Penn National Gaming pleasantly surprised Wall Street, reporting third-quarter revenue of $739 million and $210 million in cash flow, exceeding projections by $8 million and $11 million, respectively. It 
paid out $109 million in rent to Gaming & Leisure Properties Inc. Penn announced that $266 million Plainridge Park, in Massachusetts, and its two newest racinos in Ohio were all pulling in a 20% return on investment. At the former, Penn has signed up 130,000 members already for its loyalty program. “We think this should assuage investors’ recent concerns about a moderating recent revenue performance at Plainridge,” wrote J.P. Morgan analyst Joseph Greff of the slot parlor’s performance.
Out West, Penn is focused on improving the restaurant options and slot product at the Tropicana Las Vegas, while construction of the $390 million Hollywood Casino for Jamul Indian Village remains on schedule. When complete, it will be one of the closest tribal casinos to downtown San Diego, a real feather in Penn’s cap. However, until the financial performance of the Trop can be improved, it will remain a drag on Penn’s western division. The company also reported growth in market share in Joliet, Kansas City and St. Louis. “Additionally, spend per visit grew across all segments, while visitation remains mixed,” better at the high end, wrote Greff.
In an amusing sidelight, Penn admitted that Sundays are slow at Plainridge Park, due to high attendance at New England Patriots games. The company has replaced the management team at the Trop and figures to have Marquee Rewards in place by spring, just in time to capitalize on the MGM/AEG Arena. Management put their Trop purchase price at 10X cash flow and expects performance to warrant that multiple within three years.
* Pat Mulroy has been a naughty girl. The Las Vegas Review-Journal rummaged through Nevada Gaming Commission minutes and found that Mulroy had voted favorably on consent items involving Wynn Resorts two months before joining the company’s board. Rapidly backpedaling, Mulroy attorney Peter Bernhard told Howard Stutz that “It was the cleaning up of some language without any examination by the commission.” Joining the protect-Pat movement, Ethics Commission Executive Director Yvonne M. Nevarez-Goodson wrote that Mulroy “did not obtain proprietary information of Wynn Resorts’ competitors.”
If the Ethics Commission looks bad for waiving the standard one-year cooling-off period for state officials from joining an industry they regulating, Stutz’s discoveries only worsen the picture. As it stands, Mulroy’s remit on the Wynn board is so limited as to be comical. The former Southern Nevada Water Authority oligarch is said to be there only to provide “her expertise on water issues.”
* Lawrence Ho said he would be “very concerned” if Studio City Macau got less than its maximum of 400 tables. Well, he can start worrying. The Macao government has awarded him 200 tables to 
start, with another 50 coming in January. If that sounds bad, Ho is enjoying ‘favorite son’ treatment compared to Galaxy Entertainment, which only received 150 tables for its most recent casino. “Two hundred and fifty tables is a big allocation. No one should have been expecting 400,” analyst Tim Craighead told Bloomberg Business. (Certainly not Steve Wynn after his recent tirade against the Macanese government.)
“Studio City checked all the right boxes in terms of all the non-gaming amenities that the government is looking for,” said Union Gaming analyst Grant Govertson, who told Melco Crown Entertainment to look on the bright side: It got more tables than anyone was expecting. Ho’s umbrage can be attributed to loan covenants he agreed to which required Studio City to obtain the full 400 tables by next Oct. 1. That’ll put him in the hot seat.
* Real estate prospects in the Las Vegas area continue to look up.
