The Excalibur is trying an interesting experiment with important ramifications for the industry, both good and bad. The poker floor at the casino is now completely automated (no dealers). In no way am I predicting a dealer free casino environment any time soon. However, it is conceivable at some point. Remember, people thought a coinless slot floor couldn’t exist until SunCoast opened with 100% ticket in/ticket out machines. Shuffle Master, IGT, and Aristocrat all offer electronic blackjack, roulette, craps, etc. These electronic table systems (ETS) are completely interactive; patrons actually play at the same table together, just without dealers. SHFL is on an annual revenue run rate of almost $30m from ETS so it is already a real business.

So what are the benefits? The clear positive to the gaming industry of ETS is reduced labor costs. To get an idea of magnitude, roughly half of MGM’s revenues goes to labor. The employee base is not comprised of all dealers, of course. But could MGM improve EBITDA margins by 10% by eliminating dealers? Holding everything else constant, maybe.

The key, as always, is the consumer. If the consumer doesn’t embrace ETS then it won’t happen, no matter how much labor it saves. The cost benefits of cashless gaming were apparent long before SunCoast proved the consumer would adapt. The second hurdle may already be tripping up Excalibur. Nobody wants to lose their job. New technology always displaces and disrupts and ETS would be no different. As the Las Vegas Review-Journal reported, some dealers are vocally not happy with MGM. A total of 40 dealers were let go, although the company did promise to find them jobs at other MGM casinos. I’ve written extensively on the growing influence of labor unions on the gaming industry, particularly if Obama wins the presidency. ETS would be one more issue for the labor bosses to pounce on.

Poker ETS at Excalibur

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more