Three large openings in the spring could impact CYQ4 earnings for the suppliers.
Shipment timing of three large properties opening in March/April will also materially affect supplier market share. Although the open date is officially listed as May 15th, Revel is likely to [soft] open in late March or early April. Horseshoe Casino Cleveland and Hollywood Casino Toledo should open in Ohio in March and April, respectively.
It is our understanding that some Revel units may ship in December. We are hearing Revel was asking for payment terms that were extended more than what’s normal. One supplier told us that Revel wanted to make no down payment on the machines and asked to pay for them over the course of several years, which means that the company would have to book a large long-term receivable. It also means that the suppliers could have some revenue recognition issues and would most certainly have to book a reserve.
There seems to be some chatter regarding WMS’s very low market share (~11-12%) at Revel. While this is clearly another strike against WMS, we would note that the Atlantic City market has a higher concentration of steppers than the rest of the country. Steppers are not a strong point for WMS, so it’s no surprise that they would have a much lower share at Revel than at other new openings.
Other Revel tidbits:
- IGT: 40% ship share and system forecasted to ship in the March quarter
- Konami: 9-10% ship share; will ship in January
- BYI thinks that some will ship in December but the orders haven’t gone out yet. BYI should get a healthy market share since they are strong in steppers.
As it relates to the Ohio casinos, licenses are still pending for operators and manufacturers. We don’t anticipate any licensing problems or delays since Ohio already hired a 3rd party to help with the licensing process. PENN, CZR, and the manufacturers are already licensed in other jurisdictions so the consultant can simply repurpose all the information needed for licensing and resubmit that data to Ohio regulators. We believe that most of the units will ship January or early February for these two facilities.
- Konami ship share (11.0-12.5%)
- IGT forecasts shipping to both Ohio casinos in the March quarter