Las Vegas Sands (NYSE: LVS) remains keen on establishing a casino hotel in the New York City market. However, the operator is aware that the potential legalization of iGaming in the state could present challenges to traditional brick-and-mortar gaming venues.
During a Wednesday conference call discussing the release of the operator’s fourth-quarter results, Sands CEO Robert Goldstein addressed a question from an analyst regarding the company’s plans to build an integrated resort at the site of Nassau Coliseum in Uniondale, New York. Goldstein reiterated the operator’s interest in New York but acknowledged the looming presence of internet casinos.
“I think you have to agree with your comment that sometime during the construction phase you could be faced with an 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 one of the seven states currently allowing iGaming, but it is expected to consider related legislation this year. It is likely not lost on Empire State policymakers that neighboring New Jersey is generating significant tax revenue 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.
Sands’ Interest in Thailand
Sands has also indicated interest in pursuing a casino permit in Thailand, where gaming legislation is progressing rapidly. President and CFO Patrick Dumont referred to the Southeast Asian nation as an “unbelievable tourism destination.”
In response to a question from Barclays analyst Brandt Montour, Dumont addressed concerns that an integrated resort in Thailand might cannibalize Marina Bay Sands in Singapore. While acknowledging that some tourists visit both countries, Dumont emphasized that Marina Bay Sands’ unique positioning caters to high-value tourism, which could buffer against competitive threats from 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 added that there’s still work to be done in Thailand, but it could be a compelling opportunity for Las Vegas Sands.
LVS Stock Surges
In a sign that investors may finally be recognizing value in Macau casino stocks, shares of LVS soared 11.12% today on volume more than double the daily average, following the operator’s fourth-quarter results. Strength at Marina Bay Sands was viewed as the catalyst for today’s stock surge, with the operator boosting its quarterly dividend by 25%.
Stifel analyst Steven Wieczynski noted that Sands is trading at deeply discounted levels relative to historical norms and sees a path to $60+, implying upside of at least 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.”
