Casino giant Century Casinos considers departing from Europe and boosting its footprint in North America
Screen Time with the Casino Guru: Century's Journey Ahead
Century Casinos is bucking the trend in the gambling industry with a positive forecast for 2025, predicting a hefty 10 percent revenue boost. So, what's behind this bullish outlook? Let's sit down with CEO Peter Hoetzinger for a chat, fresh off the heels of the U.S. presidential election.
Century's focus has been on revitalizing struggling properties, and Missouri has benefited twice from this approach. They're now getting ready to work their magic in Maryland, too. But as the stock price remains stubbornly low, Hoetzinger reveals his plans to inject some life into it as well.
With 2024 marking a transitional year, what gives Century Casinos such high spirits for 2025?
"Last year was a transformative period for us. We integrated two newly-acquired properties – the Nugget in Reno, Nevada, and the Rocky Gap Golf Resort in Maryland – and our capital expenditure program led to some temporary disruptions, particularly in Nevada and Missouri. The completion of that program in the fall culminated in the November 1 opening of a brand-new land-based casino resort in Caruthersville, Missouri. Coupled with the new hotel we opened earlier this year in Cape Girardeau, as well as improvements made across our portfolio, we're optimistic about driving revenue and EBITDA growth in the years ahead."
What does the regional casino market hold in terms of challenges and opportunities?
"Our casinos are poised to seize opportunities in the regional casino market. The properties cater to a wider range of customers with value-adding amenities, promotions, and entertainment. In Missouri, our casinos are expanding their reach, drawing new guests from beyond a short drive. The addition of the hotel in Cape Girardeau, along with the new casino and hotel in Caruthersville, are already driving increased visits. In Caruthersville, there's a significant opportunity to penetrate deeper into Tennessee, given the absence of commercial casino competition within the state."
While the commercial gaming landscape remains stable, the proliferation of illegal slot machines in certain markets poses a challenge. Hoetzinger maintains that regulatory authorities must step in, while regional casinos need to enhance their gaming experience to stand out from the convenience store competition.
Besides property improvements, what else is being done to boost the stock price?
"The performance and results of our properties will play a significant role in shaping the stock price. We're also working on lowering our cost of capital on our Term Loan B from SOFR +600. On the investor relations side, we recently received a very favorable research (initiation) report from Craig-Hallum Capital Group. With four analysts – Macquarie, Stifel, JMP, Craig-Hallum – covering Century and all assigning a ‘Buy’ rating, we have a solid team backing us."
Is the market undervaluing Century, and why? Hoetzinger believes the company's exposure in Eastern Europe (Poland) might be unsettling some investors. However, the successful sale of this business has been ongoing for quite some time, despite challenges arising from the war in neighboring Ukraine.
How has Century Caruthersville performed since its complete makeover?
"The initial month of operation at the new casino in Caruthersville surpassed expectations. The volumes during the grand opening weekend were spectacular, and we anticipate the casino to capture substantial market share."
The sister property in Cape Girardeau has thrived since November, with a focus on providing exceptional experiences through high-level amenities like The Riverview Hotel and Beacon 53 restaurant. The property has excelled in attracting new customers with unique entertainment offerings and the recent full-service Starbucks opening in August.
With the legalization of sports betting in Missouri, can Century capitalize on this new market?
"Our Cape Girardeau casino has the opportunity to create a unique gaming experience for customers – not only for retail betting but also for watching sporting events in a social environment. The new casino in Caruthersville was designed with a sports bar that can be easily adapted for a similar experience. partnering with established, successful online operators has the potential to generate immediate additional revenue."
In Maryland, revenue at Rocky Gap Resort has been sluggish since Century took over. The company is marketing the property to metro areas like Baltimore and Washington, D.C., with promising early results.
Century's Cripple Creek casino has benefited from increased competition in the area, with sales and food and beverage side both seeing a rise. Cripple Creek has traditionally been a popular destination for walkers along Bennett Avenue.
In Alberta, Century's casinos performed in line with expectations in 2024. The introduction of sports betting and iGaming is currently being discussed, which could present a growth opportunity for Century. They are planning to roll out popular sports bars at their casinos in Edmonton and St. Albert.
Century's casinos in Poland are functioning as expected, but the company plans to exit the market and sell its Polish operations.
The gambling consumer landscape varies across regions, with some appearing more cautious due to uncertainties, while others seem willing to spend on leisure activities. In Missouri, regional consumer confidence has seemingly spiked following the presidential election outcome. Century is focused on attracting a broader customer base by offering differentiated levels of experiences at various price points and leveraging digital media.
The future for Century sees the company concentrating on optimizing its new properties and investments in 2025. Lower capital expenditure and improved balance sheet ratios are expected to follow, setting the stage for expanded M&A activity starting in 2026, with a focus on acquiring mid-size operations with untapped potential.
Thanks for chatting, Peter! Want to know more about Century Casinos? Check out: https://www.cnty.com/
"With sports betting now legal in Missouri, Century Casinos plans to create unique gaming experiences for customers at their Cape Girardeau and Caruthersville casinos. They also aim to partner with established online operators to generate additional revenue."
"Besides focusing on revitalizing struggling properties, Century Casinos also plans to boost their stock price by lowering the cost of capital on their Term Loan B, and by building a strong team of analysts backing the company, as evident from the 'Buy' ratings assigned by four analyst firms."
