John DeCree is Director, Head of North America Equity/High Yield Research, New York, at Union Gaming. Mr. DeCree has spent 10 years in capital markets focusing on the casino and gaming industry. Mr. DeCree joined Union Gaming in 2014 to focus primarily on North America equity research. Prior to joining Union Gaming, Mr. DeCree served as an Equity Research Analyst at Telsey Advisory Group, covering the global gaming, lodging and leisure sectors. In his exclusive interview in the Wall Street Transcript, John DeCree details his top gaming and casino investment opportunities.
One area John DeCree does not see as a focus is online gaming: “One thing I would add to that is we have seen retailers and those types of consumer businesses get segmented between bricks and mortars, traditional retailers and online retailers with Amazon (NASDAQ:AMZN) stepping up as pretty much a competitor to everyone. We don’t really see that in the casino and gaming segment. These operators and companies are a bit insulated from the online providers, and that adds to a bullish outlook here.”
Mr. DeCree is not bullish on US online gambling: “Online gaming hasn’t really taken off yet in the United States, so we haven’t seen much of a change or impact. Right now, only four states permit online gaming, including New Jersey, Nevada, Delaware and Pennsylvania, though Pennsylvania has just authorized online gaming and has not yet awarded licenses. New Jersey is really the only market with a noteworthy online gaming industry that generates about $245 million per year. I think we’ll see more states authorize online gaming, but the digital industry in the U.S. is still in its infancy relative to Europe. With a limited sample size, we haven’t seen online gaming in New Jersey cannibalize nor revolutionize the overall industry.”
The China market has rebounded: “…the Macau gaming market is about six times the size of Las Vegas today, so it has substantially higher wealth and larger gamers going to Macau to play. The recovery in Macau has really kind of come over the last 12 months or so with increased liquidity in the VIP segment, which is the really high-end play in Macau. That is substantially higher than we have seen in Las Vegas, and that is a product of two things over the last 12 months. One, there has been a resurgence in the Chinese economy, particularly in real estate and the industrial production of Southeastern China. Also, Macau, for the two years preceding 2017, was under a little bit of a microscope for corruption crackdown from Beijing. It has cleaned out Macau and the government officials that were gambling…We are now back to of a growth cycle in Macau. Macau’s growth trajectory has been very strong throughout 2017, and that is continuing in 2018.”
Mr. DeCree sees a great opportunity for the classic Southern Nevada gambling focus:
“We have a new hockey team in town as in the Las Vegas Golden Knights, and they are actually playing spectacularly well and rejuvenating Las Vegas as a tier-1 city. It is the first professional sports team to arrive in Las Vegas. I am sure most folks have heard the Raiders will be relocating to Las Vegas with construction on the stadium set to break ground really a little bit later this year. We are just seeing billions of dollars of infrastructure being poured into Las Vegas. So as we think about the local economy there, it is quite encouraging, and that bodes well for a company like Golden Entertainment that really generates 75% of its income from the local Southern Nevada market. So that is interesting to keep an eye on as well.”
To get the complete detail on all of Mr. DeCree’s stock picks, read the entire interview in the Wall Street Transcript.