The gaming facility bearing the same name, Monarch Casino & Resort (NASDAQ: MCRI), is the market leader in the quickly expanding regional casino industry in Black Hawk, Colorado.
In a recent letter to clients, Jefferies analyst David Katz made this observation, noting that Monarch Casino Resort Spa "overshadows its competitors" in the Colorado casino town by capturing 30% of the market. That conflicts with management's remarks. Monarch officials earlier this year informed analysts that the firm is growing its market share in Colorado, especially with mid-to high-level wagerers, and that there is still plenty of opportunity to increase its share with VIPs.
"We believe capital investments should generate stronger returns,” added Katz.
That's impressive since it suggests that three rival venues share the remaining 70% of the Black Hawk market, assuming the estimate that the Monarch venue controls 30% of it is accurate. Penn Entertainment, Caesars Entertainment, and Bally's are the operators that oversee each of those; they are all bigger than Monarch.
Growth in Black Hawk Is Significantly Driven by Monarch Casino
The Black Hawk site that bears Monarch Casino's name is the town's newest integrated resort and one of the best casino-hotels among the three Colorado gambling towns. More than $300 million was invested by the operator to improve the arena, and it seems that the city and the operator are benefiting from those investments.
About 35 miles from Denver, Black Hawk is home to "one of the few growing markets for regional casinos," according to Katz. The Monarch venue is in a prime location because it's the first casino hotel that guests notice when they arrive in the town via Highway 119. Higher table limits are also assisting the property in attracting players at a higher level.
Voters in Colorado supported Amendment 77 on Election Day 2020. This paved the way for the casino communities of Black Hawk, Central City, and Cripple Creek to lift the previous $100 per hand cap on table game wagers. Analysts predict that by raising the table limits, Black Hawk casinos will be able to attract more day visitors who may stay overnight while also keeping more local gamblers in the community and away from Las Vegas.
There are other advantages to Monarch being the Black Hawk leader. Analysts have already noted that Penn is improving Ameristar, which has benefited from some spillover benefits from the Monarch property. Two years ago, Caesars redesigned its Black Hawk casino hotel under the storied Horseshoe name. A new facade, renovated bedrooms, and an improved gaming area were all part of this transformation.
Black Hawk Casino: A Gem in the Monarchy
Katz projected that Monarch Black Hawk would bring in over $286 million this year, as opposed to roughly $220 million at Monarch's other venue, the Atlantis in Reno.
Monarch is the US's smallest publicly traded casino operator in terms of total properties. The management has made it clear that it is choosy in its merger and acquisition choices by stating repeatedly that while it is looking at expansion prospects, it will not purchase another casino merely to grow in size.
Monarch's shares are down 5.89% over the last 12 months and up 0.27% year to date.