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TICKERS: PENN, MGM RCL

EVENTS TO WATCH

Friday, May 2

  • HT Q1 – 9am , Passcode: 1398938

Monday, May 5

  • Genting Singapore Q1 – 6am 

Tuesday, May 6

  • RHP Q1  – 10am , Passcode: 25122491
  • SHO Q1  – 12pm
  • TRIP Q1  – 430pm
  • DIS FQ2  – 5pm , Passcode: 36995300

Wednesday, May 7

  • STAY Q1  – 830am
  • STN Q1 – 4pm
  • CZR Q1 – 5pm , Passcode: 20337702

Thursday, May 8

  • PCLN Q1 – 730am
  • MPEL Q1 – 830am , Passcode: MPEL
  • CAR Q1 – 830am , Passcode Avis Budget
  • BEE Q1 – 10am , Passcode: 10895989
  • SGMS Q1 – 430pm , Password: SGMS

Friday, May 9

  • HLT Q1 – 10am , Passcode: 25981567
  • AHT Q1 – 11am

COMPANY NEWS

PENN – sent Argosy Sioux City employees a Worker Adjustment and Retraining Notification, or WARN, letter from the riverboat's owner, Belle of Sioux City.  The letter told employees the Argosy will close on July 1st.  Despite the issuance of the WARN letter, PENN continue to challenge the Iowa Racing & Gaming Commission's decision. 

Takeaway:  Sioux City should be in discontinued operations for Q2.

  

MGM – (Las Vegas Sun) Broke ground on LV Strip arena, which is behind Monte Carlo and NYNY casions.  The $350m project is expected to open Spring 2016.  Las Vegas Mayor Carolyn Goodman said the city is still in the hunt to build an arena downtown.  The city is negotiating with Cordish Cos. on that project.  The deadline for those negotiations is May 31.

Takeaway: Growth is non-gaming, unless young people suddenly start playing slots.

 

RCL – unveiled new promotion, "Buy One, Get One 50% off" on 2015-2016 cruises.  From May 1st through May 31st, 2014, residents of the United States and Canada can get 50% off the cruise fare of the second guests when booked in the same stateroom as a full-fare guest. The offer applies to new individual and named group bookings in all stateroom categories and sailings departing between January 1, 2015 and April 30, 2016, and excludes Quantum of the Seas and Anthem of the Seas, as well as third and additional guests. 

Takeaway:  This follows NCL's Buy one, Get one free deal earlier this week.  Still promotional in the Caribbean

INDUSTRY NEWS

Macau Gaming Revenues for April - the DICJ reported Macau April Gross Gaming Revenue for April 2014 totaled HKD30.406B (MOP 31.318B), up by 10.64% YoY but down 11.66% MoM.

Takeway: Not surprising as we commented on Tuesday of this week in our "WE'VE BEEN PLACEHOLDERED!" - we expected a positive revision and "double digit growth" for April which was not expected by investors. 

Pacquiao, a Macau Return -  Manny Pacquiao may return to Macau for another bout in Asia’s gambling capital near the end of the year. CEO Bob Arum plans to strengthen the pay-per-view market in China by bringing in more interesting fights, which could include a possible fifth fight between Pacquiao and Juan Manuel Marquez. Arum continue so shop a broadcast deal across Asian market.  In a twist of irony, by taking Marquez to Macau, Arum risks losing the Mexican and Latino market in Las Vegas but could appeal to the Filipino population as well as pay-per-view breakthrough in China.

Takeaway:  Given the public scrum between Arum and MGM"s Jim Murren, we are not surprised by a Team Arum and Pacquiao move to Macau as Murren's new promoter is Oscar Dela Hoya.  We expect Arum and Pacquiao to saddle up to Cotai Arena at Venetian Macao.

Northeastern Iowa Gaming - the Lac du Flambeau Chippewa Tribe voted to stop funding the proposed $132 million off-reservation casino project in Shullsburg Wisconsin. 

Takeaway:  As we pointed out in our Leisure Letter on March 21, 2014, located 28 miles from Dubuque, Iowa, the proposed Shullsburg casino would cannibalize BYD's Diamond Jo Dubuque and the Mystique Casino, while ISLE's Lady Luck in Marquette and Wild Rose Clinton (in Clinton) would likely experience some lost revenues as well. 

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.