In Tuesday’s Sea Change - America is fast becoming a nation of gamblers. The American Gaming Association says that gaming revenues jumped nearly 7% last year to more than $32 billion. Even more impressive was the growth of racetrack casinos -- gaming revenues from this segment jumped 16% last year as Pennsylvania and Florida welcomed their first racetrack casinos.
Among the latest developments -- Boyd Gaming (BYD) breaking ground on a new 87-acre Las Vegas hot-spot called Echelon Place. With all this growth -- is now the time to get lucky in the casino space?
Boyd Gaming Chief Financial Officer Paul Chakmak joins the guys for this conversation.
How confident are you about the business?
“Very,” replies Chakmak. “And we feel very good about the (Echelon) ground breaking today.”
What do you expect to get out of that?
“Echelon will open it’s doors in 2010..” replies Chakmak. “The $4.75 billion project encompasses 5 distinct hotel brands, two of which we’ll own and operate ourselves…In addition we’ll own a Shangri-La Hotel that Shangri-La will manage and we’ve entered in joint venture with Morgans Hotel Group (MHGC) for a Delano and a Mondrian in Las Vegas.
What do you expect to get for your money?
“Nothing happens between now and the opening of the properties,” says Chakama. “But we see great dynamics on the Las Vegas strip. Not just in the boutique hotel side of the business but with the other amenities… (for example) 3000 square feet of retail… theaters, casino night life and restaurants.”
What’s going on with acreage?
“The dynamic in Las Vegas is ever changing and the valuation and scarcity of real estate is an important factor,” says Chakmak. “We’re developing 65 of the 87 acres at the former sight of the Stardust. We’re holding 22 acres for future development.”
Why can’t Atlantic City seem to catch-on like other gambling cities?
“There’s a limited amount of real estate (in Atlantic City) that’s zoned for gaming…(in addition building in Atlantic City is) a lengthy process and one that involves very significant capital investment.”
Dylan Ratigan asks the guys what they think of this stock?
All the guys agree BYD is a buy.
Trader disclosure: On June 19 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders:
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