Shares of major gaming
companies soar on
Vegas confidence

Mar 8, 2005 8:55 AM

Wall Street investors happily focused on the major gaming stocks on Monday, pushing several of the companies’ shares to recent highs.

Among the big winners were Riviera Hotels Corp. (RIV), Boyd Gaming Corp. (BYD), Wynn Resorts (WYNN), Harrah’s Entertainment Inc. (HET), Las Vegas Sands Corp. (LVS), and MGM MIRAGE Inc. (MGG).

The emphasis seemed to be two-fold: Las Vegas will continue to grow and, as such, Las Vegas Strip land values will continue to skyrocket.

That would explain the nearly 10% jump in share price for the Riviera, a company that has had trouble showing a profit for several quarters but whose holdings include two dozen valuable acres on the northern part of the Strip.

At the close of trading on Monday, RIV was priced at $44.98 a share, an increase for the day of $3.96 per share.

Boyd Gaming shares were higher by $3.91 with a closing price of $53.77. The company holds valuable real estate assets at the Stardust Hotel/Casino, almost across the Strip from the $2.7 billion Wynn Resort. However, it should be noted that the company’s recent quarterly report, that included substantial boosts from the acquisition of the Coast Resorts’ "locals" casinos, showed dramatic growth.

WYNN shares rose $2.60 each to $74.25 while Las Vegas Sands (LVS) moved higher by $1.47 to $49.80.

As for the prominent merger companies, MGG the acquirer of Mandalay Resort Group, and HET, that awaits only federal and state regulatory approval of its purchase of Caesars Entertainment Inc. (CZR), both were well received. MGG was up by $1.20 to $76.35 while HET increased by $1.37 to $68.35.

Closing shop

An Internet gaming site operated in a partnership by Harrah’s Entertainment Inc. (HET) in England was shut down last October because it just wasn’t making any money.

The site — called LuckyMe — involved both Harrah’s and Revahertz Networks, a Boston-based privately held software game developer that founded Gamesville, a games-for-prizes site that was sold in 1999 to the Internet search engine Lycos.

According to the company LuckyMe, which began operating in November 2003 for British bettors’ lost more than $9 million in its last year.

Gamblers who chose LuckyMe as their gaming site paid between $17 and $84 per month for access to bingo and other games with cash prizes ranging from $8.50 to $1.7 million.

This is the second U.S. based gaming company to discontinue foreign Internet gaming. Two years ago, MGM MIRAGE Inc. (MGG) terminated its Isle of Man operation because of concerns with legal matters.

Competition growing

There was a quick response to a plan by Lakes Entertainment Inc. (LACO) to build a multi-million dollar gaming complex in Vicksburg, Miss. Ameristar Casinos Inc. (ASCA) announced plans to expand its property, the largest in the market area.

Ameristar asked for a variance to build a new hotel, it already operates a 150-room hotel next to its riverboat, and a 1,150-space parking garage.

Earlier, Lakes Entertainment said it had received approval of 150-acre site on the Mississippi River for a property that would house 1,500 slot machines, 45 table games and a nearby 250-room hotel.

A spokesman for Ameristar said the new proposal would be in addition to the previously announced addition of a poker room and 200 slot machines.

Court test

While the state of Pennsylvania moved slowly to implement the provisions of a new law that will permit the installation of as many as 61,000 video lottery machines, opponents have been moving to have the law trashed as a violation of the state constitution.

This week, the opponents will get their day in court as the justices of the State Supreme Court hear arguments challenging both the law and the way it was passed.

Although a number of scholars and legislative lawyers believe that the alleged procedural shortfalls aren’t sufficiently egregious to motivate the justices to overturn the law, legislative supporters say they are prepared to submit new legislation as quickly as possible to avoid a lapse in the plan to begin operations as early as December.

THE INSIDER: Debra J. Nelson has been named vice president of corporate diversity and community affairs by MGM MIRAGE Inc. (MGG). She joins the gaming company from DaimlerChrysler Corp. where she performed similar duties.

Irwin Chafetz has been elected to the board of directors by Las Vegas Sands Corp. (LVS). He is past president and a director of Interface Group — Massachusetts Inc.

Full House Resorts Inc. (FHRI) is exploring a management agreement with the Northern Cheyenne Nation involving a potential casino in an area near Sheridan, Wyoming.

Churchill Downs Inc. (CHDN) has filed a lawsuit against the Jockeys Guild seeking injunctions that would prohibit jockeys from boycotting their tracks.

The Pojoaque Pueblo tribe of Indians has petitioned the New Mexico Racing Commission to reopen the Downs at Santa Fe Racetrack that has been closed since 1996. The tribe hopes to add a casino to the racing operation.

The Pennsylvania Department of Revenue has selected GTECH Corp. (GTK) to provide a slots monitoring-control system for its new slot-machine industry.