Las Vegas Sands (NYSE: LVS) continues to be interested in establishing a casino hotel in the New York City area, but the operator recognizes that iGaming might become a reality in the state, which could pose challenges for physical gaming establishments.
During a conference call on Wednesday to discuss the company’s fourth-quarter earnings, Sands CEO Robert Goldstein responded to a question from an analyst concerning New York, where the gaming company intends to construct an integrated resort at the location of Nassau Coliseum in Uniondale. He reinforced the operator’s enthusiasm for New York while emphasizing that the potential of online casinos should not be overlooked.
"I think you have to agree with your comment that sometime during the construction phase you could be faced with iGaming competitor which dilutes the value of the product.,” said Goldstein. “So that’s our conundrum and you said it well. The results coming out of neighboring states like New Jersey or Pennsylvania or as far away as Michigan underscore that concern.”
New York is not among the seven states that presently permit iGaming, but the state is anticipated to examine relevant legislation this year and it's probably not overlooked by Empire State lawmakers that nearby New Jersey is generating considerable tax income from online casinos.
“I don’t know why you wouldn’t have iGaming sometime in the future. So that’s our concern as we look at that market,” added Goldstein regarding New York.
Sands had previously expressed interest in considering a bid for a casino license in Thailand, where the gaming laws are progressing quickly. President and CFO Patrick Dumont referred to the Southeast Asian country as an “incredible tourism destination. ”
In reply to a query from Barclays analyst Brandt Montour, the LVS executive responded to worries that if the company were to eventually establish an integrated resort in Thailand, it might compete with Marina Bay Sands in Singapore. He acknowledged that although some tourists travel to both nations and those visiting Singapore may wish to experience new gaming options in Thailand, Marina Bay Sands’ distinctive position could help shield it from competitive challenges in Thailand.
“I think if you look at what we have in Singapore, it’s specifically tied to the highest level of high value tourism,” Dumont said on the call. “It’s rarefied air when you look who’s in that environment and the type of consumption that’s there and the type of both business and leisure tourism that takes place.”
He mentioned that there’s additional progress to be made in Thailand, but it might represent a significant opportunity for Las Vegas Sands.
In an indication that investors might finally recognize value in Macau casino equities, shares of LVS jumped 11. 12% today on a volume that was over double the daily average after the operator disclosed fourth-quarter results. Strength at Marina Bay Sands was widely perceived as the trigger for today’s rise in the stock. The operator’s decision to increase its quarterly dividend by 25% positively influenced the situation.
Stifel analyst Steven Wieczynski remarked that Sands is trading at significantly discounted levels compared to historical standards and that there’s a pathway to $60+, suggesting an upside of no less than 25% from today’s closing price.
“We believe LVS’ Singapore asset is worth ~$37/share which shows investors are getting the Macau assets for a discounted price, which we view as unrealistic over the long-term,” observed the analyst. “LVS continues to have one of the best balance sheets in the gaming industry. This should allow the company to continue repurchasing their shares or their Hong Kong shares.”
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