Century Casinos contemplates withdrawing from Europe and expanding its influence in North America
Conversing with Century Casinos' CEO Peter Hoetzinger:
With optimism high in the casino industry, Century Casinos projects a 10 percent revenue surge for 2025. Find out what gives the company such confidence and more in this candid chat with their CEO.
What gives Century Casinos such optimism for a 10 percent revenue increase in 2025?
Peter Hoetzinger: 2024 was a transitional year for us. We integrated two newly acquired properties, the Nugget in Reno, Nevada and the Rocky Gap Golf Resort in Maryland. Our capital investment program led to construction disruption at some properties, especially in Nevada and Missouri. However, we've completed our program, and the recent opening of our new land-based casino resort in Caruthersville, Missouri marks a significant milestone.
Coupled with numerous improvements across our portfolio, we're confident that the new Caruthersville facility, along with our new hotel in Cape Girardeau, will boost revenue and EBITDA in the coming years.
What regional casino market challenges and opportunities does Century Casinos face?
Peter Hoetzinger: Our casinos are well-positioned to seize opportunities in the regional market. We're focused on creating diverse amenities, promotions, and entertainment that cater to a wider range of customers. For instance, our new facilities in Missouri are extending their reach, drawing in new guests from areas beyond a short drive. The opportunity to penetrate deeper into Tennessee is substantial, as no commercial casino competition exists within that state.
While the commercial gaming environment remains stable, we struggle with the unchecked expansion of illegal slot machines in some markets. Regulatory authorities need to step up and address this issue. Simultaneously, regional casinos must ensure we provide a gaming experience that surpasses basic convenience store play.
Plans to raise stock price and feeling of undervaluation
Peter Hoetzinger: Our property performance will play a significant role in our stock price development. We're working on reducing the cost of capital on our Term Loan B from SOFR +600. On the investor relations side, we recently secured a favorable research report from Craig-Hallum Capital Group, and four analysts—Macquarie, Stifel, JMP, and Craig-Hallum—cover Century, all with a "Buy" rating on the stock.
Despite our solid performance and analysts' positive outlook, our exposure in Eastern Europe appears to be a concern for some investors. We've been working on selling our Polish business for quite some time, but the Ukraine conflict poses challenges to the sale process.
How has Century Caruthersville, a revamped casino-hotel, performed in its first month?
Peter Hoetzinger: The first month of operation at the new casino in Caruthersville has exceeded expectations. Grand opening weekend volumes were phenomenal, and we foresee the casino in Caruthersville gaining significant market share.
Plans for the sister property Cape Girardeau
Peter Hoetzinger: In light of the new casino opening in Caruthersville, the Cape Girardeau property has performed exceptionally well in November. The hotel remains popular, and the Beacon 53 restaurant continues to offer high-level amenities. The addition of unique entertainment and the new full-service Starbucks opened in August have contributed to attracting new customers.
Capitalizing on sports betting in Missouri
Peter Hoetzinger: With the legalization of sports betting in Missouri, our Cape Girardeau casino has an opportunity to create an immersive sports betting, event watching, and casino gaming experience for customers. Similarly, our new casino in Caruthersville was built with a sports bar that can be adapted for a similar experience. Establishing partnerships with top-tier online sports book brands could further enhance customer engagement.
Turning around revenues at Rocky Gap Resort in Maryland
Peter Hoetzinger: At Rocky Gap Resort, revenue has struggled due to the lack of retail play and a slow low-end customer. To overcome this, we're promoting the Rocky Gap Casino & Golf Resort to metro areas like Baltimore and Washington, D.C. So far, the response has been promising.
Impact of new competition and properties in Cripple Creek, Colorado
Peter Hoetzinger: Our Century Casino & Hotel, situated across from a newly built hotel, benefits from increased tourism and foot traffic on the gaming and F&B front. The addition of new properties and management in the Cripple Creek area has stimulated interest in the local economy overall.
Performance of Alberta casinos and potential growth factors
Peter Hoetzinger: Our Alberta casinos performed as expected in 2024. The introduction of sports betting and iGaming is currently being discussed in Alberta, which could be approved by the end of 2025. We're prepared to implement popular sports bars at our Edmonton and St. Albert casinos to capitalize on this growth opportunity.
Performance of Polish casinos and exit strategy
Peter Hoetzinger: Our Polish casinos are performing as anticipated, but we've decided to fully focus on North America and sell our Polish operations. Although the Polish market presents challenges, we remain committed to divesting our Eastern European assets.
Perception of casino consumers
Peter Hoetzinger: Historically, spikes in consumer confidence following a presidential election have been observed. Moore's casinos, located in areas that supported the winning candidate, experienced a post-election surge in visits and spending. Maintaining exceptional customer experiences across a range of offerings and price points is crucial to engaging our customer base effectively.
- Peter Hoetzinger discusses Century Casinos' optimism for a 10 percent revenue increase in 2025, citing the opening of new facilities in Missouri, improvements across their portfolio, and the recently completed capital investment program.
- Peter Hoetzinger acknowledges regional casino market challenges, such as the unchecked expansion of illegal slot machines, and opportunities, like deeper penetration into Tennessee, while emphasizing the need for regulatory authorities to address the former issue and providing a gaming experience that surpasses convenience store play.
- To raise their stock price, Century Casinos plans to reduce the cost of capital on their Term Loan B from SOFR +600, secure favorable research reports like the one from Craig-Hallum Capital Group, and address investor concerns about their exposure in Eastern Europe.
- In light of the legalization of sports betting in Missouri, Century Casinos aims to create an immersive sports betting, event watching, and casino gaming experience at their Cape Girardeau and Caruthersville properties, potential partnerships with top-tier online sports book brands included.
