Caesars Entertainment’s ongoing push to reduce the strain from its regional casino leases has caught fresh interest following recent comments by JP Morgan analyst Daniel Politzer.
Investor Note Hints at Multi-Part Renegotiation Between Caesars and VICI
Politzer hinted that landlord VICI Properties might be willing to change the financial terms. In an investor note last week, Politzer suggested that adjusting a rent structure that has become more and more of a burden could help both parties.
Politzer highlighted that Caesars’ group of regional gambling venues brings in about $750 million in annual operating cash, just a bit more than the $730 million it pays in rent. He claimed this small difference does not give the operator much room to breathe with yearly increases linked to inflation. He called the current arrangement out of step with earnings and suggested VICI might think about easing the rent increases or lowering the base amount down the line, as reported by CDC Gaming.
Any change like this, though, would mean Caesars has to give something up. Politzer hinted that a possible deal could involve handing over a physical casino or unused land to VICI. Another option, he said, might be to stretch the lease out for ten more years, moving the end date to the mid-2040s. He stressed that any agreement would probably have several parts and would not be a simple tweak.
Politzer Highlights Vegas Strength Amid Industry Uncertainty
Despite the regional situation having a negative impact on both companies’ stock prices, Politzer spotted signs to be hopeful in other parts of the gaming industry. He pointed out that investors were viewing the Las Vegas Strip more evenly, though overall leisure demand in December seemed inconsistent. From what he could tell, meetings during the week and convention visitors were helping to make up for weaker tourism trends after Thanksgiving.
Across the globe, Politzer talked about mixed feelings regarding Wynn Resorts’ upcoming Wynn Al Marjan Island project in the UAE. Even though the resort will not open its doors for over a year, he pointed out that Wynn’s own forecasts assume the property will vie in a market worth billions run by three main players. Right now, since Wynn is likely to be the only one in the game when the market kicks off, Politzer thinks the resort might do better than the company’s initial predictions.He also sounded positive about digital betting companies.
New happenings in prediction markets could let big sports betting brands join in more. This comes after rules forced platform Kalshi to stop work in Nevada. Additionally, changes happened with Robinhood and Susquehanna International Group. Politzer said if companies like DraftKings and FanDuel start event-based trading, it would make things clearer.