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Tickers:  PENN, PNK, MGM, WYNN, OEH, 200.HK

EVENTS TO WATCH

Monday, April 28

  • CHH Q1 EPS – 10am , Passcode: 70683172

Tuesday, April 29

  • Las Vegas March revenues out
  • NCLH Q1 EPS – 10am , Passcode: 22334128
  • VAC Q1 earnings – 10am , Passcode: 4679876
  • MGM Q1 earnings – 11am , Passcode: 20455736

Wednesday, April 30

  • PNK Q1 earnings – 8am , Passcode: 27759612
  • GLPI Q1 earnings – 9am
  • MAR Q1 earnings – 10am , Passcode: 10575194
  • H Q1 earnings – 11:30am , Passcode:  11561402
  • BYD Q1 earnings – 5pm , Passcode:  44440004

Thursday, May 1

  • GENTING Q1 earnings  
  • HST Q1 earnings – 10 a.m.
  • OEH Q1 earnings – 10 a.m. , Passcode: 22074904
  • FCH Q1 earnings – 12 p.m. , Passcode: 28469900
  • BYI FQ3 earnings – 4:30 p.m.
  • EXPE Q1 earnings – 4:30 p.m .

Friday, May 2

  • April Employment Report
  • HT Q1 earnings – 9 a.m. , Passcode: 1398938

COMPANY NEWS

200.HK – signed a memorandum of understanding with Veremonte Espana S.L. of Spain to hold talks for the management of at least one casino to be developed as part of the BCN Dream resort being developed by Veremonte near Barcelona.

Takeaway:  Given the press releases during 2013, we believed this had already occurred - so we don't consider this "new" news.

PENN – filed an appeal with the Iowa Racing & Gaming Decision regarding the IRGC's April 17 decision to close the Argosy Casino.  The IRGC has 20 calendar days from the April 22 appeal filing date or Monday, May 12.  The IRGC has three options: deny the appeal; accept the appeal and proceed to another hearing (similar to the hearing held at the end of March); or do nothing (in which case the appeal would be considered denied). 

Takeaway:  We give 3:2 odds the IRGC either denies or does nothing. Given the events at the March hearing, it seems unlikely the IRGC would opt for another hearing - especially given PENN's commentary last week on the Company's Q1 2014 earnings call. 


PNK - the $300 million Belterra Park will open Thursday, May 1 with 1,500 slot machines, a rebuilt thoroughbred race track, three sit-down restaurants, another three snack or beverage outlets and space for events.

Takeaway:  100 less slots than previously guided.  Increased competition for gaming dollars around Cincinnati.


MGM & WYNN – have indicated they want Massachusetts to repeal a provision requiring gambling facilities to report and withhold 5 percent for state income tax on certain winnings over $600.

Takeaway:  MA may prove to be a tough place to do business... 

 

OEH - the iconic Belmond Hotel Cipriani in Venice, Italy has reopened for the 2014 season with a stylish new restaurant, called Oro.  Oro seats 40 patrons and overlooks the the lagoon.  Summer 2014 rates at the Hotel Cipriani start from US$1,025, including taxes and breakfast, based on two sharing a Double Garden View Room with Balcony

Takeaway:  What is old is new, how about a new ticker symbol for the new brand name? May we suggest NYSE "BMD" or "BHG" 


MSC - Agents can earn more selling MSC Divina in the Med next summer Seatrade Insider 

The decision to send Miami-based MSC Divina back to the Mediterranean during summer 2015 will help US travel agents entice their clients to Europe for higher-ticket cruises while taking ship out of the competitive Caribbean, said Rick Sasso, president and CEO of MSC Cruises USA.  The move is a change from the line's original deployment plan, which would have seen Divina based in Miami year-round during 2015.  "Travel agents can make much more money in the Mediterranean than the Caribbean in June and July," Sasso said.

Takeaway:   This is cruisetalk for an exec telling folks we made a mistake to overcrowd the Caribbean market.  Cruise companies seem to a step behind in gauging where strong demand lies - this year's Europe, last year's North America. 

INDUSTRY NEWS

Macau Unemployment Rate Jan 2014 - Mar 2014 DSEC

Macau's unemployment rate (1.7%) for Jan-Mar 2014 was unchanged from the December 2013-February 2014 period.  Gaming employment fell 2.6% from the previous period to 85,600. 

Takeaway:  We're more worried about labor supply and labor inflation when the new Cotai properties add to the table supply.

 

Large junkets credit - According to a UBS report, a junket operator is reporting some larger junkets may be running tight in issuing credit because of a rise in the cost of capital.  Credit VIP volume is not growing, but cash VIP play is, said a junket operator.  Cash VIP, meaning agents lending cash to players vs. players using credit from a junket operator, now accounts for 50% of VIP business.  


A junket operator added that because of collection concerns, agents are being tighter with credit extension, so that while the number of players is up, they are gambling less.

Takeaway: Whether this is an isolated comment from a junket, we don't know.  We haven't heard this from any of our contacts.  May might provide an indication as we are expecting a very strong month.

 

G2E Asia - May 20-22, 2014 at the Venetian Macau announced the Keynote Address speaker will be Pansy Ho.  Other high profile speakers include: Gamal Aziz, president, Wynn Macau Ltd.; Edward Bowers, senior vice president, Global Gaming Development, MGM Resorts International; Grant Bowie, chief executive officer, MGM Resorts China Holdings Limited; Grant Chum, senior vice president, Global Gaming Strategy, Sands Corporation; Mike Mecca, president and CEO, Galaxy Entertainment Group Limited; Jorge Sarmiento, president and COO, The Philippine Amusement and Gaming Corporation; Kelvin Tan, chief of international marketing and executive vice president, Melco Crown Entertainment Ltd.; Will Shen, Vice President of Asia Development, Caesars Entertainment.

 

Florida Gaming Expansion - Gov. Rick Scott and the Seminole Tribe of Florida are close to reaching a new deal that could force legislators to once again consider the future of gambling in Florida.  The Scott administration is considering a May special session (beginning May 19) to consider a new compact with the tribe.  Florida legislators are scheduled to end their annual session on May 2.  The Seminoles and Florida reached a deal in 2010 to give the Seminole exclusive rights to have blackjack and other table games at three Broward County casinos and others in Immokalee and Tampa. Part of that deal expires in 2015. 

Takeway:  Expect more commentary from LVS, WYNN and Genting Singapore in the days ahead.  We all agree that Florida has destination type potential.

Saipan Gaming Expansion - the Lottery Commission must review applications from two investor groups looking to develop an integrated casino resort on the island country. Marianas Stars Entertainment Inc. and Best Sunshine International Ltd. each have until May 5 to deposit $30 million in an escrow to be further considered for a grant of an exclusive casino license. 

Takeaway:  As we highlighted in our March 3 and March 25 Leisure Letters, we remain very skeptical and doubt such integrated resorts will get buitd because the current annual visitation of approximately 450,000 (comprised of 40% from Japan and 20% from China), would only fill a small percentage of the total 730,000 room nights at a 2,000 room hotel. Thus, we remain skeptical of the casinos profitability and viability given the isolated location.  Additional airlift is required to ensure casino visitation.

Sri Lanka rejects gaming bill - the Sri Lankan government refused to allow casinos at three super-luxury resorts planned in the capital after opponents said they would lead to prostitution.

Takeaway:  Prostitution at casinos? Say it isn't so...

MACRO

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.