In May 2018 the Supreme Court overturned PASPA, which gave each state the right to legalize sports betting. Today 18 states have legalized sports betting, and it’s currently operational in 13 of them. In this note we examine the initial impact, project the incremental near-term impact with the start of the NFL season, and project the long-term opportunity for the industry.
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The U.S. ISM manufacturing PMI has been in a downtrend for the last year, and this week it fell below the key 50 level for the first time since August 2016. In this week’s piece we examine the implications for our coverage by looking at industry stock returns over the last 25 years in relation to when PMI drops below 50 as well as when PMI eventually bottoms.
Current reports indicate Hurricane Dorian is strengthening and could make landfall in Florida as a Category 3 storm on Sunday.
Resort fees are additional charges outside of advertised room rates (for access to the gym, pool, internet, etc.), which have been gaining more attention following criticism from consumers, OTAs, and some regulators. In this note we discuss the key issues and the financial impact to our coverage.
July Vegas Strip GGR reported this morning (08/28/19) showed an increase of 1.6% y/y versus our guess of up mid-to-high-single digits y/y growth, but the data is volatile month to month, like last month when June was significantly better than expected. Normalizing for slightly better hold the result was roughly flattish y/y. We will refrain from judging the month until the RevPAR data is released later today at around 2 PM ET. We are looking for Strip RevPAR growth of about mid-single digits y/y. We feel good about 3Q CZR and MGM estimates, as we heard from both companies at 2Q reports when July should have been mostly known.
We’ve taken a fresh look at our assumptions for each company now that 2Q earnings season has been digested. Some estimates come up, some come down, and some don’t move as we just changed some of the assumptions with various offsets. Each is detailed below.
BYD reported 2Q earnings after the close (07/30/19). Adjusted EBITDAR of $233M beat consensus of $228M and our $225M estimate. Results were generally consistent across the board with strength in each major segment. BYD also reiterated prior FY guidance of $885M-$910M. All in, we view the result as positive given some risk prior to today that the quarter was trending worse and/or BYD would need to reduce guidance due to recent weather in the southeast. Note the stock also had already increased 4% today prior to this report, we think because the June Vegas industry data released in the morning suggested a likely better 2Q than investors expected previously.
June Vegas Strip GGR was released this morning which showed a surprising increase of +17.7% y/y versus our expectation of -2.0% y/y driven by very high hold. Had the month played in line with normal hold then the result would still have been up around 5% y/y, ahead of our expectations. June Vegas Strip RevPAR was then released this afternoon which showed an increase of 4.8% y/y, which was below our expectation of around 10%. Overall, it was a good month for the Strip, and it appears 2H is shaping up well per MGM, and we believe 2020 is setting up to be a strong year, too, with many tailwinds.
For our Weekly Sho we've recorded a 20-minute video with 36 slides highlighting our current views as we head into another earnings season. The cruise line section begins at 4:03, the lodging section begins at 9:00, and the gaming section begins at 15:40. Enjoy the rest of your weekend!
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