Good morning, and welcome to the Indy Gaming newsletter, a weekly look at gaming matters nationally and internationally and how the events tie back to Nevada.

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M Resort has had designs for a second hotel tower since the Henderson casino opened in March 2009. However, the financial issues that led Penn Entertainment to acquire the property 19 months later kept the expansion plans on the shelf.

But all of that changed Monday when, 14 months after Penn first announced it would build M Resort’s second tower, company executives and government leaders held a ceremonial groundbreaking at the hotel-casino. The 20-month project will cost $206 million and add 384 rooms to M Resort, bringing its total capacity to 774 rooms and suites.

The project will also include expanded meeting space and other amenities.

Penn CEO Jay Snowden, who attended the groundbreaking but didn’t participate in the event,  told The Nevada Independent that the company could have pulled the trigger on the hotel expansion a few years ago.

“We've had demand exceeding our room capacity here for years, but there was this thing called COVID that kind of got in the way of the [expansion] plans,” Snowden said.

“A lot of group business demands outgrew us,” he added. “Soon after the news that we were breaking ground, we got a lot of callbacks.”

M Resort sits on 93 acres bordered on the west by Las Vegas Boulevard and St. Rose Parkway to the north. On a quarterly earnings call this year, Snowden said it was one of the company’s “highest-performing properties.”

It’s the flagship of the company’s Nevada casino operations, which also include Cactus Pete’s and Horseshu in Jackpot near the state’s northeastern border with Idaho. 

Penn sold the operations of the Tropicana Las Vegas last year to Bally’s Corp. but was mentioned as a potential buyer of the Cosmopolitan of Las Vegas and The Mirage when the two Strip resorts were on the market.

“We’ll always have an interest in having a presence on the Strip,” Snowden said. “But we're not going to chase something that doesn't make sense. And we're not going to overpay for an asset.”

Snowden had a similar response when asked about expanding Penn’s presence to Reno or South Lake Tahoe. 

“If there's an opportunity that we think could be a good investment and give us great returns, of course, we'll take a look,” he said.

M Resort is one of Penn’s four nationwide expansion projects, including a casino in Ohio and two Illinois properties, that will cost the company a combined $850 million. Real estate investment trust Gaming and Leisure Properties, which owns the land associated with the four casinos, committed as much as $575 million toward the combined costs. Penn operates 43 casinos in 20 states.

In November, Penn signed a 10-year, $1.5 billion agreement with ESPN to launch ESPN Bet, an online sports betting platform and product. 

On Monday, Maryland and Iowa each released sports betting results for November showing ESPN Bet capturing roughly 6 percent of each state’s market over a 17-day period.

“We're pleased but there's a lot of work to do,” Snowden said. “This is about retention [of customers] long term. The demand has far exceeded our expectations.”

ESPN Bet has launched in 16 states, but not Nevada. The company's three in-state casinos have sportsbooks leased to William Hill US. Snowden alluded to Nevada’s requirement for in-person registration for mobile sports betting as a hang-up that will keep ESPN Bet on the sidelines for now.

“I would say it will happen at some point, but the online sports betting law is a bit nuanced,” he said. “It’s a more challenging issue since we only have one property in Las Vegas right now. So it's convenient for some, but not for all. I would say it's definitely in the future.” 

Snowden said M Resort’s sportsbook, however, could be rebranded as ESPN Bet.

“We are going through a process with ESPN and doing site visits with us around the country,” he said. “This is a very appealing property for them to have a brand presence. But you want to have an online sports betting product with a retail sportsbook.”

BetMGM views new technology as a method to increase its Nevada presence

BetMGM CEO Adam Greenblatt called 2024 an “investment year” for the online gaming company as it looks to improve its technology offerings and expand its sports betting operation to a 29th state.

During a call with analysts last week to update the company’s financial standing, Greenblatt described an initiative involving BetMGM sportsbooks at Strip casinos operated by MGM Resorts International, which has a 50 percent ownership stake in the sports betting firm.

BetMGM is also seeking Nevada regulatory approval for the use of a mobile wallet connected to the company’s sports betting app that would allow the seamless transfer of a customer’s account balance between states. The idea is to remove the step of requiring a customer to open a second account just for Nevada.

Greenblatt said the technology is used in most of BetMGM’s markets outside of Nevada, adding the mobile wallet is not encumbered by state lines and has increased player engagement, player retention and operational efficiency.

“Now that our players don’t need to go through the process of reregistering new accounts in each state, we are seeing a five-times increase in new state bettors that previously played with BetMGM in a different state,” he said.

The challenge is Nevada, where out-of-state customers visiting the Strip are required to open separate BetMGM accounts. Nevada also doesn’t allow remote registration for sports betting.

“[BetMGM] management noted they currently have 17 percent of market share in online sports betting, down from 18 percent in recent periods,” Jefferies gaming analyst David Katz wrote in a research note. “Management reiterated it expects to capture 20 percent to 25 percent of the market by 2026 via product enhancements.” 

Greenblatt said MGM’s Strip properties have more than “4 million unique Vegas visitors” within BetMGM’s customer database. He said the company is “working constructively” with the state’s Gaming Control Board on the regulatory process.

Most analysts view the next 12 months as a reset year for the sports betting operator that has lost market share on a national scale to DraftKings, FanDuel and Caesars Sportsbook and facing headwinds from the recently launched ESPN Bet and Fanatics Sportsbook.

Even in Nevada, where DraftKings and FanDuel don’t operate, BetMGM trails the combined Caesars/William Hill sports betting operation that captures more than 50 percent of the state’s estimated sports betting revenue, according to Eilers & Krejcik Gaming, a Southern California-based advisory firm. 

BetMGM also competes for Nevada customers with Circa Sports and Red Rock Resorts’ STN Sports. The three are the only other companies with a double-digit percentage market share in the state, according to Eilers & Krejcik. 

Chris Krafcik, the firm’s managing director for sports and digital gaming, said BetMGM believes that bolstering its marketing efforts strategically would help it catch up with the competition.

Rumbolz elected to a two-year term as AGA board chairman

Everi Holdings Chairman Mike Rumbolz was elected to a two-year term as board chairman for the American Gaming Association. His tenure begins in January and he replaces Hard Rock Entertainment Chairman Jim Allen, who has held the role since January 2022.

The AGA is the gaming industry’s Washington, D.C.-based trade organization and produces the annual Global Gaming Expo (G2E).

Rumbolz retired as CEO of the gaming equipment and payment technology provider Everi in 2022 and was elected to AGA’s Gaming Hall of Fame. He plans to continue the organization’s efforts to halt illegal gaming operations and increase responsible gambling initiatives. 

Rumbloz, whose career began in the 1980s as a Nevada gaming regulator, has worked for gaming equipment manufacturers and casino operators.

News, notes and quotes

Hornbuckle praises funding for high-speed rail train from Los Angeles

MGM Resorts CEO Bill Hornbuckle hasn’t been shy about lamenting the regular traffic backups that occur along Interstate 15 during busy weekends. In a July interview, he called the situation the top complaint by the company’s Southern California customer base.

Last week, Hornbuckle, chairman of the U.S. Travel and Tourism Advisory Board, applauded the $3 billion in federal funding Brightline West secured for a long-delayed high-speed rail train from Las Vegas to Southern California, saying it will help alleviate bottlenecks and delays along I-15 and open Las Vegas to increased visitation.

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Busy first day at Red Rock’s $780M Durango Casino Resort 

CBRE Equity Research analyst John DeCree strolled across Durango Drive a week ago to check out the opening of Red Rock Resorts’ $780 million Durango Casino Resorts. CBRE’s offices are in the Uncommons complex across from the main entrance.

He said the activity level for a Tuesday afternoon was impressive, even for a new opening. Every area of the casino was crowded with customers.

“While we always caution about reading too much into opening day, the new casino was buzzing all day and night, evidencing just how deep demand is within the property’s five-mile radius of no other [casinos],” DeCree wrote in a research note.

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Hill, White reappointed to the Las Vegas Stadium Authority board

Las Vegas Convention and Visitors Authority CEO Steve Hill and Laborers International Union Local 872 leader Tommy White were reappointed to new three-year terms on the Las Vegas Stadium Authority by Gov. Joe Lombardo.

The panel oversees the operations of Allegiant Stadium and manages tax revenue distributions and capital improvement funds. The stadium authority is negotiating an agreement covering the Oakland Athletics’ proposed $1.5 billion stadium on the Strip.