Gaming companies seek to hide financial results; Murren bullish on MGM

When the gaming industry speaks, Frank Schreck‘s lips move. His latest move is to propose a removal of the transparency that applies to casinos owned by investment banks and funds, such as the Hard Rock Hotel & hrhlvCasino and SLS Las Vegas. Under Schreck’s proposal, which passed out of the Nevada Gaming Control Board, quarterly results would no longer have to be publicly reported, just privately shared with the NGCB. In return, the casino owners will have to be relicensed. The measure, if passed by the Nevada Gaming Commission, will enable struggling casinos like SLS to avoid a great deal of public embarrassment. Schreck does have a point, though, when he says that casinos owned by investment houses have to meet a higher threshold of disclosure than publicly owned casinos. Whether sweeping quarterly results under the rug is the answer is quite another thing. Schreck has quite a track record for advancing bad ideas to Nevada regulators.

* DraftKings and FanDuel are defying serious legal peril in Florida. Although the state allows horseracing and dog tracks, a law on the books forbids betting “upon the result of any trial or contest of skill, speed or power or endurance of human or beast.” In 1991, seeking to clarify the issue, then-Attorney General Robert Butterworth issued Draft Kingsan advisory opinion that the law “prohibits the operation and participation in a fantasy sports league whereby contestants pay an entry fee for the opportunity to select actual professional sports players to make up a fantasy team whose actual performance statistics result in cash payments from the contestants’ entry fees to the contestant with the best fantasy team.” That would seem to put daily fantasy sports clearly in the wrong.

Legislation is making the rounds in Tallahassee to legitimize DFS. In the meantime, DraftKings and FanDuel are hanging tough, unlike Yahoo, which quit the state. With as much as 5% of their revenue coming from Florida, it’s obvious that the DFS giants think that the risk they’re running is worth the equally obvious risk.

* Although MGM Resorts International already has plenty of irons in the fire — and $13 billion in long-term debt — the company is slightly changing its tune with regard to its planned REIT. In addition to being a murren's headrefuge for most of MGM’s domestic properties, it may act as a vehicle for new acquisitions. Said CEO Jim Murren, “we believe it’s going to be exciting for our shareholders at MGM Resorts when they see the opportunities.

“It was the best fourth quarter we have had since our previous record in 2007,” he added of the company’s domestic performance. (Obviously, the same could not be said for Macao.) MGM anticipates robust convention business at least through 2018, hence the cannibalization of the Aria showroom to provide more meeting space. 4Q15 was the company’s best-ever quarter for the convention trade and 2016 is 98% booked. “We have literally no new supply growth in the near term,” Murren said of the Las Vegas Strip, “unlike many major markets in the U.S. That of course helps the home team and MGM is the home team.”

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