TICKERS: PENN, 0027.HK, CCL
COMPANY NEWS
PENN - Plainridge Casino opening reported a great a turn out.
- “It’s been a fabulous success,” said Lance George, the facility’s general manager. He said he expected to exceed his goal of 10,000 people in the first 12 hours of operation.
- Within three hours of the opening, the casino had hit its fire department-imposed capacity of 3,750 people.
- Patrons said they waited about 15 minutes to get in. Some cashiers had to close temporarily because they had run out of money.
Takeaway: Great comments. We continue to expect Plainridge to beat expectations of $300-350 slot win/day. We're at $400 and we suspect Plainridge will top even our forecast.
Louis XIII - Plans to charge as much as HKD1 million (US$129,000) per night for its most luxurious accommodation. According to a report, “Louis XIII plans to use only ‘one single junket’ (the Neptune Group), and believes this could reduce the cannibalisation between junkets,”
Takeaway: Can't believe wealthy mainland Chinese will want to be seen within this extravagance during the corruption crackdown.
Galaxy - Vice Chairman, Francis Lui Yiu-tung, thinks the government should reconsider its intention to ban smoking in casinos, in view of the slump in gaming. He indicated that the present practice – allowing smoking in casinos only in smoking rooms – serves the paramount purpose of protecting the health of staff. Lui added, “Over a longer period of time, VIP gaming will change to a different model. But to let it drop 50%, everybody will have the responsibility to look at it and see what we can do to smooth out the curve such that everyone will have a little bit more time to adapt to the new norm.”
Takeaway: Expected comments from a gaming operator regarding the full smoking ban.
CCL - Eight tourists killed in Alaska plane crash.
- Promech Air, an airline based in Ketchikan, operated the shore excursion sold through Holland America Line, the cruise ship company said in a statement.
- The eight passengers were guests on the Westerdam, which is on a seven-day cruise that departed Seattle on Saturday.
INDUSTRY NEWS
Macau Junkets - Prominent Macau casino junket operator Cheung Chi-tai has been accused of laundering HK$1.8 billion through bank accounts in Hong Kong after he "surrendered'' to police in the city earlier this week.
Takeaway: More bad press for junkets.
Las Vegas - McCarran Passenger Traffic Increases in May.
- May 2015 saw 3,992,150 passengers arriving and departing, a 5.7% increase YoY.
- YTD there have been 18,113,323 passengers arriving and departing, a 3.3% increase YoY.
- Domestic travel to Las Vegas increased 5.4% YoY
- International travel to Las Vegas increased 7.5% YoY
Takeaway: That's 21 straight monthly gains for McCarran traffic. Should be good for May slot play.
New Jersey - Tax bill passes in state Senate. The most important of the five bills approved by the state Senate would let Atlantic City's eight casinos make payments in lieu of taxes for 15 years.
- The bill would allow the gambling halls to know exactly how much they owe instead of facing huge potential increases each year.
- The payment-in-lieu-of-taxes bill would let the casinos collectively pay $150 million for the first two years and $120 million annually for 13 years, assuming gambling revenue stays within certain ranges ($2.2 billion to $2.6 billion) in the city.
- The Tropicana, which Icahn owns, and the Trump Taj Mahal, which he is soon to acquire, would pay nearly $19 million less in the first year of the plan.
- Caesars and Harrah's would see a nearly $20 million reduction. Bally's, which also is owned by Caesars Entertainment, would see a $2.6 million increase in payments.
- The Borgata would see a $2.7 million reduction.
Takeaway: The House is next.
China Lottery - Misappropriation of funds reported.
- The government’s National Audit Office claims that it has uncovered widespread misappropriation of the funds from its state lottery program.
- At least some of the RMB 64 billion in funds that China’s Academy of Social Sciences claimed earlier this week was unaccounted for (see previous report) has been found; RMB 16.9 billion (about US$2.72 billion) was misused or misappropriated.
Takeaway: Bad news for an industry that is being highly scrutinized by the govt.
MACRO
Hedgeye Macro Team remains negative on Europe
Takeaway: European pricing has been a tailwind for CCL and RCL but a negative pivot has happened in 2015.
