LEISURE LETTER (04/15/2014)




Wednesday, April 16

  • HTZ at BAML Auto Summit

Thursday, April 17

  • Iowa Racing & Gaming Commission Meeting - to decide whether it will grant Cedar Crossing Casino a state gaming license, which would make the Cedar Rapids facility the 19th casino in Iowa.
  • GE 1Q14 Earnings - 8:30 am Conf Call - real estate comments?
  • BX 1Q14 Earnings - 11 am Conf Call PIN 149 943 55 - lodging comments & color?
  • DIS - Investor Day - cruise & parks commentary?

Monday, April 21

  • IGT FQ2 earnings - 5 pm Conf Call   , Passcode: IGT

Monday, April 22

  • Genting Singapore - Annual General Meeting

Thursday, April 24

  • PENN Q1 earnings - 10 am
  • HOT Q1 earnings - 10:30 am , Passcode: 12049644
  • LVS Q1 earnings
  • LA March revenues released


MGM - Clark County District Judge Elizabeth Gonzalez has ordered that the Harmon Tower be demolished - dismantled floor-by-floor. 

TAKEAWAY:  While everyone is talking about the dismantling, we wonder what MGM & City Center will rebuild on this very visible and valuable piece Las Vegas Strip real estate?


MGM - MGM Resorts International and Hakkasan Group announce formation of JV hotel Company MGM Hakkasan Hospitality

TAKEAWAY:  Building hotel brands is not an easy business.


Atlantic City - rumors are circulating that Showboat will be the next casino to close in Atlantic City.  Management is apparently moving players redeeming promotions to Harrah's.

TAKEAWAY:  While any walk-in traffic lost (low end grinders anyway) because Revel would be even farther from the nearest open casino, at the margin, less supply is a modest positive for the adjacent Revel and all of the operators including Borgata.


Japan - (Reuters) Yumeshima, with about 170 hectares (420 acres) of land available for development, is likely to be designated as the preferred site for a casino when Osaka officials meet on April 22 to discuss possible gaming site, Governor Ichiro Matsui said


Tokyo, the other city most likely to host a casino, has yet to officially name a site for a development, although the Odaiba area in Tokyo Bay is being touted as the preferred location.  Tokyo Governor Yoichi Masuzoe has yet to say whether he supports a casino in the capital. 


Proponents of the initial bill expect debate to start in May, and aim to pass it before the house adjourns in June.  Matsui believes casino operators will invest more than 500 billion yen ($4.91 billion) in an integrated resort in the city, adding that he was visited last week by Lawrence Ho, CEO of MPEL. 

TAKEAWAY:  Probabilities look better than ever


New Jersey I-Gaming - Internet gaming win was $11.9M, up 15.2% from February 2014.  Borgata and party.poker generated $4.4M in online gaming revenue, up from $3.2 million the prior month, leading the New Jersey online gaming market with a 37% share.

TAKEAWAY:  Slow and steady but not close to the billion dollar run rate many politicians expected.  We care about Poker share and Borgata upped its share to 51%.


Massachusetts Gaming Poll - a survey by the Western New England University Polling Institute, conducted March 31 through April 7 of 477 adults, found that 59% of adults indicated they support establishing casinos in Massachusetts, while 34% were opposed and 7% were either undecided or declined to answer the question. The margin of sampling error for the survey was plus or minus 4.5 percentage points.  Still, many respondents took a "not in my backyard" approach to the issue, as 55% indicated they were opposed to having a casino in their community, 42% said they supported having a casino in their community, while 3% were undecided or declined to answer the question.

TAKEAWAY: Just build the casinos! 


Greece VLTs - (GamblingCompliance) Publication is reporting that progress is being made on legislation to potentially allow for 35k VLTs.

TAKEAWAY:  This has been a frustrating, dragged out process for the suppliers.  Even now our sources are downplaying the likelihood. Nevertheless, SGMS popped 4% on the news.


Ireland I-Gaming - A massive increase in gambling problems among young people is being linked to the rise of smartphones and tablets. According to the data, among the under-25 year old age group, as many as 90% started gambling on a handheld device. 

TAKEAWAY:  Why the trends in Ireland but not elsewhere? 



China Macro

  • New yuan loans: 1.05 trillion yuan vs consensus 1 trillion
  • Total social financing: 2.07 trillion yuan vs consensus 1.85 trillion, -19% YoY

TAKEAWAY:  Lending was ok in March but there is still fears of a credit slowdown as China keeps an eye on shadow banking.


Hedgeye remains negative on consumer spending and believes in more inflation.  Following  a great call on rising housing prices, the Hedgeye Macro/Financials team is turning decidedly less positive.

TAKEAWAY:  We’ve found housing prices to be the single most significant factor in driving gaming revenues over the past 20 years in virtually all gaming markets across the US.

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