The Mohegan Tribal Gaming Authority recently released its fourth-quarter fiscal results ending 30 September 2023, showcasing notable strides in revenue diversification despite inconsistent results across some metrics. The company’s dedication to its customers and employees also set it apart from the competition, as management remained confident in its 2024 prospects, placing significant hope in its new and planned venues. 

Some Setbacks Offset Record Revenues

The overall net revenue for Mohegan operations surged to $444.3 million, marking a commendable 7.6% increase in year-on-year comparisons. This increase contributed to a record 2023 consolidated net revenue of $1.67 billion, reaffirming the company’s successful strategy. Adjusted EBITDA, likewise, fell just short of 2022’s full-year record of $403.9 million, settling at $399.9 million for 2023.

However, a more comprehensive look into individual metrics reveals that income from all operations experienced a 24% decrease, totaling $48 million. Even more stark was the net income attributable to Mohegan, which saw a 116% decline, resting at -$19.9 million. Additionally, adjusted EBITDA for all operating results witnessed a decrease of $11.7 million, amounting to $88 million.

Individual Venue Results Remain Mixed

These results are primarily due to the inconsistent performances of individual properties. Mohegan Pennsylvania was among the best-performing venues, offsetting the 3% decline in net revenue to $62.8 million with a 4% increase in adjusted EBITDA and a 4% upsurge in general net income. However, other resorts faired noticeably worse.

Niagra Resorts’ 5% increase in net revenue to $88.7 million did not reflect across other metrics as adjusted EBITDA decreased by 21% to $14 million, while net attributable income plummeted by 59% to $5 million. Mohegan Sun fared even worse, with net revenue shrinking by 5% to $224 million and Adjusted EBITDA falling off a cliff, dropping 134% to $56 million. 

Mohegan Is Optimistic Regarding Its Prospects

Despite rising revenues, significantly higher operating costs left Mohegan with a net loss of $18.8 million for the quarter, a sharp decline from Q4 2022’s $29.6 million net income. However, company management remained confident in its direction as CEO Raymond Pineault was optimistic regarding Mohegan’s foray into online gaming and the success of its new venues.

We were exceptionally pleased with the performance of our digital team. We are also extremely excited about the opening of our newest venture, Mohegan INSPIRE, and the property’s ability to drive additional growth for the organization.

Raymond Pineault, Mohegan Gaming & Entertainment CEO

The company’s diversified approach and the recent strategic initiatives remain vital focal points in navigating the gaming landscape, ensuring resilience and sustained growth despite the dynamic market conditions. Mohegan has demonstrated its ability to capitalize on its investments, so 2024 should hopefully bring enduring success for the tribal operator.

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Gaming and Leisure Properties (GLPI) has published its financial results for the first quarter of the year. The company recorded favorable results with metrics increasing across the board.

As reported by GLPI, the total company revenue increased by 12.7% year-on-year to $355 million. Its income from operations, meanwhile, skyrocketed from $199.8 million in Q1 2022 to $266.8 million in Q1 2023.

The company’s total net income for the period was $188.7 million, representing a stellar 55% increase. The company also recorded adjusted EBITDA of $323.1 million, which translates into a 10% YOY rise.

Adjusted Funds from Operations (AFFO) for the period sat at $248.6 million. The company updated its guidance, saying that it expects AFFO of between $984 million and $997 million for the year ending December 31.

The company also said that it paid its first quarter dividend of $0.72 per share to shareholders as well as a profit dividend of $0.25 per share related to the sale of its Tropicana Las Vegas property.

The first quarter of the year was a time of busy activity for the company. In January, the company called for redemption of its $500 million, 5.375% Senior Notes – a move it completed by February 12.

In January, GLPI also completed the $635 million sale-leaseback of Bally’s Tiverton and Hard Rock Hotel & Casino Biloxi from Bally’s Corporation. The two properties were added to the existing master lease with Bally’s. That same month, GLPI completed a new master lease with PENN Entertainment.

CEO Carlino Praised the Results

Peter Carlino, GLPI’s chair and CEO, commented on the Q1 results, praising the value of his team’s long-term strategy to expand and diversify the company portfolio. He also said that the Q1 growth reflects GLPI’s expansion and diversification into a landlord with 6 tenants with 59 properties across 18 states. Eight of these properties, Carlino noted, were added in 2022 and early 2023.

The CEO said that his team hopes to generate record results in 2023 and continue the ongoing expansion and diversification of its portfolio.

Our disciplined capital investment approach, combined with our focus on stable regional gaming markets, supports our confidence that the Company is well positioned to further grow our cash dividend and drive long-term shareholder value.

Peter Carlino, CEO, GLPI

In February, the company published its Q4 2022 results, once again highlighting the durability of its robust rental streams.

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Despite its steady post-COVID recovery, Macau’s gambling sector faces rising competition from other Asian destinations. The local government has spent years attempting to distance itself from gaming and attract tourists with family-friendly options. However, the aftermath of the pandemic and rising economic uncertainty made such efforts exceptionally difficult.

The Last Few Years Were Unkind to Macau

Since the liberalization of the gambling industry in 2001, Macau’s economy has heavily relied on its casinos which account for over 80% of total revenue. Such a disproportionate focus on a single sector was not without issues, and in 2016 the government released a five-year plan to diversify its economy and reduce the share of gambling revenue to 45% by 2020.

Unfortunately, COVID-19 put these plans on hold and significantly damaged Macau’s gaming industry. Despite the sector’s steady recovery, frequent lockdowns and a substantial drop in foreign visitors indirectly bolstered competing gambling hubs like South Korea, Singapore, Malaysia, and the Philippines. Macau still attracts 90% of its tourists from mainland China and Hong Kong, but foreign visitors are instrumental in fostering a lasting reputation.

Rebranding the “Las Vegas of the East” Will Not Be Easy

Diversification-wise, gambling’s share of the total revenue remains unchanged despite the local government’s substantial efforts. However, progress is there. The government is relentlessly investing in developing new industries like tourism, finance, and technology. Numerous new initiatives aim to draw visitors away from casinos and towards the city’s cultural and heritage attractions.

New licenses have operators invest substantial amounts in non-gambling activities, with a planned $14.7 billion going towards water and amusement parks, spas, and food courts. However, such attractions are unlikely to attract more than betting-weary punters without a complete rebrand and a titanic marketing campaign. Macau’s name is synonymous with gambling, and shifting away from such will be challenging.

Gambling Is Still Vital to Financing Diversification

Another avenue for Macau to step away from gambling is the Chinese government’s intentions to turn the region into a financial center, attracting institutions, international finance companies, and investors. Developing a technology industry by creating incentives for tech companies and entrepreneurs is another possibility, but doing so artificially is unlikely to yield any meaningful results.

Overall, Macau finds itself in a precarious position. Diversification will require exorbitant funding, will take years, if not decades, and may not even work. However, remaining fixated on gambling leaves the economy vulnerable to another disaster. The territory needs to walk a fine line between utilizing casino profits to bolster other sectors and remaining competitive enough to secure such funds in the first place.

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