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Tickers: BYI, CZR, IGT, PNK, H, CCL

EVENTS`

  • Aug 26:  Horseshoe Baltimore Opening
  • Aug 27:  BYI 2Q earnings
  • Aug 28:  Hollywood Dayton Raceway Opening
  • Sept 1/2:  Revel closes

COMPANY NEWS

BYI – Launched and connected its "Cash Connection" wide-area progressive slot link across Nevada and New Jersey. As a result of the interstate progressive linked slot machines, jackpots should reach larger amounts more quickly and thus offer more excitement for players. The multi-state link features Bally’s hit games including TITANIC, The Magic of David Copperfield, Betty Boop’s Fortune Teller, Jackpot Empire, Hot Shot Progressive, and other titles.

Takeaway: A small but much needed catalyst for higher yields.

 

IGT – announced Nevada joined IGT's Powerbucks commercial multi-state Wide Area Progressive link as such Powerbucks networked games in Nevada casinos are now linked with casinos located in New Jersey and Deadwood, South Dakota.

Takeaway: All efforts to make slot machine gaming more exciting despite demographic headwinds.

PNK – Belterra Park reduced its slot floor by 35 slots in July.

Takeaway: A very disappointing opening for the racino.  PENN should fare better in Youngstown and Dayton though as both racinos will open in much less competitive geographies.

H – Hyatt Hotels Corporation is now offering access to the transportation service Uber through its app for iOS and Android. Uber, a service that allows riders to connect with transportation on-demand, is present in more than 100 cities worldwide and can be accessed through a dedicated Uber button located beneath the 'My Reservations' section in the Hyatt app. According to the Wall Street Journal, the Hyatt app also estimates trip prices for each Uber segment while also automatically storing the guest's hotel address for future use.

Takeaway: Hyatt trying to fully integrate transportation into its guest reservation process.

CCL – Princess Cruises is offerings savings on more than 150 cruise vacations to sunny destinations such as the Caribbean, Tahiti, Hawaii, Panama Canal and Mexico. The “Endless Summer Sale” runs through September 10, offers guests the chance to save up to $1,400 on select cruises departing between November 2014 and February 2015. In addition to special cruise fares, guests booking balcony staterooms or above will receive an onboard credit of $200 (for cruises 11 days or longer) or $150 (seven- to 10-day cruises); and those booking interior or oceanview staterooms can get credits of $150 (cruises 11 days or longer) or $100 (seven- to 10-day cruises).

Takeaway: More discounting in the Caribbean and Mexico.  

INDUSTRY NEWS

SLS Granted License – The Nevada Gaming Commission approved licensing for the SLS Las Vegas, setting the stage for the opening of the $415 million redevelopment of the former Sahara.  The SLS has been reconfigured to include a 56,000-square-foot casino with nearly 800 slot machines, 74 table games and a high-limit gaming area. A sports book will be operated by William Hill.

The nine restaurants and three nightlife venues include many SBE signature brands, including Umami Burger, the Mediterranean-themed Cleo, Japanese-themed Katsuya, 800 Degrees pizza and The Sayers Club entertainment lounge.

The three former Sahara hotel towers, all built in different decades, have been reconfigured under new names — Lux, World and Story — and are aimed at different markets: the luxury customer, the tour and travel market and the younger crowd looking for a “Vegas weekend.”

Takeaway: Given the SLS' overall programming, other operators risk losing younger guests as well as the California drive-in guests to the old-meets-new SLS.

Tuberculosis at Two Tunica Casinos (Clarion Ledger) The Mississippi Department of Health has confirmed two recent cases of tuberculosis (TB) at two Tunica casinos. One employee each at the Horseshoe Tunica Hotel and Casino and the Gold Strike Casino Resort were diagnosed. The employees are not currently at the casinos. TB is an airborne infectious disease caused by the bacterium Mycobacterium tuberculosis. Last year, 65 cases of TB were confirmed in Mississippi. TB is curable and preventable, though some drug-resistant strains of TB are more difficult to treat. Treatment for TB infection can from 12 weeks to nine months

Takeaway: As if the general public needs another reason to avoid casinos.


Indiana Casinos to remain boat based – Indiana Governor Mike Pence announced he opposes the transition of casinos from riverboats to land-based properties.  Governor Pence's comments follow recent commentary by Tropicana in Evansville to transition to a land-based operation.

Takeaway: Indiana stands to lose play to neighboring states with newer land-based casinos - as if the environment wasn't tough enough.

Resorts World Manila (Philippine Daily Enquirer) Genting’s Philippines-based Resorts World Manila (RWM) is spending about US$650 million (RM2.06 billion) to double its gaming and hotel capacity. RWM chief operating officer Stephen Reily said on an average day, some 18,000 patrons visited RWM but the number increased to between 32,000 and 34,000 during “busy days”

Takeaway: Genting trying to keep its programming current as new competition from City of Dreams Manila is about to open.


Universidade de Macau – The University of Macau (UM) will start its 2014/2015 school year next Monday on the newly developed campus on Hengqin Island.  About 4,000 students will live in the Residential College in the new campus. There will be more than 9,000 students in the new school year, including 1,700 freshmen. The full move to the new campus will be complete by November as portions of the laboratory facilities have yet to be transferred. The Macau Government announced that the university’s current campus will be reserved for higher educational purposes. In addition, a one-year temporary measure of lending and renting the old campus’ dormitories to three local universities will commence in the new school year.

Takeaway: Could the old college dormitories serve as casino worker housing for the Cotai casino operators?  Such a plan would appease the Chief Executive. 

Hurricane Season (Finally) Heading Up – According to the National Hurricane Center, current satellite data indicate an area of low pressure located over the Leeward Islands which has a 60% chance of forming a tropical depression over the next 48 hours and a 80% change over the next five days. Environmental conditions are expected to be more conducive for development when the disturbance moves near or over the southeastern Bahamas on Saturday, and a tropical depression is likely to form over the weekend or by early next week.

Takeaway: Potential for cruise disruptions and reschedulings across South Florida, the Bahamas and the Caribbean.  

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.