RCI Hospitality Holdings, Inc. (NASDAQ: RICK), the parent company of Rick’s Cabaret and other gentleman’s clubs, could pull the plug on plans for casinos in Colorado.

In December 2022, the company acquired a four-story, 30,000-square-foot building at 130 Main Street in Central City for $2.4 million in cash with hopes of turning that property into Rick’s Cabaret Steakhouse & Casino. At that time, RCI told investors that affiliated entities had “applied for a gaming license to operate 175 slot machines, six blackjack tables, one craps table, and one roulette table in Central City.”

Now, the company appears to be having second thoughts about its Central City plans. While no firm decision has been made as of yet, RCI may have other avenues through which to better deploy capital instead of waiting for the Colorado regulatory process to take shape.

We may end up with actually withdrawing the gaming license at some point instead of paying all this money for the investigation and waiting the time line they want, I just don’t know yet,” said RCI President and CEO Eric Langan on the company’s recent first-quarter earnings conference call.

RCI and its subsidiaries run more than 60 gaming venues, gentleman’s clubs, and sports bars across the US.

Rick’s Casino Ambitions in Limbo

While the $2.4 million RCI paid for the Central City property isn’t a massive sum of money, it’s arguably somewhat significant for a company with a market capitalization of $449 million.

“I’m currently basically evaluating that timeline with our new refocus on capital allocation, doing a lot of math right now and calculating whether or not we want to even continue to focus on that at all or take our money and energy and focus instead of casino operations back us back on our core business,” said the chief executive office on the earnings call.

He added that the company could consider share buybacks as the Colorado casino efforts move to the back burner. A share repurchase program could be beneficial at a time when RCI is off 29.5% year to date.

Rick’s Not Abandoning Colorado Outright

While casino efforts may be pushed back or abandoned, RCI isn’t giving up on Central City. It will move ahead with opening Rick’s Cabaret Steakhouse there as well as proceed with a new Bombshells restaurant in the city.

Gaming venues in Central City include Century Casino, Dostal Alley Casino, Dragon Tiger Casino, and Easy Street Casino, among others.

Scores of Queens business owners, civic leaders, and residents gathered at State Sen. Jessica Ramos’  (D-Queens) office Monday in an effort to push the legislator to support plans for a new casino in the borough.

The gaming venue would be part of the broader $8 billion Metropolitan Park plan pitched by New York Mets owner Steve Cohen. He’s partnering with Hard Rock International in hopes of landing one of three downstate casino licenses state regulators are expected to award in late 2025 or in early 2026.

Ramos represents the Citi Field area and has thus far been reluctant to back legislation that would change the parkland designation of Willets Point. Changing that classification is essential because without that alteration, Cohen and Hard Rock might not be able to pursue a casino license. That would be to the dismay of some Queens leaders and residents.

This is a great project and Jessica we’re calling out to you. We love you, but we need your help and without you this cannot go through,” said Aaliyah Rose Scott, of Jackson Heights, as reported by CBS New York.

The rally at Ramos’ office was organized by the Coalition for Queens Advancement.

Ramos Previously Criticized Cohen’s Tactics

While Ramos has been noncommittal regarding whether or not she’ll introduce legislation to remove Willets Point’s parkland status, she says she’s open to dialogue with Queens groups and citizens that both support and object to the gaming venue.

Last month, Ramos and Queens Future — a group with ties to Cohen — released polls detailing locals’ views of the gaming project. Not surprisingly, the poll commissioned by a Ramos donor indicated negative views on the casino while the Queens Future survey showed strong support for Metropolitan Park.

“We want Metropolitan Park. We want this for the jobs for the young people…we want this for the green space, we want this because we deserve nice things,” said Saeeda Dunston, with Elmcor Youth and Adult Services, according to CBS New York.

Interesting Timing for Queens Casino Rally

The timing of the Monday gathering is interesting on multiple. First, it arrived against the backdrop of clarity that in the case of many of the groups vying for New York City-area casino permits, there are no backup plans. That’s true of Cohen and Hard Rock. Should Metropolitan Park not procure a casino permit, the project won’t come to fruition and Willets Point will likely remain an “asphalt jungle” for years to come.

Second, the possibility of surprises in the New York casino competition could be increasing as industry observers note ethics concerns could hamper bids by Genting and MGM Resorts International. Those operators run Empire City in Yonkers (MGM) and Resorts World New York in Queens (Genting).

That’s relevant because when New York policymakers approved legislation to allow for three gaming venues in the downstate region, it was widely believed Empire City and Resorts World New York were essentially grandfathered into two of those permits.

Emmett Investment Management, a money manager focusing on mid- and small-cap stocks, penned a letter to PlayAGS (NYSE: AGS) investors on Tuesday telling them they should oppose the $1.1 billion takeover offer floated on May 9 by Brightstar Capital Partners.

The board of the Las Vegas-based slot machine approved the go-private bid from the private equity firm and if shareholders do the same, the transaction could close in the second half of this year. Brightstar’s offer values PlayAGS at $12.50, or a 40% premium to where the stock closed on May 8. PlayAGS shares are up 33.3 over the past week but have yet to ascend to $12.50.

In its letter to investors, Emmett questioned the timing of the offer becoming public, noting it arrived just a day before the target released impressive first-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) results.

The Brightstar transaction was announced just hours before the release of AGS’s transformational first quarter results,” wrote Emmett CIO and founder Alexander Rohr. “The Company’s first quarter results reinforce our optimistic view of AGS’s prospects, as organic adjusted EBITDA grew 21%, far outpacing the industry. Business mix is also improving at AGS: adjusted EBITDA from the Company’s interactive segment, to which the market assigns the highest multiple, increased almost 9x year-over-year and almost 50% sequentially.”

New York-based Emmett owns approximately 1.5% of PlayAGS outstanding equity.

Emmett Says Takeover Bid Overshadowed PlayAGS Earnings

It’s not uncommon for some investors to oppose acquisitions and there are recent examples of professional market participants resisting gaming industry takeovers.

“If market participants had been given the opportunity to digest first quarter results absent Brightstar’s bid, we believe AGS shares would be trading well above the current market price of $11.40,” wrote the Emmett chief investment officer. “Any reasonable forecast of AGS’s 2024 adjusted EBITDA increased by ~15%, which on a constant enterprise value/EBITDA multiple—arguably conservative given improving mix—would imply a share price higher than $11.40.”

Rohr went on to write that PlayAGS investors are essentially being asked to accept a bid “that offers effectively zero—or negative—premium.” He added that the company’s first-quarter numbers don’t reflect the potential upcoming benefit to the company via possible disruption in the industry caused by the pending merger of International Game Technology’s (NYSE: IGT) global games unit with Everi Holdings (NYSE: EVRI). He said that transaction could actually help PlayAGS add market share, and that probably isn’t accounted for in the Brightstar offer.

Emmett Not Opposed to PlayAGS Selling, Sees Scant Value In Brightstar Bid

Rohr said his firm isn’t averse to PlayAGS being acquired, but he believes the Brightstar offer isn’t adequate compensation for investors given the progress the target has made and its potential to build on that over the long term. Rohr also outlined a scenario in which PlayAGS could create significant value for shareholders without the takeover.

We believe AGS would have a bright future as a standalone public company, with at least $225 million in 2026 adjusted EBITDA clearly achievable. Even on a multiple of 7x adjusted EBITDA — a significant discount to slower-growing peer Light and Wonder’s 9x NTM multiple — AGS shares would trade at $24.70, nearly 100% higher than Brightstar’s bid,” he opined.

Rohr didn’t mention other potential suitors for PlayAGS and some analysts have noted the target is unlikely to be the subject of a bidding war.

Nassau Community College is paying a lobbying firm, but that doesn’t mean the educational institution will push New York lawmakers to approve a gaming license for Las Vegas Sands at Nassau Hub.

State lobbying records indicate the junior college hired Shenker Russo & Clark, LLP last year at a rate of $5,000 per month and recently renewed its contract with the firm. The initial agreement called for the Albany-based law firm to lobby on behalf of the college on issues such as education, funding, and casino gaming.

(Shenker Russo & Clark, LLP should) focus its efforts on the State budget and any other general legislation as it affects the College for the purpose of improving the educational experience for the students and the College Community,” according to the terms of the original contract.

Las Vegas Sands, the largest gaming company by market capitalization, is hoping to build a $6 billion casino hotel at the site of Nassau Coliseum in Uniondale. Despite some controversy surrounding that effort, the LVS bid is widely viewed as one of the most credible in downstate casino competition.

Nassau Community College Taking Different Approach than Hofstra

In an interview with Newsday, Jerry Kornbluth, a spokesman for the college, said the institution has not asked Shenker Russo & Clark to lobby on behalf of the school as it relates to the casino project, adding that Sands is likely doing its own lobbying.

So chippy has that relationship become that in February, former Gov. David Paterson (D-NY) — now a Sands lobbyist — said Hofstra barred him from speaking at the school at which he earned his law degree. The following month, Nassau County Executive Bruce Blakeman (R) leveled allegations of collusion against Hofstra, claiming representatives of the school may have endeavored to help New York Mets owner Steve Cohen and Hard Rock International, the bidders for a Queens casino license.

Hofstra has denied those claims, though the school has made clear it’s not opposed to New York City-area casinos. It just doesn’t want one near campus. For its part, Nassau Community College isn’t engaging in such flaps and its support of the LVS plan is reasonable when accounting for the school’s large budget deficit.

Nassau Community College Could Benefit from Casino

While Nassau Community College isn’t directly lobbying on the Long Island casino plan, the school has something to gain if Sands wins a gaming license or something to lose if that doesn’t happen.

In January 2023, the gaming company said it will use the school as its training facility. That public-private arrangement could be a jobs creator and revenue generator for the school.

The partnership between the casino operator and the community college could spark the creation of related course fares, including classes focusing on casino and hotel management, security, culinary programs, and meetings and banquets, among others.

The Las Vegas Valley is home to hundreds of bars, pubs, restaurants, and taverns at which customers can play keno, slots, and video poker. As the owner of more than 70 such venues, Golden Entertainment (NASDAQ: GDEN) is the dominant operator of Sin City gaming bars, but it could face new competition and it could be familial in nature.

On its recent first-quarter earnings conference call, Red Rock Resorts (NASDAQ: RRR) President Scott Kreeger said the gaming company could entertain establishing a footprint in the Las Vegas tavern business.

It’s a great place to invest in,” said Kreeger on the call. “It’s a unique customer with a different profile than our core customer. So, it skews younger and skews toward the sports bettor. We like that kind of customer.”

As reported by Howard Stutz of The Nevada Independent, should Red Rock pursue direct gaming bar competition with Golden, it could make for some interesting family gatherings because Golden CEO Blake Sartini is the brother-in-law of Red Rock CEO Frank Fertitta III and Vice Chairman Lorenzo Fertitta. In 1983 Sartini married then Delise Fertitta and one of their three children is named Lorenzo, presumably after her brother.

Red Rock Has Clear Tavern Ambitions

It’s not a matter of “if,” but when Golden and Red Rock butt heads on the tavern front. The latter already has seven such locations under contract with a pair slated to open later this year with the rest following in 2025.

“We think it’s an opportunity for us to kind of expand into what we call the micro-market within the (Las Vegas) valley,” added Kreeger.

In Nevada, gaming taverns feature bars and restaurants and are classified as restricted venues because they are allowed a maximum of 15 gaming devices.

Golden Ready for Gaming Bar Fight

Owing to Red Rock’s status as one of the largest operators of casinos catering to Las Vegas locals, the company is a credible competitor in the gaming bar business. However, Golden has advantages of its own. Those include its level of name recognition among Las Vegas locals, a strong balance sheet, and a prudent acquisition strategy. That includes Golden often getting first crack at gaming pubs that are put up for sale.

“In April, we purchased two additional taverns, growing our tavern portfolio to 71 locations, with 68 of them in the Las Vegas Valley. We anticipate opening our 72nd tavern by the end of Q2, and we still target growing the portfolio to over 90 locations within the next few years,” said Golden CFO and President Charles Protell on that company’s May 8 earnings conference call.

In terms of Las Vegas casino hotels, Golden’s portfolio consists of The Strat near the Strip and two Arizona Charlie’s locations — a significantly smaller portfolio than Red Rock’s. However, Golden is one of the top operators in Laughlin and Pahrump — two markets in which Red Rock doesn’t have venues.

Shares of Boyd Gaming (NYSE: BYD) delivered a much-needed bounce early Monday after the regional casino operator announced a new $500 million share repurchase program.

The Las Vegas-based company said its board of directors approved the buyback plan. Boyd also declared a quarterly dividend of 17 cents per share, which was in line with what the operator announced earlier this year.

Considering the additional authorization, the Company had approximately $721 million remaining in repurchase authority as of March 31, 2024,” according to a statement. “Additionally, the Board of Directors has declared a quarterly cash dividend of $0.17 per share, payable July 15, 2024, to shareholders of record as of June 15, 2024.”

Shares of Boyd were higher by 2% in early trading on the news of the new stock repurchase scheme.

Good Timing for Boyd Buyback Announcement

News of the fresh $500 million share repurchase plan arrived as Boyd’s stock has been floundering, potentially indicating management sees value in the downtrodden shares.

Over the past month, the stock is down 14.3% — a slide that has the shares lower by 11.9% year to date. Much of that weakness is attributable to the operator’s disappointing first-quarter earnings report in which it missed Wall Street estimates.

Boyd runs 10 gaming venues in its home market, including Aliante, California, Cannery, Fremont, Gold Coast, Jokers Wild, Main Street Station, Sam’s Town, Suncoast, and The Orleans. It also operates regional casinos in Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio, and Pennsylvania.

Boyd Buyback Announced After Insiders Dumped Shares

An interesting element of the Boyd buyback announcement is that it arrived soon after insiders at the gaming company dumped a significant amount of shares. In a less than three-week stretch spanning February 20 through March early March, Boyd insiders, including Chairman Emeritus Bill Boyd — son of the company’s founder Sam Boyd — and CEO Keith Smith sold approximately $53.4 million worth of the stock.

Those sales came in advance of the aforementioned first-quarter earnings report on which the stock tumbled. Those transactions were offset by the company buying back $105 million worth of its shares in the first quarter.

As of the end of March, Boyd Gaming had cash on hand of $283.5 million, and total debt of $2.9 billion.

It was widely believed that as the iGaming and online sports wagering industries matured and as analysts and investors demanded tighter focuses on profitability, promotional spending would rationalize. One analyst said that while that’s happening, the extent to which promotional expenditures have declined is debatable.

In a note to clients today, Deutsche Bank analyst Carlo Santarelli said that while it’s accurate that promotional spending as a percentage of gross gaming revenue (GGR) declined in the first quarter, that may have been more the result of a small number of new states joining the regulated online sports wagering fray. State-level debuts typically account for a significant chunk of customer attraction spending as operators look to bolster their client bases and grab market share in the early innings.

For some individual operators, the notion of reducing promotions from an organic/same-store perspective is also correct. However, when looking at data from states that are not freshly launched, we see no evidence of a slowing cadence of promotions overall,” wrote the analyst.

Translation: mobile sportsbook operators may well be spending big on client luring and retention in “vintage” states such as New Jersey and Pennsylvania, among others.

Sports Betting Promo Spending Can Hinder Profitability

Promotional spending is, arguably, the elephant in the regulated sports betting room, because operators need to spend to acquire and retain customers. But that often comes at the expense of attaining profitability.

“While we don’t think the igaming promotional landscape, which we believe has also intensified, is much better than that of the OSB landscape in terms of promotions relative to GGR, and given that the GGR mix is heavily skewed toward OSB, we see a long path to achieving these targets,” added the analyst.

Even with the surprisingly elevated promo expenditures, some gaming companies are finding ways to become profitable. Flutter Entertainment’s (NYSE: FLUT) FanDuel was profitable on an annualized basis last year while rival DraftKings (NASDAQ: DKNG) delivered a surprise first-quarter earnings per share (EPS) profit on the basis of non-generally accepted accounting principles (non-GAAP).

In a recent report, Goldman Sachs highlighted 21 growth companies that were not profitable last year that could turn that corner in 2024. Two of the stocks on that list were DraftKings and Rush Street Interactive (NYSE: RSI).

Hold Use Criticized

In wagering, “hold” refers to the percentage of money operators retain for each dollar wagered. Increasingly, gaming companies are gauging internal performance against expected hold — a number they likely set themselves. While Santarelli acknowledged hold misses explain why some first-quarter results were weak in the sports betting space, he’s not keen on that methodology.

“We understand the rationale and the logic, though we don’t see the investment community warming up to a place where every miss is chalked up to hold that was below a theoretical number provided post the period,” observed the analyst.

He also pointed out that while sportsbook operators were pinched a bit last month due to unfavorable outcomes on the Masters and the NCAA Tournament, but added the weeks after those events have been kind to gaming companies.

Residents in the neighborhoods around Times Square strongly oppose the area becoming home to a casino hotel. That according to a new poll by Tulchin Research.

The Times Square casino group is led by Caesars, real estate developer SL Green, and Jay-Z’s Roc Nation entertainment agency — an highly recognizable consortium, but one that apparently has some grass roots work to do. The poll indicates 71% of those surveyed oppose the casino effort with 59% saying they “strongly oppose” it while just 23% of voters in the Times Square area back a gaming venue.

This robust opposition cuts across all major demographic groups, including particularly strong objection among women, with 77% opposed (62% strongly opposed), and voters aged 55 and over, where opposition reaches 81% (68% strongly opposed),” noted Tulchin.

Perhaps telling about the intensity of the anti-casino sentiment is the extent to which men living in and around Times Square view the idea in a negative light. Overall, 65% of men in the area don’t favor a gaming venue in Midtown Manhattan while 63% of males in the 18 to 54 age group — a vital demographic for gaming companies — oppose it.

Traffic, Crime Among Reasons Times Square Casino Opposed

Residents’ reasons for not endorsing the Times Square casino pitch are easy to understand. Eighty-one percent believe a gaming venue will worsen traffic in the already highly congested area while 80% believe the property would contribute to more crime. The same percentage believe the casino would make Times Square a less pleasant part of New York in which to live and work.

Regarding Broadway, 65% of those polled by Tulchin think a casino hotel would hurt theaters while another 64% see a gaming venue as a potential headwind to area small businesses, including restaurants.

Caesars and SL Green are attempting to allay those concerns. Last year, the companies announced that a variety of businesses in Times Square would be linked to Caesars Rewards in an effort to drive customers of the casino hotel to eateries and shops in the theater district.

Times Square Bad Casino Location, Say Voters

According to Tulchin, just 9% of voters queried believe Times Square is the optimal location for a new casino hotel, but just 12% said they favor gaming venues being built anywhere in New York City, including Times Square.

In what could be potentially about overall sentiment toward casinos in the Big Apple, 24% of those polled by Tulchin said they’re OK with a gaming venue in the city as long as it’s not in Times Square, but 49% don’t want new casinos anywhere in the city.

Currently, Caesars and Wynn Resorts are the big names eyeing gaming venues in Manhattan while other competitors are eying the Bronx, Brooklyn, Nassau County, and Queens.

IAC/InterActiveCorp (NASDAQ: IAC) Chairman Barry Diller earned an unrestricted Nevada gaming license today after the Nevada Gaming Commission (NGC) voted 4-1 in favor of granting him that status.

That ends a more than two-year saga in which Diller held a restricted license due to a federal probe into allegations he may have committed insider trading in options contracts on video game publisher Activision Blizzard (NASDAQ: ATVI) in advance of Microsoft (NASDAQ: MSFT)  announcing a $68.7 billion takeover offer for that company.

He appeared before the NGC today via Zoom from New York.

Why Diller Needs Nevada Licensing

While Diller isn’t involved in day-to-day casino operations in Nevada, he needs to be licensed by the state because IAC/InterActiveCorp is the largest shareholder in MGM Resorts International (NYSE: MGM).

As IAC CEO Joey Levin recently noted in his first-quarter letter to investors, the conglomerate now owns 20% of MGM shares outstanding, easily making it the largest investor in the gaming company. Under Nevada law, outside investors that come to control 5% or more of publicly traded gaming entities based in the state must be licensed. NGC commissioners are satisfied with the results of the SEC inquiry and appeared enthusiastic in granting Diller unrestricted licensing.

You’re eminently qualified. Serving on the Coca-Cola board and others, you have experience that very few people have. Good for MGM to have you on the board,” said Commissioner Brian Krolicki at the Thursday meeting.

Both Diller and Levin are members of MGM’s board of directors. Commissioner Rosa Solis-Rainey was the NGC member that opposed full licensing of Diller, noting that the SEC could restart its insider trading investigation. Should that happen, the onus would shift to the NGC in terms of potentially revoking his license.

“I wish there was a way to give him a non-restricted license with some caveat that if there’s any settlement or prosecution, he comes before us again. I in no way want to impugn his character or history of service to communities or his businesses,” she said.

Other Commissioners Supportive of Diller

Perhaps helpful to Diller’s cause is the point that IAC has availed itself to be a long-term investor in MGM and one that’s not taking a potentially controversial activist stance. August marks the four-year anniversary of IAC buying MGM shares.

Several months later, IAC added to that position. Those investments coupled with the Bellagio operator’s prolific share repurchases have helped IAC become the biggest investor in the casino giant and that appears to be just fine with the NGC.

NGC Chair Jennifer Togliatti praised Diller for being forthright in his testimony while Commissioner Abbi Silver — the newest member of the NGC — said Diller should be licensed without conditions and that she was satisfied with comments by the SEC.

Gaming and Leisure Properties (NASDAQ: GLPI) said Thursday it is paying $105 million to Strategic Gaming Management, LLC to acquire the property assets of three casinos in Nevada and South Dakota.

The properties being purchased by the real estate investment trust (REIT) are Baldini’s Casino in Sparks, Nevada and the Silverado Franklin Hotel & Gaming Complex and the Deadwood Mountain Grand in South Dakota.

Simultaneous with the acquisition, GLPI and affiliates of Strategic Gaming Management, LLC  will enter into two cross-defaulted triple-net lease agreements, each for an initial 25-year term with two ten-year renewal periods. GLPI also provided $5 million in capital improvement proceeds at the closing of the transactions for a total investment of $110 million,” according to a statement issued by GLPI.

It’s the second deal announced by Pennsylvania-based GLPI this year. In February, the gaming landlord said it was paying $175 million for the property assets of Tioga Downs Casino Resort in Nichols, N.Y.

Acquisitions Fit Gaming and Leisure Mold

Prior to today’s announcement, GLPI owned the real estate assets of 62 gaming venues in 19 states. The transactions with Strategic Gaming Management keep with the REIT’s penchant for avoiding volatile gaming markets while focusing on regions often overlooked by rivals.

With the purchases of the Silverado Franklin Hotel & Gaming Complex and the Deadwood Mountain Grand, GLPI enters South Dakota for the first time. Prior to today, the casino landlord’s closet properties to the Dakotas were in Illinois and Iowa.

“Silverado has completed over $32 million of capital projects since its inception to maintain and enhance its offerings, including buffet renovations, new restaurant openings, and casino remodels. Silverado is expected to begin construction on a hotel renovation in 2024, using a portion of the $5 million in capital improvement proceeds funded by GLPI at the closing of the transactions,” according to the statement.

Other Details of Gaming and Leisure Deal with Strategic

When the three purchases are finalized GLPI’s portfolio will increase to 65 properties and its tenant roster will rise to nine.

As part of the agreement, GLPI gains rights of first refusal on other gaming properties Strategic Management might up to sell “until Strategic’s adjusted earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) related to GLPI owned assets reaches $40 million annualized.”

Strategic’s initial annual rent payments to GLPI will be $9.2 million, representing a cap rate of 8.2%. A 2% annual increase goes into effect in year three and an inflation-linked escalator of “the greater of 2.0% or CPI capped at 2.5%” starts in year 11.