5 Biggest Casino Gaming News Stories of 2018

Top 5 Biggest Gaming News Stories 2018

REITs might not be an exciting topic, but GLPI, MGM Growth Properties, and Vici Properties are changing the landscape of the US casino industry.

2018 has seen many of the stories from the past few years — online gambling and technological advances — in a bit of a holding pattern. Several new industry-wide events changed the American gaming sector more than the old stories.

Next year might bring more online gambling legal news or some new tech innovation that changes everything. For now, sports betting dominates the news.

Sandwiched in the middle of the big industry news is a personal story of a legend’s fall from grace. Steve Wynn’s problems are emblematic of how 2018 was a year of transition for the gaming industry.

Since we cover American gaming news, this list of the five biggest casino gaming news stories of 2018 focused heavily on the United States casino industry. Our fifth entry is a departure, but we argue that the fifth news story will affect the US gaming industry in big ways.

1. Sports Betting in America

The most momentous event was the U.S. Supreme Court’s repeal of PASPA, a 1992 federal ban on gambling in 46 states. The SCOTUS decision opened the door for legal sportsbooks in dozens of states and the District of Columbia. It also opened the door for international gaming companies like Paddy Power-Betfair, GVC Holdings, and William Hill to expand across the United States.

Since the May court decision, Delaware, New Jersey, Mississippi, West Virginia, and Pennsylvania have changed their laws to allow single-game sports betting.

Michigan, New York, Connecticut, Minnesota, Illinois, Indiana, Ohio, Virginia, Louisiana, and several other states have discussed sports betting or introduced bills in their state legislatures.

Sports betting has not generated a lot of cash so far, but the implications are far reaching. Eilers & Krejchuk predicted as many as 32 US states could legalize sports betting in the next 7 years.

2. Steve Wynn Falls from Power

To begin 2018, Wynn Resorts CEO and founder Steve Wynn was in control of a $17 billion casino company. In the previous year, he had opened Wynn Palace, a $4 billion casino-resort, in Macau. In 2019, he was planning to open the $2.4 billion Wynn Boston Harbor in Everett. With his friend Donald Trump as US president, Wynn had ascended to be Finance Chairman of the Republican National Committee. He was a FoxNews contributor, as well.

In January 2018, the Wall Street Journal published an expose on alleged sexual misconduct over the decades by Steve Wynn. The WSJ article interviewed 150 current and former employees, with dozens in Wynn salons alleging misconduct. In the MeToo# era, the story caught fire. Steve Wynn stepped down from running the corporation he founded in February, then divested himself of $3+ billion in Wynn stock in March.

Now that the end of the year, the Massachusetts Gaming Commission prepares a report on whether Wynn Resorts deserves a license for its Everett casino. The question is whether the Wynn board covered up Steve Wynn’s alleged wrongdoing. It is a sign of how far the name “Wynn” has fallen that the casino is now named Encore Boston Harbor.

3. Consolidation of Casino Industry

Rumors have swirled that Caesars Entertainment might merge or be bought out by either MGM Resorts or Tilman Fertitta of Golden Nugget. Fertitta made a public offer, which was turned down. But Caesars’ CEO left the company and many see that as a sign that a merger might be in the offing.

Meanwhile, Penn National Gaming merged with Pinnacle Entertainment to add 40 new properties to the Pennsylvania company’s portfolio.

Boyd Gaming bought four Pinnacle properties when Penn National ran into monopoly concerns. Eldorado Resorts, a lesser known Reno-based company, bought Isle of Capri, while also joining with GLPI (see below) to purchase Tropicana Resorts.

4. REITs Rule

Five years after the first casino REIT (Real Estate Investment Trust) launched in the United States, REITs are becoming mainstream in the land-based casino industry. In 2013, Penn National Gaming spun off the first REIT in the US casino industry, Gaming & Leisure Properties Inc. (GLPI).

REITs buy casino properties, then lease them to casino companies. A real estate investment trust is a good way to collect new investment dollars. GLPI bought most of Penn National’s casinos and now leasing them back to Penn as a management company. GLPI has had a key role in consolidation of the US industry.

MGM Resorts and Caesars Entertainment followed suit, launching their own REITs — MGM Growth Properties and VICI Properties, respectively. Both performed well in 2018, producing regular dividends for shareholders. REITs no longer lease only to their former parent companies, but lease properties to former competitors now.

With $3 trillion in assets, REITs appear here to stay. They’re becoming a key factor in the US casino industry.

5. UK Industry Implodes

For the US gaming industry, one of the most significant news stories is upheaval in the United Kingdom’s gaming industry. UK operators have had to search for new markets to explore and the US industry holds the best possible returns for investors. Let’s look at the UK’s problems.

Fixed-odds betting terminals (FOBTs) in betting shops proved controversial in the UK these past few years. For that reason, the Tory government changed FOBT policies so the bet maximum is now £2 instead of the previous £100 per bet. This was considered such a big blow to the UK gaming companies the policy was throttled until late 2019 or even 2020 (at one point).

Meanwhile, the Chancellor of the Exchequer had discussed a 10% to 15% tax increase on overseas operators in the British market — that is, an increase on the 15% Point of Consumption Tax (POCT). This was speculation, until public outcry forced the May government to step up the FOBT changes to April 2019.

The Chancellor needed to replace those lost tax revenues, so the speculated POCT increase was announced as a 10% increase (to a 25% POCT), which also was sped up to April 2019. It amounts to two hammer blows coming to UK gambling companies in the next few months.

To make matters worse, the UK Gambling Commission announced that British betting companies cannot advertise during UK sporting events. These are massive blows to UK gaming companies, so they’ll have to find new revenue sources quickly — or face a new wave of consolidation themselves.