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Alliance Gaming Corp. (AGI) surprised both
investors and gaming analysts late Thursday with the pre-announcement that
rather than a profit the company would report a loss for the first quarter of
its fiscal year that ended on Sept. 30.

Based on its financial review, the company
said it would have a loss from continuing operations in the range of $0.09 and
$0.14 rather than the $0.10 per share profit that was the average estimated by
analysts that follow the company.

At the opening of trading on Friday
morning, AGI shares fell some $4 per share to a low of $10.80 per share. By the
end of trading, the shares had recovered a bit to $12.10 per share.

Not included in the operational loss was
the $0.09 per share the company said it would take as a charge to reflect the $7
million judgment ordered by a jury in a patent infringement case against a
former subsidiary.

The company blamed revenue weakness on its
Bally Gaming subsidiary as well as expenses incurred in staff restructuring and
the transition of its new CEO, Richard Haddrill.

“The transition to new CEO and
President Richard Haddrill is now complete following the announced resignation
of Robert Miodunski as an officer and director of Alliance Gaming
Corporation,” a company statement read.

“During the past 90-day transition
period, certain aspects of the company’s operations have undergone substantial
review, including completion of the organizational integration of the Sierra
Design Group with Bally Gaming and Systems.

“As part of the new organization, the
company announced the appointment of Robert Luciano to the position of executive
vice president and chief technology officer.”

Jeff Martin, gaming analyst at Roth
Capital Partners, said he downgraded Alliance to “neutral” from
“strong buy” and cut his price target on the stock to $15 a share from

In Monday trading, AGI regained some of
the earlier loss before closing at $12.64, an increase of $0.54 for the day.

New owners

Just when it appeared that Las Vegas’
growing Mexican community was going to have a casino with a Hispanic theme,
Station Casinos Inc. (STN) on Friday moved in to end the planned development of
the defunct Castaways Hotel/Casino on Boulder Highway.

An investment group consisting of Randy
Miller, Rich Iannone and Rich Gonzales had agreed to buy the former Showboat
Hotel/Casino from Vestin Mortgage Group the company whose $21.6 million was
accepted by the bankruptcy court when former owners VSS Enterprises defaulted on
their loan.

But the Castaways development obviously
posed a competitive problem for Station’s Boulder Station about one mile south
so the company bought out the controlling investment group for $12 million and
then completed the deal by paying Vestin $21.6 million to have full ownership of
the property.

As of Monday, Stations said it was still
pondering the property’s future. They indicated that the casino’s
configuration would have to be changed if it were to reopen in its current form.
Among the possible options included selling it as a non-gaming property or even
leveling the structure and building a new one.

Riviera speculation

Speculators had a field day Monday trading
the shares of Riviera Holdings Corp. (RIV), although there were no official
announcements from the company.

Shares had been trading in the early teens
for the past few weeks but dramatically moved up late last week, rising to the
high teens. On Monday, with 166,400 shares changing hands, the price of one
share ended at $23.30, an increase of $4.77 for the day.

“The Riv has been on the auction
block for many months,” explained a knowledgeable source, “and it may
be that one of the larger companies has finally moved into take it over. That
land on the north end of the Strip is highly valuable.”

Other major movers among the major gaming
companies on Monday were Wynn Resorts Limited (WYNN) that was up $2.31 a share
to $53.29 and Station Casinos Inc. (STN) which closed at $50.92, up $1.90 per

Harrah’s sale

Looking to reduce regulatory concerns with
its $9.4 billion acquisition of Caesars Entertainment Corp. (CZR), Harrah’s
Entertainment Inc. (HET) has agreed to sell four casinos to Colony Capital LLC,
the company that recently took over ownership of the Las Vegas Hilton.

Involved are Harrah’s East Chicago, in
Indiana, and Harrah’s Tunica in Mississippi, as well, as Caesars’ Atlantic
City Hilton and Bally’s Tunica.

Colony will pay $1.24 billion for the four
properties. The privately held company already operates The Resorts Hotel/Casino
in Atlantic City but will be making its first forays into both Indiana and

Wynn artwork

Residents of Northern Nevada are being
given the opportunity to view the collection of art masterpieces owned by Steve
and Elaine Wynn.

Fourteen paintings featuring works by
Vincent van Gogh, Pablo Picasso, Claude Monet and others are being loaned to the
Nevada Museum of Art in Reno. They will be displayed until March 30.

The Wynns, who plan to display the art
works at their new Wynn Las Vegas casino beginning next April, paid shipping
costs for the masterpieces and are loaning the collection to the museum for

Commenting on the move, Wynn said,
“Because of their timely quality, great value and importance historically,
I know from talking to other collectors that we don’t feel as if we own
pictures. We never felt comfortable having them in the house, although it’s a
dream to have them in the house.”

Michigan Prop

Pollsters indicated last week that
Michigan voters seemed prepared to require that any new gambling project must be
approved by voters.

With 63% of those polled favoring the No.
2 ballot measure, it appeared that the anti-gaming measure would pass with ease.
Only 27% said they opposed the constitutional amendment.

Exempted from the requirement would be
Indian casinos.

The proposition was placed on the ballot
to prevent the state’s racetracks from adding slot machines.

THE INSIDER: A $2 million upgrade
has been announced by Penn National Gaming Inc. (PENN) for its Casino Rouge
riverboat casino in Baton Rouge, La.

Multimedia Games Inc. (MGAM) has selected
JCM American Corp. as its preferred supplier of bill validators.

International Game Technology (IGT)
directors announced that they had approved a hike in the quarterly cash dividend
to $0.12 per share from the previous $0.10 per share.


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