Sands New York Front-Runner, New Vegas Casinos on Backburner, Says Analyst

Posted on: June 28, 2023, 02:50h. 

Last updated on: June 29, 2023, 11:35h.

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

Las Vegas Sands (NYSE: LVS) is considered one of the front-runners to procure one of the three downstate casino permits in New York, according to a Wall Street analyst.

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The Las Vegas Strip. An analyst says it will be a while before new casino hotels are developed there. (Image: Bloomberg)

In a recent report to clients, Wells Fargo analyst Daniel Politzer noted that — when accounting for the operator’s planned expenditures in Macau and what could be a $5 billion project in Nassau County, NY — Sands has the industry’s “most expensive and aspirational pipeline.”

We believe Sands is a front-runner, given the scale of its project, track record, and ability to work well with local constituencies,” said Politzer of Sands’ New York efforts.

He added that the operator’s proposal is “the most compelling” of the dozen or so that are vying for just three downstate permits. Sands has financial obligations to Nassau County regardless of whether or not it wins one of those licenses. In addition to enhancements in Macau, Singapore, and the prospect of building a new property in Uniondale, NY, LVS is eyeing Thailand as another destination for an integrated resort. But Politzer didn’t spill ink on that issue.

Don’t Expect Much

In Las Vegas, imminent additions to the city’s casino supply include the Fontainebleau on the Strip and Red Rock Resorts’ Durango Station in the southwest corner of the city. Both are slated to open by the end of this year.

After that, it’s likely to be a while before another from-the-ground-up project emerges in Sin City, as operators focus on enhancing existing venues rather than opening costlier new properties. For example, Caesars Entertainment (NASDAQ: CZR) is shifting a tower from the Horseshoe, making it part of the Paris in an effort to capitalize on the latter’s higher occupancy and room rates.

Off the Strip, Penn Entertainment (NASDAQ: PENN) is doling out $206 million to expand M Resort in Henderson, while Red Rock recently announced plans for major renovations at Green Valley Ranch Resort Spa & Casino, which is also located in Henderson. When Red Rock concludes Durango, the $800 million Inspirada project is likely next up for the operator.

“Following minimal development activity during the pandemic, there are now dozens of planned projects across our gaming coverage,” noted Polizer.

MGM, Wynn Also Strong Pipelines

With domestic expansion opportunities limited and, in some states, hindered by political haranguing, gaming companies are looking to international destinations to bolster their portfolios. That includes MGM Resorts International (NYSE: MGM) and Wynn Resorts (NASDAQ: WYNN).

With local partners, MGM is planning to open an $8 billion integrated resort in Osaka, Japan’s third-largest city. That project, while significant, currently isn’t “a needle-mover right now” for MGM, because it’s scheduled to come online in 2030.

As for Wynn, that operator’s Wynn Al Marjan Island in the United Arab Emirates could be a needle-mover,  and one that’s currently “underappreciated,” because it could add 10% to the operator’s share price when it opens in early 2023, according to the Wells Fargo analyst.