United States regional gaming showed signs of improvement in May, although gross gaming revenue (GGR) is still dropping, said U.S.-based Telsey Advisory Group.
“GGR across 22 reporting states declined 0.4 percent, stemming a string of steeper declines in the earlier part of the year,” the research house said in a report on Wednesday.
“With the improvement in May, we feel more comfortable about our outlook for 2Q14 earnings,” it added.
Telsey said it sees “little evidence” of a long-term recovery for U.S. regional gaming trends.
“We believe some of the positive movement in the equities as of late can be attributed to the better-than-expected trends quarter-to-date, though we do not see anything to signal a broader or sustainable recovery in the space and remain on the sidelines here,” said the report.
Ratings agency Moody’s Investors Service Inc lowered its outlook on the U.S. gaming industry to ‘negative’ from ‘stable’.
“The negative outlook reflects recent declines in comparable monthly gaming revenue for most jurisdictions, as well as the flat revenues that preceded them, outside Nevada, over the last year-and-a-half,” Moody’s said in a report published this week.
Telsey sees an upside in casino closures underway in Atlantic City. “While taking longer than expected, we are finally seeing supply being pulled from the oversaturated/underperforming Atlantic City market,” it said.
Caesars Entertainment Corp announced that it will close its Showboat casino at the end of August. Revel AC, which filed for bankruptcy protection on June 19 for the second time, said it could also close by the end of summer if it is unable to find a buyer.
“Caesars has been rumoured to be interested in purchasing Revel, likely via one of its better capitalised entities, giving the operator a much newer facility on the northern end of the boardwalk compared with Showboat,” said Telsey. “We see this all as a much needed right-sizing of the Atlantic City market.”
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