FANTINI ’ S FINANCE
The Stall of iGaming and Regional Gaming
The spread of iGaming has not happened , and regional casinos face significant challenges
BY FRANK FANTINI
There ’ s a shift occurring among public policy makers in regard to online casino gaming that has not received full recognition .
A year ago , many industry observers appeared to believe that the wide spread of iGaming was inevitable . The investment implication , we were commonly told , was of higher profits , thus higher equity returns , because the profit margins on iGaming are greater than those of sports betting or brick-and-mortar casinos .
The paucity of profits was dismissed as merely a temporary “ land grab ” for customers in an early-stage industry — the ultimate winners would be big winners for investors . The threat of restrictive legislation and regulation was likewise dismissed as U . S . industry leaders assured investors that their commitment to responsible gaming was genuine and sufficient .
Today , the headlines are about legislation to control iGaming , from Congress to states like Maryland , from restrictions on advertising and betting limits to higher tax rates .
Now , maybe few , or even none , of such tough bills will make it into law . And there are still a lot of states that can legalize digital gaming to fuel industry growth . But the conversations are changing . And the warnings about false promises and the dangers of turning cellphones into casinos is coming from some industry leaders .
Consider David Cordish , one of America ’ s most successful and visionary developers of entertainment , experience-oriented real estate projects . In a document prepared for Louisiana legislators , Cordish warns that iGaming benefits are illusory when social and related costs and loss of landbased jobs and tax revenues are factored in .
And it is worth mentioning that this warning comes from a guy who is investing $ 270 million to develop a casino in Bossier City that will employ more than 750 Louisianans .
Or consider Stewart Kenny , co-founder of PaddyPower , which is now Flutter , perhaps the world ’ s most successful online gaming operator . “ The in- dustry is going to change dramatically in the next three to five years ,” he says . “ It ’ s going to go from an entertainment business to an addiction business .”
Those kinds of comments can be powerfully persuasive to legislators . This doesn ’ t mean that online gaming won ’ t grow , but the sands of change may be shifting . iCasino is growing , but the prospect of sweeping the nation is not guaranteed .
Meanwhile , old-fashioned casinos ... … aren ’ t guaranteed growing profitability , either .
Deutsche Bank equity analyst Carlo Santarelli recently published a report that splashes some cold reality on regional gaming trends .
By factoring out various data to achieve as best as possible apples-to-apples comparisons , Santarelli shows that gross gaming revenues in brick-andmortar properties have generally been flat and have fallen well short of inflation .
Those revenues have grown 6.9 percent over the past decade .
The picture that Santarelli presents is not new to readers of this space , as we have repeatedly pointed out the nearly languishing state of regional brick-and-mortar gaming . There is little reason to think that the legacy regional casino business will turn around as iGaming spreads , a growing number of casinos share the pie , and as gray gaming proliferates , from sweepstakes machines to socalled skill-based games .
Compounding the problem is that some companies have cut costs to the point of squeezing the fun , or value proposition , out of the customer experience , resulting in diminishing returns . When going to a casino is no longer fun , people will quit going to them .
As we ’ ve also noted , the opportunities for long-term investors in U . S . regional casinos have been companies with steady growth plans like Boyd Gaming and Churchill Downs , and their shareholders have been rewarded with rising stock prices — or excellent operators able to generate increasing profits from current operations , such as Monarch Casino .
Now is the Time One regional casino operator with more than its share of growth opportunities is Full House Resorts . Thanks to the Illinois Supreme Court , this may be the year in which Full House wins or loses investor confidence that it can capitalize on those opportunities .
That is because the court has knocked down a lawsuit challenging the issuance of the Waukegan casino license that Full House holds , thus clearing the way to gain financing to construct a permanent casino where its temporary American Place now operates .
If Full House successfully finances the project and , as part of the process , refinances other debt , it will be all systems go .
The bullish outlook for Full House is that it gets acceptable financing and American Place combines with relatively new Chamonix resort in Cripple Creek , Colorado , to transform the company .
Without the financing , however , or without executing on fulfilling the profit potential of the new casinos , Full House will be a debt-laden little company facing uncertain and unpleasant options .
Our bet is on Full House . Chamonix has gotten off to a slow start and critics question whether the luxury resort is overbuilt in a small town miles down a twisting mountainous road from its primary market , Colorado Springs .
But , this is Colorado . Residents know how to traverse twisting roads , and the state knows how to clear winter snow for vehicles . Black Hawk and its canyon road are evidence of that . And the Colorado Springs and southern Denver exurbs are big enough . Most important , gaming revenues at Chamonix are growing by double digits .
So , now it is up to CEO Dan Lee , a former Wall Streeter , to get the financing needed to make Chamonix and American Place work . If he does , the onus then will be on Full House to execute operationally and fulfill what appears to be considerable potential .
Frank Fantini is principal at Fantini Advisors , investors and consultants with a focus on gaming .
12 Global Gaming Business MARCH 2025