Gaming stocks continue steep slide

Mar 3, 2009 5:03 PM

"The world has definitely turned upside down," a friend was saying the day after checking stocks and realizing Dan Lee’s little Pinnacle Gaming was selling for more than MGM MIRAGE, close to $4 a share more.

"It hit me," he said, as MGM hovered around $3.50 a share late last week. "I could buy a teriyaki bowl and an order of egg rolls from Jack in the Box for less than two shares of the company that owns hundreds of acres along the Las Vegas Strip corridor."

What has happened? Did someone drop a hallucinogenic into the water? Must be something like that because little of what we’re seeing makes any sense.

"Kirk is playing chicken with some of his lenders," suggested a financially savvy friend who may or may not be accurately reading the actions of MGM’s principal shareholder.

And then we had the senior strategists at Boyd Gaming saying, in effect, that their born in Las Vegas company doesn’t care what anyone else thinks. Vegas is their kind of town. Boyd wants a bunch of the Station Casinos assets, maybe all of them, if Station is willing and the price is right.

Station once seemed to have an impossible lead in the business of connecting with locals. Boyd gained a lot of ground with its purchase of the Gaughan casinos but there was still a lot of ground to make up.

Move along the Strip a bit farther and we come to the possibility passed along in whispers late last week, the one about Steve Wynn giving serious thought to taking a run at the badly depressed MGM MIRAGE shares.

Not that Wynn needs it, or even wants it, but what a time to go on a shopping spree when you’ve got the kind of money Wynn has and prices have collapsed to their current low levels. Wynn has to be remembering how his board forced the sale of Mirage Resorts to MGM some nine years ago.

Going after MGM or some part of it seems highly unlikely, but what a way to double back and pick up some of the finest resorts on the Strip. Wynn would know about that since he built them – Bellagio and The Mirage.

Wynn’s new Internet site makes reference to the Michelin, AAA and Mobil awards his hotels and restaurants have earned. He’s very big on quality restaurants. With MGM’s market capitalization under a billion dollars, it was easy to imagine Wynn considering the prospects for moving some of the best MGM assets into his company, maybe adding one of those Michelin three-star Joel Robuchon restaurants.