also stated that Gamesys did not always have “a system of deposit limits which, for some customers, did not identify risks of harm quickly enough” as one customer was able to deposit £8,255 within three days of opening an account, another lost £5,968 within five weeks of opening account and another lost £17,482 within 34 days of opening an account.

Regarding AML failures, the UKGC discovered through its investigation that in certain circumstances, some Gamesys customers were “able to evade some of the licensee’s AML triggers/thresholds and go on to spend significant sums without AML checks being conducted”.

As such, one customer deposited £14,585 in 28 weeks, another deposited £18,884 in just over six months and another deposited £34,280 in five and a half months.

Kay Roberts, Executive Director of Operations at UKGC, commented: “Our focus as a regulator is to ensure that operators are employing policies and procedures which make gambling fair, safe and crime-free.

“We take this responsibility extremely seriously and whenever we find failures in policies and procedures then the business can expect significant regulatory action.”

4

After almost four years leading Entain, Jette Nygaard-Andersen has released a statement on her decision to step down as CEO, saying that the company is “better and stronger” than it has ever been.

“Entain is fundamentally a better and stronger company today than it has ever been,” she said.

“Through a multitude of twists, turns and challenges, we’ve transformed the business from the GVC of old to one with the highest standards of governance, compliance, player safety, a new effective strategy setting the company up for further growth in all markets, old and new, and excellent quality of earnings.

“Over the past four years, we have dramatically shifted the company to be a responsible operator, a reputable employer, strategically put the customer front and centre of business operations, worked on transforming the technology to make it future fit, diversified the portfolio and so much more.”

Last month, Entain announced that Nygarrd-Andersen would be resigning from her position as Chief Executive Officer with immediate effect.

Although ending amid the HMRC investigation, Nygarrd-Andersen’s tenure as Entain CEO saw a number of milestones, including several high-profile acquisitions expanding the firm’s global presence.

The outgoing CEO added: “Thanks to the professionalism and passion of Entainers around the world, the business tackled challenges such as the pandemic head-on, navigated a path to 100 per cent regulated operations and always thought of the customer. 

“As a result, Entain is now a business that has scaled and operates in over 30 territories with 30,000 employees.”

3

New York State has introduced another legislation that looks to legalise online casinos in the Empire State. 

Senator Joseph Addabbo put forward S8185 for discussion on January 11, and as of writing, it resides in the Senate’s Racing, Gaming and Wagering Committee. The 2024 bill is very similar to the 2023 edition – S4856 – with a few slight changes.

Like last year’s bill, online casino licences will be available for the four downstate casinos and three forthcoming upstate casinos, VLT parlours MGM Empire City Casino and Resorts World NYC, New York tribes and online sports betting operators.

In addition, three more licences will be available for competitive bids for applicants who have a focus on DEI, whereas last year’s bill stated that three additional licences would be available for applicants with at least five per cent minority ownership.

The bill states: “abide by an affirmative action program of equal opportunity, approved by the commission, whereby the applicant establishes specific goals for the utilisation of minorities, women and veterans in full-time, permanent jobs at such interactive gaming license’s place of operation.”

The bill estimates that New York would receive approximately $1bn annually in state tax revenue, as well as $150m in one-time licence fees from casinos, operators and independent contractors looking to conduct online casino operations.

213.5

Golden Entertainment completed the sale of its distributed gaming operations in Nevada to an affiliate of J&J Ventures Gaming.

J&J Gaming acquired Golden Entertainment’s Nevada distributed gaming operations for cash consideration of approximately $213.5m, subject to customary working capital and other adjustments, plus purchased cash (cash and cash equivalents related to such operations at the time of closing) of approximately $37.5m.

For this transaction, Latham & Watkins LLP acted as legal counsel to Golden Entertainment.

Golden Entertainment and J&J Gaming have already worked together on one transaction in the past year, as the operator sold its Montana distributed gaming operations in September 2023 to an affiliate of J&J Gaming.

The post Entain, UKGC fine & New York: the week in numbers appeared first on CasinoBeats.

J&J Gaming has acquired Golden Entertainment’s Nevada distributed gaming operations for cash consideration of approximately $213.5m, subject to customary working capital and other adjustments, plus purchased cash (cash and cash equivalents related to such operations at the time of closing) of approximately $37.5m.

For this transaction, Latham & Watkins LLP acted as legal counsel to Golden Entertainment.

Golden Entertainment and J&J Gaming have already worked together on one transaction in the past year, as the operator sold its Montana distributed gaming operations in September 2023 to an affiliate of J&J Gaming.

Within its third quarter financial report in November, Golden Entertainment’s CEO and Chair, Blake Sartini, stated that the divestments such as the Montana sale has given the company financial flexibility in 2024.

“Following our divestiture of Rocky Gap Casino Resort in July, we completed the sale of our Montana distributed gaming business in September and we remain on track to complete the sale of our Nevada distributed gaming business at the end of the year,” Sartini said at the time.

“The completion of these transactions significantly strengthens our balance sheet, enables return of capital to shareholders and provides financial flexibility to enhance shareholder value.”

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CEO and Chair Blake Sartini also noted that the recent divestments and property sales have also provided the operator with “financial flexibility” heading into Q4 and 2024.

STRAT renovations

Publishing its Q3 financials, Golden Entertainment declared a total revenue of $257.7m, down in comparison to the previous year’s $279m during the same period.

Gaming revenue came in at $165.2m, a decline on the previous year’s $188.4m, food and beverage revenue improved to $44.5m (Q3 2022: $43m), rooms revenue improved to $31.4m (2022: $30.7m) and other revenue dropped slightly to $16.6m (2022: $16.8m).

Per segment, Nevada Casino Resorts led the way with $105.5m, up on the previous year’s $98.9m, boosted by the recent completion of renovations at The STRAT which increased its occupancy.

Elsewhere, Nevada Locals Casinos revenue grew slightly to $16.9m (2022: $16.8m), while Nevada Taverns dropped narrowly to $7.5m (2022: $8.3m).

Sartini commented: “For our third quarter, we saw improved performance in our Nevada Casino Resorts segment which was primarily driven by increased occupancy and our recent completion of room and pool renovations at The STRAT.

“Our Nevada Locals Casinos segment maintained the strong performance we have seen throughout the year, while our taverns experienced typical seasonality with lower summer volumes.”

Financial flexibility

Revenue from Maryland Casino Resort and distributed gaming segments were impacted during the quarter as the results “only include 24 days of operations for the Rocky Gap Casino Resort and do not include 18 days of operations for distributed gaming operations in Montana when compared to the prior year”. 

The quarter’s earnings also include a $305.8m gain on the sales of the Rocky Gap Casino Resort and the Montana distributed gaming business, as well as transaction costs of $8.6m.

As a result, Maryland Casino Resort segment revenue came in at $1.6m (2022: $7.4m) while distributed gaming revenue stood at $8.4m (2022: $10.5m).

Sartini continued: “Following our divestiture of Rocky Gap Casino Resort in July, we completed the sale of our Montana distributed gaming business in September and we remain on track to complete the sale of our Nevada distributed gaming business at the end of the year. 

“The completion of these transactions significantly strengthens our balance sheet, enables return of capital to shareholders and provides financial flexibility to enhance shareholder value.”

Golden Entertainment’s net income in Q3 was $241.2m ($7.83 per fully diluted share) compared to a net income of $14m ($0.45 per fully diluted share) the previous year.

Adjusted EBITDA was $53.2m, down from the Q3 2022’s $61.1m “primarily due to the exclusion of full quarter results for the company’s Rocky Gap Casino Resort and the Montana distributed gaming business that were sold during the third quarter”.

The company allocated $175m of the cash proceeds from the sale of Rocky Gap Casino Resort to repay its remaining borrowings outstanding under the original term loan, in addition to paying a one-time cash dividend of $2 per share of its outstanding common stock and repurchased 252,395 shares of common stock for total consideration of $9.1m. 

As of September 30, Golden Entertainment had approximately $91m of availability remaining under its share repurchase authorisation, and a total principal amount of debt outstanding at $738.7m, consisting primarily of $399m in outstanding borrowings under the new term loan and $335.5m of senior unsecured notes. 

The company also has cash and cash equivalents of $295.9m, and there continue to be no outstanding borrowings under its $240m revolving credit facility.

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Last week, the company finalised the $260m sale of the Rocky Gap Casino to Century Casinos, with $175m of those proceeds allocated to repay outstanding debt.

Furthermore, the group is also proceeding with the offload of its Nevada and Montana-based distributed businesses to J&J Gaming, for approximately $360m. After closing, this will see the latter become the largest distributed operator in the country.

Charles Protell, President and CFO of Golden, commented: “We remain confident that both transactions will close by year end, and we look forward to having J&J as our gaming partner in our Nevada taverns.

“These transactions will accomplish our goal of divesting non-core businesses at attractive valuations, leaving us with a Nevada portfolio of owned casino assets and the largest gaming tavern footprint in the state.”

“We obviously have the capacity to go out and look for deals”

Charles Protell, President and CFO of Golden Entertainment

The comments came in an earnings call as the firm reflected on its performance through the second quarter of the year, with revenue down one percentage point to $286.7m (2022: $289.4m).

Net income plummeted to $12.3m (2022: $21.2m), while adjusted EBITDA dropped 22.13 per cent to close the April to June period at $58.4m.

Across Nevada, revenue and EBITDA declined 4.6 per cent and 28 per cent, respectively, which was negatively affected by ongoing renovation at The Strat. Montana saw revenue rise slightly, however, AEBITDA also declined. 

Despite this, Protell noted that both regions boast “strong pipelines of new locations,” which are expected “to come online in the second half of this year”.

For the year-to date, revenue is up less than half of a percentage point to $564.73m (2022: $563m), net income maintained a Q2 trend by declining 58.25 per cent to $23.91m (2022: $57.28m) and AEBITDA declined 15.29 per cent to $120.57m (2022: $142.34m).  

He continued: “Our company remains uniquely positioned to benefit from the growth drivers of Nevada’s resort and local markets, and we believe our properties will demonstrate better performance in the back half of the year. 

“In addition, our strengthened capital structure will allow for maximum flexibility to invest in our core assets, return capital shareholders on a regular basis and evaluate future strategic alternatives.”

Looking at expansion, and bringing things full circle, the topic of M&A once again became the focal point of discussions as Protell was first quizzed on potential opportunities and the boundaries associated with pursuing these. 

“We’re looking at things that move the needle and that we can use synergies within our current organisation”

Blake Sartini, Chair and Chief Executive Officer of Golden Entertainment

“We obviously have the capacity to go out and look for deals,” he said. “I think those opportunities for us would need to be in the west, casinos or portfolios of a more meaningful size. 

“To us, that’s $50m plus, $50m to $100m are the things that we would target to look at. And importantly, where we think we can create value through synergies in the operations with our existing portfolio. 

“So I think that that is a fairly narrow lens to look at acquisitions, but we will do that. I think the other thing that we’re trying to highlight as we think about our future going forward is that it will be weighed against simply buying our own stock given the capacity that we have on the balance sheet and the buyback authorization from the board.”

Detailing the need to be patient but opportunistic, Blake Sartini, Chair and Chief Executive Officer of Golden, added: “As we look through the landscape right now in M&A … we see a lot of value in our own shares. We see a lot of value in our own company, but the capacity is there for us to look. 

“I think Charles mentioned 50 million plus. We’re looking at things that move the needle and that we can use synergies within our current organisation. So patient, but opportunistic.”

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The group’s current key activities within the area concern a pair of divestments, with the sale of the Rocky Gap Casino Resort to Century Casinos recently gaining Maryland Lottery Commission ahead of a potential finalising by the close of June.

In addition, Golden Entertainment is also expecting to offload its distributed gaming businesses across Nevada and Montana to J&J Gaming by the close of the year. This will see the group become the largest distributed operator in the country after closing

“We remain confident both transactions will close by year-end, and we look forward to having J&J as our gaming partner in our Nevada taverns,” said Charles Protell, President and CFO of Golden Entertainment.

Adding: “Importantly, both these transactions accomplished our goal of divesting non core businesses at attractive valuations, leaving us with a Nevada portfolio of owned casino assets and the largest gaming tavern footprint in the state. 

“…we will have significant room in our capital structure to pursue value-creating initiatives”

“Collectively, these transactions will generate over $500m of net proceeds, which will allow us to reposition our balance sheet, more effectively invest in our core assets, return capital to shareholders and evaluate strategic opportunities.”

Despite acknowledging revenue and margin pressures, Protell also voiced confidence in “long-term demographic trends” across Las Vegas in support of the growth strategy of its taverns segment. 

This is set to be bolstered by the addition of six locations, which are under contract to be acquired, with agreements also in place for two future development sites.

This positivity was shared in an earnings call following Golden’s first quarter financial report, with revenue up two per cent year-on-year to $278.1m (2022: $273.6m).

However, net income and adjusted EBITDA each fell to $11.6m (2022: $36.1m) and $62.2m (2022: $67.3m), with the latter said to be impacted by cost pressures as well as disruption of ongoing room renovations at the STRAT in a bid to be “ready for the strong Las Vegas calendar later this year”.

Protell continued: “Looking forward, after the closing of the sale of our distributed business, our pro forma net leverage moves down to 1.4 times. With a target net leverage of less than three times, we will have significant room in our capital structure to pursue value-creating initiatives, whether investing in our own assets, pursuing acquisitions or more aggressively returning capital to shareholders.

“Regardless of the future economic outlook, we will have one of the most pristine balance sheets in our industry”

“That said, in the near term, we will be primarily focused on closing our previously announced transactions, executing on modest reinvestment in our core businesses and maintaining our low leverage profile.

“After the sale of Rocky Gap in our distributed businesses, we will have transformed the company to being 100 per cent focused on Nevada with [our] own strip and local casinos as well as the leading Las Vegas gaming tavern platform. 

“These assets will continue to benefit from the long-term visitor and population growth of Las Vegas, which will also remain the most stable regulatory and competitive environment in the country.

“Regardless of the future economic outlook, we will have one of the most pristine balance sheets in our industry, enabling us to take advantage of potential acquisition opportunities in our core markets and to establish a more regular return of capital to our shareholders.”

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This aforementioned fee, plus $39m of estimated purchased cash at closing, will see J&J Gaming gain operations in Nevada for $213.5m, plus an estimated $34m of purchased cash, with the latter to be acquired for $109m, plus an estimated $5m of purchased cash, subject to customary working capital adjustments.

Furthermore, Golden Entertainment, which owns ten casinos, nine of which are in Southern Nevada and one in Maryland, has also entered into a separate five-year agreement with J&J Gaming.

This will see the company support the gaming operations of Golden’s 60 branded tavern locations in Nevada at financial terms consistent with the company’s past practice.

The aggregate cash consideration plus purchased cash represents a multiple of approximately 9.0x of the adjusted EBITDA for Golden’s distributed gaming segment for the year ended December 31, 2022, of $44m, net of $3.8m of corporate costs allocated to the segment.

The transactions are expected to close prior to year end, subject to customary regulatory approvals and closing conditions

Blake Sartini, Chair and Chief Executive Officer of Golden Entertainment, commented: “Our leading distributed gaming operations in Nevada and Montana were built over the last 20 years through the hard work and dedication of our team members who provide exceptional service and support to our valued route partners. 

“We believe this transaction will provide further success for our route partners through sharing of best practices and new technology. We anticipate our distributed gaming team members will continue to serve our route partners with the same dedication under J&J Gaming’s ownership. 

“Our confidence in J&J Gaming’s future success is highlighted by our new long-term agreement with J&J Gaming to service Golden’s wholly owned tavern portfolio.
“For Golden, these transactions will allow us to focus our management team and capital on our portfolio of wholly owned casinos and taverns in Nevada and create additional value for our shareholders.”

Established almost 100 years ago, J&J Gaming is a privately held business and distributed gaming operator in Illinois, with related operations in several other states.

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Speaking on an earnings call following the company’s Q4 financial results, President & CFO Charles Protell spoke about plans to renovate more rooms at the resort before the Formula One Las Vegas Grand Prix in November and the Super Bowl in 2024.

To make sure that the company has a “competitive product” before the big sporting events come to town, approximately $30m will be spent on the renovations at the property.

Protell stated: “In 2023, we intend to renovate more rooms at The STRAT to provide a more competitive product in order to capture demand from group business and citywide events like F1 and the Super Bowl.

“We are currently renovating additional 537 rooms, hallway corridors in our pool areas, which should be completed in the first half of the year at an expected cost of approximately $30m in 2023.

“This will bring the total rooms and suites that we have renovated to 1,200 out of 2,400 rooms at the property, with most of the others having been updated prior to our acquisition of The STRAT in 2017.”

Alongside renovations to The STRAT, Golden Entertainment provided an update on the sale of the Rocky Gap Casino Resort in Maryland, which is expected to close in Q2 2023. 

CEO and Chair Blake Sartini noted the sale will “provide meaningful liquidity that combined with our free cash flow will position us to maintain low leverage, invest in our owned properties, and accelerate capital returns to shareholders”.

Publishing its Q4 results, the company reported a 0.8 per cent drop in revenue year-over-year to $279.7m (Q4 2021: $282m), but better than 2019’s $242.1m. Gaming revenue declined by 3.22 per cent to $185m (2021: $191.2m).

For the full year, Golden Entertainment reported $1.12bn in revenue, a 2.3 per cent increase YoY (2021: $1.1bn). Gaming revenue rose as well by 3.07 per cent to $428.9m (2021: $416.2m).

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CEO and Chairman Blake Sartini also noted that the company expects to close the sale of its Rocky Gap Casino Resort in the second quarter of 2023, while its fourth quarter performance is above 2019 levels, but down compared to the previous year due to costs.

Golden Entertainment Q4 solid

Publishing its Q4 results, Golden Entertainment reported a 0.8 per cent decline year-over-year in revenue to $279.7m (Q4 2021: $282m), but stands above 2019’s $242.1m. Gaming revenue fell by 3.22 per cent to $185m (2021: $191.2m).

Operating income for the company grew by 2.7 per cent YoY to $35.4m (2021: $34.5m), net income fell by 42.1 per cent to $11.1m (2021: $19.1m), and adjusted EBITDA came in at $63.7m, down by six per cent (2021: $67.8m).

Per location, Golden Entertainment’s Nevada casino resorts – The STRAT Hotel, Casino & SkyPod, Aquarius Casino Resort, Edgewater Hotel & Casino Resort and Colorado Belle Hotel & Casino Resort – were the top earners in the quarter with $104.2m (2021: $104.5m) and an adjusted EBITDA of $32.5m (2021: $36.6m).

Distributed Gaming operations in Nevada and Montana followed with $90.3m (2021: $89.9m) in revenue and an adjusted EBITDA of $10.7m (2021: $10.5m).

Nevada locals casinos – Arizona Charlie’s Boulder, Arizona Charlie’s Decatur, Gold Town Casino, Lakeside Casino & RV Park and Pahrump Nugget Hotel Casino – reported $40.1m in revenue (2021: $39.7m) and an adjusted EBITDA of $19.2m (2021: $18.8m).

Nevada Taverns – made up of 64 branded tavern locations – declared $26.9m in revenue (2021: $28.4m) and an adjusted EBITDA of $7.9m (2021: $9.8m).

Golden Entertainment’s Maryland Casino Resort – Rocky Gap Casino Resort – reported $17.9m in revenue (2021: $19.2m) and an adjusted EBITDA of $5.1m (2021: $5.9m).

The company entered into definitive agreements to sell Rocky Gap Casino Resort in Q3 2022, and it expects to close this transaction in Q2 2023 which Sartini notes will “provide meaningful liquidity that combined with our free cash flow will position us to maintain low leverage, invest in our owned properties, and accelerate capital returns to shareholders.

“Our fourth quarter demonstrates strong financial performance that remains well above 2019 levels, while higher labour and other costs impacted the comparison to last year’s fourth quarter results,” he said.

Another $1bn revenue year

For the full year, Golden Entertainment has reported $1.12bn in revenue, up 2.3 per cent YoY (2021: $1.1bn). Gaming revenue was up as well by 3.07 per cent to $428.9m (2021: $416.2m).

Operating income for 2022 stood at $147.9m, down 10.9 per cent (2021: $166m), net income fell as well by 49.1 per cent to $82.3m (2021: $161.8m), and adjusted EBITDA declined by 8.4 per cent to $267.1m (2021: $291.7m).

On a geographic basis, Nevada casino resorts led the way with $407m in revenue (2021: $389.7m) and an adjusted EBITDA of $135.1m (2021: $149.1m), followed by distributed gaming with $365.5m in revenue (2021: $357.4m) and an adjusted EBITDA of $44m (2021: $47.5m).

Nevada taverns was next with $110m in revenue (2021: $110.2m) and an adjusted EBITDA of $37.6m (2021: $39.8m), followed by Maryland Casino Resort with $78m in revenue (2021: $78.2m) and an adjusted EBITDA of $25.4m (2021: $26.7m).

Sartini stated: “For the second consecutive year, our total annual revenue exceeded $1bn and our operating discipline continues to support the significant margin improvement we have achieved leading to a 45 per cent increase in full year adjusted EBITDA compared to 2019. 

“Our business trends to start this year are encouraging, and we anticipate capitalising on the strength of Las Vegas in 2023 and beyond.”

During Q4, Golden Entertainment repaid $25m of its outstanding term loan and repurchased $2m of its senior unsecured notes, bringing total debt repaid in 2022 to $116m.

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