NH's Business: Assessing the gaming and casino business within New Hampshire

Fred Kocher interviews Charlie McIntyre of the New Hampshire Lottery & Gaming Commission about the expanding gaming and casino business in the Granite State, highlighting growth dynamics within the sector. The conversation underscores implications for regional operators and state oversight, potentially affecting local revenue streams and regulatory policy considerations though no specific financial figures were provided.

Analysis

Market structure: New Hampshire expanding its gaming footprint is a net positive for casino operators, gaming-equipment suppliers, and casino REIT landlords (regional operators gain scale; state lottery sales may be partially cannibalized). Expect winners: IGT/LNW-style suppliers and landlords like VICI/GLPI that lock long-term leases; losers: marginal stand-alone hotels and small casinos in adjacent states facing cross-border leakage. Capacity additions will compress short-term unit economics (hold rates/slot yield) by an estimated 5–15% until demand maturation over 12–36 months.

Risk assessment: Tail risks include voter or legislative reversals, aggressive tax/revenue-sharing that cuts operator EBITDA margins by >200–400bps, and construction delays >12–24 months that push ROI timelines beyond underwriting. Immediate noise (days) is low; watch short-term (30–90 days) licensing and financing events and long-term (12–36 months) opening and market maturation. Hidden dependencies: cross-border visitation from MA/ME, online-sports partnerships (DraftKings/PENN), and municipal bond markets for project funding; a spike in muni yields or credit tightening could stall projects.

Trade implications: Favor selective long exposure to gaming suppliers and REIT landlords with 12–24 month horizons: consider a 2–3% position in IGT (supplier) and a 2% allocation to VICI for defensive cashflows, targeting 20–30% upside or yield+capital returns in 12–24 months. Pair trade: long VICI (2%) vs short MAR (1%) — casinos should sustain higher RevPAR vs broad lodging if gaming demand accelerates. Options: buy 9–15 month call spreads on IGT or DKNG to express upside with defined risk if a license is awarded within 90 days.

Contrarian angles: The market may overestimate net-new spend; historical state rollouts (e.g., PA/Rhode Island) show 18–36 months to reach steady-state and meaningful cannibalization of lotteries and nearby venues. Mispricing risk: landlords (VICI/GLPI) often trade on stable cashflows yet underprice upside from new regional casinos — downside emerges if taxation or local referenda reverse approvals. Key unintended consequence: aggressive local taxes or social policy could cap payout ratios and depress operator multiple by 1–2 turns.

Key Decisions for Investors

• Establish a 2–3% long position in International Game Technology (IGT) over 12–24 months to capture hardware/software supply upside; accumulate on any pullback of 8–12% and target 20–30% total return.
• Allocate 2% to VICI Properties (VICI) as a defensive landlord play; add if dividend yield rises >50bp above current levels or if new NH casino signs a >15-year triple-net lease; sell/reduce if cap rates compress by >50bp (implying valuation re-rate).
• Implement a pair trade: long VICI (2%) vs short Marriott (MAR) (1%) over 12 months to express relative strength in casino-backed real estate vs broad lodging, rebalancing if spread moves >200bp.
• Buy 9–15 month call spreads on IGT or DKNG (cost-limited structures) sized to 0.5–1% portfolio risk to capture license approvals; initiate only after NH Lottery & Gaming Commission files a final license order or the state legislature votes in favor (monitor next 30–90 days).