Sands ahead of Ceasars

Sands reported it's 2nd quarter results for 2011. It seems to be on track to easily edge out Ceasars Entertainment as the largest Hotel/Casino corporation in the world (by revenue) for 2011. Revenue is $4.655 billion for the first half of 2011 (up a whopping 48% from last year).

Las Vegas Operations
The stingy comp policy in Las Vegas seems to be very profitable.

The Vegas operations had $422.2 million in table drop in 2nd QTR 2011, vs $417.1m 2nd QTR 2010. In addition the win percentage jumped to 20% from 13.8%.
The super tight slots (win percent 9.9%) are not working as well with play down dramatically.

But given the $30 million drop in comps for the quarter, profitability soared by 1800%.


Bethlehem PA Operations
Vegas casino total revenue is ahead of Bethlehem casino revenue by 5% for the first 6 months of 2011. Non casino revenue is on different planetary orbits as Vegas has over 7000 hotel rooms and Bethlehem has 300.

Hotel in Bethlehem had only 49% occupancy for it's first month at $168 average daily room rate.

Quote: pacomartin

The super tight slots (win percent 9.9%)

That can't be right. At 9.9% you'd almost never win.
Remember that article at UNLV somebody posted here
that said 7.5% was killing everybody.

Quote: EvenBob

That can't be right. At 9.9% you'd almost never win.
Remember that article at UNLV somebody posted here
that said 7.5% was killing everybody.

That was a typo, I meant slot hold is 8.8% (up from 7.8% same quarter last year).
Most people seem to sense the low payout as slot handle is down almost 40% to $411.5m from $670.8m last year.

I can't understand the corporate strategy on slots. That slot hold is higher in Vegas than it is in Bethlehem PA. In PA you must drive 40 to 50 miles to find competition. In Vegas you cross a bridge.

8.8% is murderous. For years it was around
the 5.3% mark and everybody was happy.
Raising it so high doesn't make any logical
sense, slot players aren't as stupid as the
casinos seem to think they are.

Quote: EvenBob

8.8% is murderous

I'm not sure what Sands is doing in Vegas. They seem to be drowning in money from Asia, so they are seemingly unconcerned about being competitive in Vegas.

I mean Vegas slot revenue is 1.9% of total gaming revenue for the corporation. If they had gone with the lower hold like last year, it would be 2.8% of revenue. It seems like it doesn't even make the board room discussions.

Quote: EvenBob

8.8% is murderous. For years it was around the 5.3% mark and everybody was happy.
Raising it so high doesn't make any logical sense, slot players aren't as stupid as the casinos seem to think they are.

I read somewhere that BEEP BEEP BEEP BEEP excuse me - "I read somewhere that" triggered my Urban Legend alarm.

Anyway, I read somewhere that the hold on Megabucks is higher than on other machines - does the Sands have a breakdown between Megabucks and other slots (and what the coin-in ratio is)?

Quote: ThatDonGuy

Anyway, I read somewhere that the hold on Megabucks is higher than on other machines - does the Sands have a breakdown between Megabucks and other slots (and what the coin-in ratio is)?

Corporations do not identify the profit margin on one kind of slot vs another kind for their company. The gaming commission of Nevada does make such an identification. A Megabucks machine is the most profitable slot on the market.

In general in gambling the higher the maximum payout the bigger percentage that the operator keeps. While Megabucks makes about twice as much as a penny slot, it is still considerably better than a lottery ticket.

Ceasars Inc. is losing it's title as "world's largest casino operator". For the first 6 months of 2011 revenue has been $4,408m (virtually the same as last year) while Sands Corporation had revenue of $4,655m. They will probably dub Sands Corporation the largest company at the end of the year.

Personally, I think that Sands is already there. The prospects for Sands are getting better and better. But most people like to wait for a full year's results.

The positive news from Vegas was undercut by the increasingly bad news for Atlantic City and Louisiana for Ceasars Inc.

Strip revenue jumps 32.3% in June. The breakdown is not posted, but considering the higher room rates I suspect that the lions share will be in table games.


In the next three years I think Sands could easily surpass Marriott to become the largest hotel/casino/resort company in the USA.Keep in mind that Marriot operates or franchises 3,545 lodging properties worldwide, with 618,104 rooms.

The breakdown for Strip revenue for June was posted.

Baccarat led the charge with 489% of last June's unusually poor baccarat return.
Other table games increased by a respectable 24%.
Slot revenue went up by 1.6%.

However, hotel rooms and other revenue are up significantly.

Wynn/Encore is reaping the largest share of the gaming increases. Sands is sticking with it's low comp policy.

Before you get too excited, Strip gaming revenue is back up to the calendar year 2005 level, instead of the year 2004. It still has a ways to go to get back to it's former peak return.

Fiscal	Billions
2005	$5.58
2006	$6.38
2007	$6.75
2008	$6.68
2009	$5.62
2010	$5.66
2011	$6.10

The highest the strip reached for any rolling 12 month period was $6.945 billion roughly 4 years ago.

For the last 4 quarters Sands Corporation slightly edges out Ceasars Inc.

Qtr	Year	Ceasars	Sands
total	12 months	$8,817.60	$8,824.82
2nd	2011	$2,229.10	$2,448.63
1st	2011	$2,179.00	$2,206.51
4th	2010	$2,121.00	$2,123.30
3rd	2010	$2,288.50	$2,046.38

Quote: pacomartin

In general in gambling the higher the maximum payout the bigger percentage that the operator keeps.

I always thought it was sort of the opposite - the lower the minimum, the higher the operator keeps (i.e. dollar slots have a higher return than nickel slots - and from what I saw, except for Megabucks, that tended to be true)?

How else do you explain the fact that, say, "full pay" VP (on the Strip, anyway) seems to be limited to high roller areas?
(Or did you mean, "the higher the payout odds, the bigger percentage that the operator keeps"?)

Also, how much additional overhead does a multi-casino progressive such as Megabucks have, and how much effect does that have on the expected return?

Quote: ThatDonGuy

I always thought it was sort of the opposite - the lower the minimum, the higher the operator keeps (i.e. dollar slots have a higher return than nickel slots - and from what I saw, except for Megabucks, that tended to be true)?

In general the lower the minimum bet, the higher percentage the operator keeps. But it's also true that the higher the maximum payout, the more the operator keeps.

Here is an analysis of the most recent year of data from the slots in downtown Las Vegas.

Penny slots have a higher house edge than dollar slots, but people tend to bet 60 cents per pull on penny slots (20 lines times 3 cents per line). So a dollar slot machine on average earns $125 a day for the casino, while the penny slots earn $104 per day.

However, penny slots are so numerous, that they are responsible for 31.1% of slot earnings for downtown. Similarly multi-denomination machines earn a relatively low $69 per day, but they still bring in 32.0% of the total downtown earnings.

Type	Per day	Per day	Number	Number	Revenue	Revenue
	2011	2006	2011	2006	2011	2006
Megabucks	$244	$288	54	88	1.3%	1.9%
$25	$241	$190	16	22	0.4%	0.3%
$5	$203	$178	97	215	1.9%	2.9%
$1	$125	$129	951	1,654	11.6%	16.0%
other	$110	$115	153	270	1.7%	2.3%
penny	$104	$115	3,060	1,597	31.1%	13.8%
quarter	$93	$96	1,754	3,978	16.0%	28.6%
multi-denom	$69	$89	4,717	3,206	32.0%	21.4%
nickel	$63	$80	641	2,122	4.0%	12.7%
all slots	$89	$101	11,443	13,152	100.0%	100.0%

Type	FY2011	FY2006	Diff
Megabucks	$4,800	$9,256	$(4.5)
$25	$1,405	$1,523	$(0.1)
$5	$7,187	$13,981	$(6.8)
$1	$43,284	$77,773	$(34.5)
other	$6,161	$11,365	$(5.2)
penny	$115,716	$67,007	$48.7
quarter	$59,576	$138,666	$(79.1)
multi-denom	$118,852	$103,707	$15.1
nickel	$14,716	$61,687	$(47.0)
all slots	$371,697	$484,965	$(113.3)

I think if you loosened all the dollar machines to their lowest possible setting, the overall take for downtown would rise. It would give people a reason to go there as opposed to their neighborhood casino or the Vegas strip.

Downtown used to earn over $700K a year in gaming in the early 1990's, and now it is below $500K per year. That's a pretty significant drop considering they built the Stratosphere in the interim and after two decades of inflation.

In the last 5 years slot machines earn 30% less than they used to. The increase in penny and multi-denomination slots is more than offset by losses in all other types of machines. By designating dollar slots as "loss leaders" the downtown casinos might attract more slot players who are looking for something different.

Quote: pacomartin

Sands reported it's 2nd quarter results for 2011. It seems to be on track to easily edge out Ceasars Entertainment as the largest Hotel/Casino corporation in the world (by revenue) for 2011.

The tally at the first half of 2011 was:
$4.46 billion for Sands Inc.
$4.41 billion for Ceasars Corp.

But the first release was a record quarter:
$2.41 Sands Inc. 3rd quarter

Ceasars is not expected to come close to that number. It looks like Sands Inc. is expanding it's lead, and will be declared the largest gaming corporation in the world by the end of the year.

Sands seems happy with it's restricted comp policy in Las Vegas. The property is back on track. However, casino revenue was only $125 million, vs. $100 million at the Bethlehem casino.

A surprisingly strong revenue surge for MGM Resorts, based on it's big investment in MGM China. Revenue in every Las Vegas resort (except The Mirage) is at least improved over last year.

The tally at the first half of 2011 was:
$4.46 billion for Sands Inc.
$4.41 billion for Ceasars Inc.
$3.63 billion for MGM Resorts Inc.
$2.63 billion for Wynn Resorts Inc.

Third quarter so far:
$2.41 Sands Inc. 3rd quarter
$2.23 MGM resorts Inc.
????? Ceasars Inc.
$1.37 Wynn Resorts


So, either we say that MGM is making a comeback, or we say whoever invests in China makes money.

For 2010 the rank for the industry (Casinos, hotels, resorts) was:
$10.908 billion Marriott International
$8,907 billion Harrah's Entertainment
$5,979 billion MGM Mirage
$4.712 billion Starwood Hotels & Resorts
$4,563 billion Las Vegas Sands
$4,216 billion Host Hotels & Resorts

Quote: pacomartin

A surprisingly strong revenue surge for MGM Resorts, based on it's big investment in MGM China. Revenue in every Las Vegas resort (except The Mirage) is at least improved over last year.

Ceasars Corporation did not come in too badly, with only a -1.5% drop from last year for the 3rd quarter.

Third quarter:
$2.41 Sands Inc. 3rd quarter
$2.25 Ceasars Inc.
$2.23 MGM resorts Inc.
$1.37 Wynn Resorts

The tally at the first half of 2011 was:
$4.46 billion for Sands Inc.
$4.41 billion for Ceasars Inc.
$3.63 billion for MGM Resorts Inc.
$2.63 billion for Wynn Resorts Inc.

So barring any catastrophe in the next 6 weeks, the Sands Corporation will finish out this calendar year as the largest gaming corporation in the USA.

Adelson has given huge amounts of money to Jewish charities and according to the New Yorker, Adelson is "fiercely opposed to a two-state solution" for Israel and Palestine The article also described how Shelley Berkley, a Nevada Democratic Party congresswoman claimed that Adelson "seeks to dominate politics and public policy through the raw power of money. He and his wife donated $500K for President George W Bush's inauguration. Adelson's money may make a huge difference in next year's presidential race, as the Republican candidate will struggle against the incredible fund raising ability of President Obama.

The implosion of the Sands Casino was 15 years ago this month.