At a time when many in the casino industry and on Wall Street are waxing cautious about the coming year, Century Casinos is upbeat. It recently forecast a 10 percent revenue upsurge for 2025. This confidence seems at least partly justified by new, Century-built product in certain of its markets, but there may be more to the story. And who better to ask than CEO Peter Hoetzinger?
Casino Life recently sat down with Hoetzinger, with the recent U.S. presidential election (which he discussed) fresh in mind. It’s a time of flux, not just politically but for Century itself, which has made significant capital-reinvestment commitments to its U.S. properties. It’s also ramping up in Canada and attempting to make a polite exit from Poland, although the market is making that difficult. (Yes, Hoetzinger very candidly explains that, too.)
In the U.S. and Canada, Century’s modus operandi has been that of a fixer-upper, finding challenged properties and reversing their fortunes. It has already done this twice in Missouri and will soon endeavor to do so in Maryland. Although the stock price has languished at bargain levels, Hoetzinger has a plan for that as well. With confidence such as his, Century’s future looks firmly charted.
Century is projecting a 10 percent revenue increase for 2025. What gives the company so much optimism?
2024 was a truly transitory year for us. We integrated two newly acquired properties, the Nugget in Reno, Nevada and the Rocky Gap Golf Resort in Maryland. Our elevated capex program caused construction disruption at some properties, especially in Nevada and Missouri. We have successfully completed that program in the fall, culminating in the November 1 opening of the new land-based casino resort in Caruthersville, Missouri. That new facility, plus the new hotel we opened earlier this year in Cape Girardeau, Missouri – coupled with all other improvements we have made throughout our portfolio – gives us optimism to grow revenue and EBITDA in the years to come.
What challenges and opportunities does the regional casino market present at this point?
Our casinos are positioned well to take advantage of several opportunities in the regional casino market. The properties are focused on creating amenities, promotions and entertainment that have value for a broader range of customers.
In Missouri, our two casinos are extending their reach and attracting new guests from areas beyond a short drive. The addition of the hotel at Cape Girardeau, and the new casino and hotel at Caruthersville are already creating additional visits from new and existing customers. In Caruthersville there is substantial opportunity to reach even deeper into Tennessee, where no commercial casino competition exists within that state.
While the commercial gaming environment is stable, the unchecked expansion of illegal slot machines in some of our markets remains a challenge. To counter these challenges, the regulatory authorities need to step in. But also the regional casinos must ensure that the gaming experience at our casinos must be far more than the basic experience of playing a game in a convenience store. Our casinos must diversify offerings to attract a broader audience and continue to leverage data analytics to build more personalized marketing strategies.
What else are you planning to do to raise your stock price?
The performance and results of our properties will ultimately be the major factor in the development of the stock price. In addition, we are working on lowering our cost of capital on our Term Loan B from SOFR +600. On the investor relations side, we recently got a very favorable research (initiation) report from Craig-Hallum Capital Group. With that, four analysts (Macquarie, Stifel, JMP, Craig-Hallum) cover Century and all have a “Buy” rating on the stock.
Do you feel the market undervalues Century and why?
Our exposure in Eastern Europe (Poland) seems to disturb the investment story for some. We have been working on a sale of that business for quite some time. But even though the results in Poland are satisfactory, the war in neighboring Ukraine presents a challenge to that sale process.
How is Century Caruthersville performing in its first month as a totally revamped casino-hotel?
The first month of operation at the new casino at Caruthersville has exceeded expectations. The volumes over the grand opening weekend were phenomenal and we expect the casino at Caruthersville to pick up significant market share.
What are your plans for its sister property in Cape Girardeau?
In light of the new casino opening in Caruthersville, the Cape Girardeau property has performed exceptionally well in November. The property continues to focus on creating remarkable experiences for customers with high-level amenities, such as The Riverview Hotel and Beacon 53 restaurant. The property has experienced success in bringing new customers to the property with unique entertainment offerings and the new full-service Starbucks that opened in August.
Staying in Missouri for a moment, will Century be able to capitalize on the legalization of sports betting there?
With the passing of sports betting in Missouri, our Cape Girardeau casino has the opportunity to create a new experience for customers to not only place retail bets, but to also watch sporting events and play casino games in a social environment. At Caruthersville, the new casino was designed with a sports bar that can be easily adapted for a similar experience. A top-tier retail sports book brand could also create additional engagement opportunities for the property. From an online standpoint, our two Missouri casinos each have an opportunity to partner with established, successful online operators to generate immediate additional revenue.
In Maryland, revenues at Rocky Gap Resort have trended downward ever since Century took over. How do you plan to reverse that?
At that property, in particular, revenue has been challenged by lack of retail play and a slow low-end customer. We have started to market the Rocky Gap Casino & Golf Resort to the metro areas of Baltimore and Washington, D.C., with promising initial results.
Has your Cripple Creek casino been affected by new products and new management in that area, and how so?
Our Century Casino & Hotel sits directly across the street from a newly built, 300-plus room hotel. We are benefiting, on the gaming as well as the F&B side, from the additional volume of people in town. Cripple Creek has traditionally been a place where people like to walk up and down Bennett Avenue, the main thoroughfare, with casinos on both sides of the road.
How are your casinos in Alberta performing and are there any impending changes in that market that will help Century?
In 2024, all our operations in Alberta performed in line with our expectations. The introduction of sports betting and iGaming is currently being discussed in Alberta and could be approved by the end of 2025. This could be a good growth opportunity, and we aregetting prepared with the implementation of popular sports bars at our casinos in Edmonton and St. Albert.
How are your casinos in Poland faring?
Our seven casinos in Warsaw, Wroclaw, Krakow, Katowice, Lodz and Bielsko-Biala are performing according to our expectations. But in an effort to fully focus on North America, we have decided to exit that market and sell our Polish operations.
Whether in Europe, Canada or the U.S., how do you find gambling consumers to be right now? Confident? Wary? Free-spending? Cutting back?
Historically in the time leading up to a presidential election, many of our U.S. customers are more cautious, due to uncertainty about future economic conditions. In Missouri in particular, our casinos are located in areas where the winning candidate was more heavily favored. Our results in November would seem to show that the election outcome has likely boosted regional consumer confidence. Whether this is from policy expectations or just that customers increase spending when their views seem validated, the results are positive.
Overall, regional gaming customers are often seeking an exceptional experience such as a weekend getaway or an evening of entertainment at a location within driving distance. Providing differentiated levels of the experience at various price points has proven successful in maintaining engagement with a broader base of customers.
Does Century have a ‘typical’ customer profile? To whom do you market your products?
Our regular customers are generally from the regional area within a couple hours’ drive. Some of our casinos are also located near interstate highways and at significant river-bridge crossings. These traveling customers are generally from the states of the upper Midwest or the mid-South and are looking for a place to stop for a few hours or overnight. Our new hotels and amenities have also expanded the reach for customers that are looking for a weekend getaway or a longer day trip, particularly for those out of nearby metro areas. This growth is evident at our Cape Girardeau property, which is experiencing a significant increase in visitation from guests living over 125 miles from the property.
Most of our guests are middle-aged to older adults in the 45-65 and older range. These guests typically have more time and disposable income to spend at our properties. Customers of all ages are attracted to reasonably priced leisure activities in a fun and social environment. The introduction of more electronic table games, the addition of diverse entertainment acts, and the social-worthy experiences in our hotels and restaurants have been successful in attracting new younger customers.
While many of our loyal casino guests still prefer direct-mail contact and messaging through traditional advertising, many of our new customers – particularly those attracted to the properties by our hotel, restaurants and entertainment – are often more easily engaged through digital media. Our teams see our engagement strategy continuing to evolve as potential customers shift to more AI-driven applications.
What are your goals for Century over the next one to three years?
In 2025, we will fully focus on completing the integration of the new properties and optimizing the return on the investments we put in throughout 2024. That will drive free cash flow, which will also be enhanced by significantly lower capex spend next year. With that, we will improve our balance sheet and leverage ratios. From 2026 on, we see ourselves becoming busy again on the M&A side, trying to acquire mid-size operations (generating between $20 million and $75 million in annual EBITDAR each) that somewhat lack full attention from current ownership, thus providing significant upside potential.
Thank you, Peter.
For more information on Century Casinos visit: https://www.cnty.com/
Casino Life Magazine Team would like to thank Peter Hoetzinger, for taking the time for this interview with us earlier this year.
***This exclusive feature interview was originally published in Casino Life Magazines December 2024 edition Issue 172***
