Since our last report in Gaming & Leisure Magazine, a number of gaming operators posted third quarter earnings and several equipment manufacturers announced facility expansions and acquisitions. During the quarter, companies with operations in the United States and China reported somewhat mixed results. On the gaming supplier side of the industry, Konami Gaming and Ainsworth Game Technology moved forward with facility expansions in Las Vegas, with completions expected in 2015 and 2016, respectively. Consolidation within the gaming equipment manufacturing industry has continued in recent months. Las Vegas Revenue Growth for Wynn. On a company-wide basis, Wynn Resorts posted net revenues of $1.37 billion during the third quarter of 2014, which was down from $1.39 billion, a decline of 1.5 percent from a year ago. The 5.6-percent decline in net revenue from operations in Macau was largely offset by a 9.0-
percent increase in net revenue from Las Vegas operations. Adjusted property EBITDA for the company was $458.8 million during the third quarter of 2014, representing a 5.3-percent increase from the third quarter of 2013. Las Vegas operations reported net revenues of $427.8 million, a 9.0-percent increase from the $392.5 million reported in the comparable quarter of 2013. Adjusted property EBITDA rose an impressive 25.1 percent to $133.3 million, up from $106.5 million generated in the third quarter of 2013. Wynn Resorts’ Las Vegas properties reported an occupancy rate of 89.3 percent during the third quarter of 2014, which is up from 87.9 percent a year ago. Average daily room rate (“ADR”) also increased 6.8 percent to $267 from $250, while revenue per available room (“RevPAR”) increased 8.2 percent to $238. Wynn’s Macau operations dipped during the third quarter with net revenues of $942.3 million, which represented a 5.6-percent decrease from the same quarter last year. Adjusted property EBITDA in Macau was down 1.1 percent year-over-year, falling from $329.1 million to $325.5 million. Wynn’s Macau operations achieved an occupancy rate increase of 2.8 percentage points, rising to 98.5 percent. ADR was $327, which was up 5.5 percent compared to the same quarter of 2013, while RevPAR increased 8.4 percent to $322. Las Vegas Sands’ Results Moderate For the first time this year, Las Vegas Sands reported a company-wide 1.0-percent annual decline in net revenues, falling from $3.57 billion to $3.53 billion. Conversely, consolidated adjusted property EBITDA increased slightly (+0.6 percent) to $1.283 billion compared to $1.275 billion in the year-ago quarter. The company’s international properties posted
mixed results during the quarter. Sands Cotai Central reported a net revenue increase of 10.8 percent and the Venetian Macao achieved a slight increase of 0.8 percent compared to the third quarter of 2013. The Four Seasons Hotel Macao experienced the greatest decline in net revenue of 19.6
percent, while Sands Macao was down 8.3 percent.
Marina Bay Sands reported a decline of 5.0 percent
when compared to the year-ago quarter.
Domestically, the company’s Las Vegas
properties, which consist of The Venetian Las
Vegas and The Palazzo, and includes the
Sands Expo and Convention Center, reported
an increase for the second quarter in a row, rising
1.5 percent compared to the same period
last year. Adjusted property EBITDA also
increased, rising 3.6 percent. In Pennsylvania,
net revenues at Sands Bethlehem reported an
increase of 3.6 percent and an adjusted property
EBITDA improvement of 0.7 percent.
MGM Resorts Reports Revenue Rise
MGM Resorts International reported a 1.0
percent increase in net revenue in the third
quarter of 2014, rising to $2.49 billion compared
to $2.46 billion for the same period last
year. Adjusted property EBITDA increased
2.0 percent to $570 million.
MGM China faced a revenue decline of 2.0
percent compared to a year ago, falling to $794
million. However, MGM China’s adjusted
property EBITDA increased 12.0 percent to
$214 million. Despite a 34.0-percent increase
in main floor table games revenue, VIP table
games revenue fell 19.0 percent, due to a
decline in turnover and hold percentage.
Net revenues at MGM’s Las Vegas Strip properties
(excluding ARIA) increased 2.9 percent
year-over-year to $1.3 billion due to gains at all
but three locations. Bellagio led the way with a
9.9-percent gain, followed by Luxor (+7.6 percent)
and Monte Carlo (+6.5 percent). The
Mirage, Excalibur and MGM Grand Las Vegas
reported net revenue declines of 6.9 percent, 0.8
percent and 0.4 percent, respectively.
Konami Expanding Vegas Operations
Investments within the gaming manufacturing
segment of the industry continue to move forward.
One of the notable construction projects
currently underway in Las Vegas isn’t a new
resort casino, it’s the renovation and expansion of
the North American headquarters for Konami
Gaming. The company began construction on
the expansion of its corporate offices and manufacturing
center in April of this year.
Upon completion in summer of 2015, the complex,
which will total 316,000 square feet, will be
home to Konami’s corporate offices, sales center
and manufacturing and equipment services for its
North American and European gaming businesses.
It will also allow the slot machine manufacturer to
expand its workforce. The new facility is expected
to meet the silver certification level for Leadership
in Energy and Environmental Design (LEED). The
price tag on the project has yet to be released.
Ainsworth Breaks Ground
in Las Vegas
For the first time, Australian-based Ainsworth
Game Technology is coming to the United
States. In early October, the company broke
ground on its new North American headquarters
located on 24 acres in Las Vegas. The project is
expected to span 290,000-plus square feet.
Based out of Sydney and traded on the Australian
Stock Exchange, Ainsworth is looking to potentially
triple its current employee base in North
America and have an increased focus on the video
On hand for the groundbreaking ceremony
was the company’s founder, 92-year old Leonard
Ainsworth, who reportedly remains active in
the business, along with Chief Executive Officer
Danny Gladstone, North American President,
Mike Dreitzer, and Nevada Governor Brian
Sandoval, among others. The company indicated
the Las Vegas site was chosen based on its
market expectations for growth in the North
American market. The company also expects to
be able to more effectively serve their customers
within the region.
GAMING INDUSTRY: PERFORMANCE REVIEW
Brian R. Gordon, CPA
Scientific Games Acquires Bally Tech
New York-based Scientific Games Corporation,
one of the world’s leading developers of technology-
based products and services for the worldwide
gaming and lottery markets, recently completed
its acquisition of Las Vegas-based Bally
Technologies on November 21. The $5.1-billion
buyout consisted of $3.3 billion in outstanding
Bally shares plus the assumption of $1.8 billion
in existing Bally debt.
The transaction is expected to create $235
million in cost savings and result in an employee
count of approximately 8,300 people worldwide.
The company also announced its organization
will consist of three operating units going forward:
Gaming, Lottery and Interactive.
Last year, Scientific Games bought slot maker
WMS Industries for $1.5 billion, and Bally purchased
table games provider, SHFL Entertainment, for $1.3
billion. Now, all four companies are under the
Scientific Games umbrella, and there has even been
talk of moving its corporate headquarters to Las Vegas.
Global Cash Buying
Consolidation continues in the gaming supplier
industry as Global Cash Access Holdings, Inc.
came to an agreement in July to purchase
Multimedia Games Holding Co. for $1.2 billion
in cash. Awaiting shareholder and industry regulatory
approvals, the transaction valued
Multimedia Games at $36.50 per share.
Las Vegas-based Global Cash Access is a casino
supplier of ATMs, point-of-sale transactions
and money-transfer services as well as slotmachine
ticket redemption and jackpot kiosks.
The company’s website states it processes more
than $50 million in transactions every day.
Multimedia Games is based out of Austin,
Texas. The company recently moved beyond
its traditional role of supplying slot machines
to Native American casinos and entered markets
such as Nevada, Pennsylvania and New
Jersey. As of September 2013, it had 205
gaming licenses in 29 states.
The merger is expected to close early next
year and Global Cash Access estimates the
combined operations with Multimedia Games
will generate $30 million in cost synergies and
$800 million in revenue. It was also announced
the new company’s headquarters will remain in
Las Vegas, while the gaming development
operations will remain in Austin.
GTECH to Acquire IGT
The Las Vegas-based slot machine manufacturer,
International Game Technology (IGT), recently
entered into a merger agreement with the
Italian-based lottery group GTECH S.p.A.
GTECH is expected to acquire IGT for $6.4 billion.
The transaction, which is expected to close
by the second quarter of 2015, is comprised of
$4.7 billion in cash and stock, along with the
assumption of $1.7 billion in net debt.
The acquisition is projected to shift GTECH
away from its Italian-based market and broaden
its operations within the international casino
business. The transaction will also be the largest
foreign acquisition by an Italian firm since 2009.
When the transaction is completed, Georgia
Worldwide will become the parent holding company
for the combined operations.
IGT posted somewhat weaker financial performances
in 2014, reporting an annual net
income decline of 9.0 percent for the fiscal
year ending September 30. The Nevada-based
slot machine maker also confirmed a 7.0 percent
workforce reduction in fiscal year 2014,
achieving approximately $30 million in cost
savings during the second half of 2014, with
an estimated $50 million in cost savings
expected on an annualized basis in 2015.
JCM Global Buys Out FutureLogic
JCM Innovation Corp., a manufacturer of currency
validating equipment and cash registers,
completed its acquisition of U.S. based printer
company FutureLogic in early September 2014.
JCM’s line of peripheral component products
now includes bill validators, printers and digital
media as well as FutureLogic printers for a
wide range of applications, including the creation
of player vouchers for casinos and other
JCM Innovation is part of Tokyo-based
Japanese Cash Machine Co. Ltd., which reported
the deal with FutureLogic was worth $70.6 million.
In 2013, FutureLogic reported sales of
$47.2 million, up 9.5 percent from 2012. The
completion of this purchase is expected to further
enhance JCM’s competitive position within the
industries it serves worldwide, including banking,
gaming, kiosk, retail and transportation.
Brian Gordon is a principal with the Nevadabased
advisory services firm, Applied Analysis.
Gordon has extensive consulting experience
within the gaming and leisure industries.