Century Casinos, Full House Get Rocky Mountain Highs as Colorado Lifts Betting Limits

Posted on: November 4, 2020, 10:19h. 

Last updated on: November 4, 2020, 11:12h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Smaller gaming companies with Colorado footprints, namely Century Casinos (NASDAQ:CNTY) and Full House Resorts (NASDAQ:FLL), rallied Wednesday after Centennial State voters signed off on allowing casinos to raise per-hand betting limits on table games.

Bronco Billy's
Full House’s Bronco Billy’s Casino in Cripple Creek, Colo., where table game limits could soon rise. (Image: Colorado Springs Gazette)

On Election Day, Colorado voters approved Amendment 77. That sets the stage for voters in the state’s three gaming centers of Black Hawk, Central City, and Cripple Creek to lift the current table game bet a maximum of $100. Century Casinos operates two namesake gaming venues in its home state, while Las Vegas-based Full House runs Bronco Billy’s in Cripple Creek.

In midday trading, shares of Century are up more than two percent, while Full House is higher by about 0.40 percent. The pair are among the smallest publicly traded domestic gaming companies, with market values of $151.65 million and $73.14 million, respectively. Despite those diminutive statures, analysts are enthusiastic about the Amendment 77 outcome as it pertains to Century and Full House.

Colorado’s per-hand betting limit of $100 can now be raised by locals in respective gaming towns. Further, Colorado definition of allowable table games does not include a number of table games, such as baccarat or Pai Gow tiles,” said Roth Capital analyst David Bain in a note to clients today.

Bain, who is bullish on Century, noted the stock could more than double over the next year. He said Colorado operators of all stripes should benefit from eliminating the betting cap and broadening table game offerings.

Quantifying the Benefit

Prior to Election Day, analysts widely theorized that eliminating the $100 table bet limit in Colorado would benefit gaming companies there, both large and small.

In 2019, table games represented just 13 percent of gross gaming revenue (GGR) in Black Hawk, and a meager 8 percent in Cripple Creek, compared with averages of 20 percent to 25 percent in comparable regional markets.

While acknowledging that benefits are difficult to quantify, Bain says higher limits could generate an additional $1.75 million in earnings before interest, taxes, depreciation and amortization (EBITDA) for Century, while contributing 40 cents to its share price. For Full House, the analyst sees 24 cents in per-share value created with higher table limits in Colorado.

“We believe the increase in wagers will appeal to higher net worth clients, potentially fueling more trips/overnight stays,” said the analyst. “An augmentation to baccarat and/or Pai Gow tiles could also expand the demographic, particularly the Asian patron, in our view.”

What’s Next

Now, the matter of eliminating the table cap moves on to the aforementioned gaming communities, where the matter will be decided independently. But it’s unlikely these areas will rebuff the chance to bolster revenue.

“Remember, these towns are primarily gaming towns, and we expect full support from them in near-term special sessions,” said Stifel analyst Steven Wieczynski.

He also named Century Casinos as one of the beneficiaries of the Colorado vote. Full House wasn’t mentioned in his note.