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Tickers: CZR, IGT, LVS, WYNN, HOT, RHP

EVENTS

  • July 14: AC June revenues
  • July 15-17: Pre-RCL earnings Hedgeye Cruise pricing survey
  • July 16:  LVS 2Q call (430pm)
  • July 23:  TRIP 2Q call (430pm)
  • July 24:  
    • WYN 2Q call (830am)
    • PNK 2Q call (9am)
    • LHO 2Q call (930am)
    • PENN 2Q call (10am)
    • HOT 2Q call (1030am)
    • AWAY 2Q call (430pm)
  • July 25:
    • PEB 2Q call (9am)

COMPANY NEWS

CZR(Bloomberg) Caesars Entertainment Operating Company has hired New York law firm Kirkland and Ellis to help in the reorganization of $17.4 billion in debt. 

Takeaway: Good luck. Bad balance sheets are endemic in gaming.

IGT – announced an agreement to install its Advantage 9.1 System Suite along with sbX Media Manager at Northern Quest Resort & Casino. The comprehensive systems solution includes IGT's Point Play and Xtra Credit bonus applications, sbX Media Manager, and IGT's Service Window

Takeaway: Another systems win for IGT.

LVS – A former Macau business partner of Las Vegas Sands Corp has accused the casino operator of misappropriating trade secrets during the latter’s successful bid in 2002 for a casino licence in the city.  Asian American Entertainment Corp (AAEC), a company led by Taiwan entrepreneur Marshall Hao Shi-sheng, is suing the company for at least US$5 billion in profits that it says are owed via their joint ownership of copyright related to a casino licence bid. AAEC filed the complaint in U.S. District Court in Nevada on July 9. The case is in addition to two separate, ongoing legal actions in Macau over alleged breach of contract

Takeaway: A repeat of the same, previous lawsuit.

WYNN & 1128:HK (Macau Business Daily) In a CNN interview, Linda Chen, Wynn Macau COO said that Wynn is now focusing on expanding the activities offered by Wynn Resort especially as the company gets ready to open it's new Wynn Palace in Cotai. She also said that Steve Wynn will remain in his position for many years.

Takeaway: Touting the Macau DICJ focus for more non-gaming and entertainment amenities.

HOT – In an interview with Bloomberg, Matthew Fry, SVP of acquisitions and development for Asia, said: “China is our single-biggest and fastest-growing market in Asia.” Factors like rising urbanization, a buoying middle class, and a mushrooming travel industry make China an attractive travel and tourism market. The company, which already has a network of 133 hotels in the region, is planning to double its footprint in the region by 2015.  It already has 120 properties in the pipeline, with four expected open this year. In second and third-tier cities, Starwood will focus on four-star hotels to cater to the changing demand of the country after the new government’s crackdown on extravagant spending.  Fry also said Starwood plans to add 30 properties to its portfolio of 40 hotels in India, which according to Fry is the company’s second-biggest market in Asia.

Takeaway: Let's hope the ASIA/PAC economies remain strong.

RHP – The Metro Historic Zoning Commission recommended approval of RHP's expansion plans for the Ryman Auditorium on the condition the digital billboard be downsized from 236 square feet to 154 square feet. Ryman Hospitality will have its expansion plan for the auditorium considered at the Historic Zoning Commission meeting on Wednesday. The company wants to add a restaurant, new lobby and multimedia history tour, plus renovated box office, restrooms and concessions area. The project, which will extend the non-historic portion of the building all the way to Fourth Avenue, will cost about $14 million.

Takeaway: As expected, RHP is refocusing the Ryman Auditorium programming for the younger country music listener.

INDUSTRY NEWS

Illegal Chinese World Cup Betting – (Xinhua) More than RMB18 billion (US$2.9 billion) changed hands in cases of illegal football gambling detected by the authorities in mainland China during the 2014 FIFA World Cup.

Takeaway: A big number and now with the World Cup over, no more excuses for poor GGR

Trump Plaza Casino Atlantic City to close – Trump Entertainment Resorts announced the company “expects that it will terminate the operations of Trump Plaza Hotel and Casino on or shortly after September 16, 2014.”

Takeaway:  With the 3rd AC casino to close this year, incremental positive for Borgata and CZR.

Macau Airlift – AirAsia asked Macau's Civil Aeronautics Board for an additional 720 weekly seat entitlements between Macau and the Philippines.  AirAsia's request follows the July 1st service expansion from 4,500 weekly seats to 7,020 current weekly seats.

Takeaway: Strong demand = request for additional capacity.

California Online Poker – Online poker may come to California sooner than expected - the Iipay Nation of Santa Ysabel Indians could launch real money online poker in the state as soon as today through its website, PrivateTable.com. The site will only spread real money online poker to California residents 18 years of age and older. Players will be able to make deposits through the Financial Payment Network, or FinPay for short. Deposit options include credit cards, electronic checks, Bitcoin and in person at the tribe’s smoke shop.

Takeaway: With a large potential pool of players, CA remains the prize for on line poker companies.

Netherlands Gaming – The Dutch government decided to sell 14 casinos operated by Casino Holland, 10 in an immediate portfolio sale and the remaining four individually during 2015, as well as authorize two new licenses will be granted 2017, and legalize and regulate Internet gaming. The government announced casinos will pay a 20% gaming revenue tax plus 2% for problem gambling programs and to regulators.

Takeaway: An interesting announcement that was under the radar... we are anxious to hear which companies are interested in buying the casinos.  

MACRO

Singapore Economy Unexpectedly Contracts – Gross Domestic Product for the three months to June 30 fell 0.8% on a seasonally adjusted and annualized basis compared with the previous quarter, according to advance estimates by the Ministry of Trade and Industry. This compared with a revised 1.6% increase in the first quarter. The median forecast by seven economists polled by The Wall Street Journal was for 2.2% growth.

Takeaway: Could be another tough quarter for Singapore mass 

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.