Q3 earnings season may help answer several burning questions
Welcome to the third-quarter earnings season, when executives clear the air about some of the business strategies they have had since summer and for the first nine months of calendar-year operations.
Four times a year, CEOs and financial officers field questions about what an editor once described as the purest form of public disclosure of corporate information because it involves easy-to-compare numbers.
And this quarter, for publicly traded casino companies and equipment manufacturers, there will be far more questions than answers.
Las Vegas Sands Corp. and Boyd Gaming Corp. got the earnings ball rolling with calls last week. MGM Resorts International’s presentation is scheduled for Tuesday. Presentations by IGT, Wynn Resorts Ltd. and Caesars Entertainment Corp. are scheduled for Wednesday.
For IGT — and competitors Everi Holdings, AGS and Scientific Games, with earnings calls in November — how will G2E, which ran this month, spur product sales in 2019?
How will market share be altered by the promising expansion of the sports-betting industry? Who has the best casino and mobile solutions in the market for sports wagering, now in six states with more pending?
While Southern Nevada’s big six publicly traded casino companies have interesting stories to tell this quarter, the biggest intrigue involves Wynn and Caesars. Questions for them involve what they can do to shore up their anemic stock prices.
Wynn’s share price is bouncing around the $100 level, about half of what it was nine months ago. How much of what’s going on there can be attributed to key regulatory investigations that are nearing an end?
The company has been under investigation since February, when Steve Wynn resigned as chairman and CEO after accusations of sexual harassment surfaced. He has denied the allegations, but they have resulted in investigations by the Wynn Resorts board and by gaming regulators in Nevada and Massachusetts.
Has the company done enough to keep regulators in those two states assured that it is compliant with each state’s laws and regulations?
Last week, Massachusetts updated the public about the adjudicatory hearing the state’s Gaming Commission will conduct on Wynn Resorts’ suitability to remain as a licensee for the $2.5 billion resort it is building outside Boston. The state initially said that would occur in September or October, but now it appears it won’t happen until December.
Would Massachusetts revoke the Wynn license? And how will the matter play out in Nevada?
Caesars presents a whole different mystery. With its stock price foundering around 52-week-low levels, questions have arisen about the status of its off-Strip Rio property, especially after privately held Golden Nugget chain owner Tilman Fertitta muddied the waters with an offer for a reverse merger with his company, with him taking over as CEO. (Caesars rejected the offer.)
Could the Rio be sold? (Caesars officials have stated on record that they don’t respond to sale rumors.)
And how do all these developments affect the grand prize awaiting casino companies in Japan — gaming concessions valued at upward of $26 billion a year once properties open by 2026.
Some analysts say Las Vegas Sands and MGM have the inside track on licensing in Japan. That has to be galling to Caesars and Wynn, which have spent time and resources there. How will Japan assess the Wynn suitability outcome? Can Caesars’ stellar treatment of responsible gambling issues outshine its comparatively weak financial condition?
We won’t get all the answers for months, but we certainly could get a few clues in the next few weeks.
The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson.
Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.
