A mini-rally in the value of gaming shares that began on Friday was short lived. On Monday, investors took back about half of the previous trading day’s profits.
The Friday boost came after an industry report prepared by Morgan Stanley was made public. The report countered fears of a softening locals market in Las Vegas and said patches of weakness in the industry actually presented a buying opportunity.
Investors agreed and began pushing up the shares of Boyd Gaming Corp. (BYD) from $42.50 to $44.09; Station Casinos Inc. (STN) from $63.92 to $66.68, and Harrah’s Entertainment Inc. (HET) from $65.21 to $66.71.
But after investors were able to evaluate the impact of Hurricane Rita over the weekend, noting that the storm forced the closing of St. Charles, La., casinos owned by Harrah’s, Isle of Capri Corp. (ISLE), and Pinnacle Entertainment Inc. (PNK), share selling began.
By day’s end, Monday, BYD was listed at $43.05, down $1.10; STN was at $65.04, down $1.51, and Harrah’s was at $65.49, down $1.18.
The only positive note for the group was the showing of Pinnacle which was up $1.04 for the day to its closing price of $18.53.
A deal to install a number of slot machines provided by Bally Gaming and Systems at a temporary gaming facility in Bangor, Maine, could affect the timing of the property’s November opening.
The Maine Gambling Control Board decided last week that it would not issue a permanent distributor’s license to Bally Gaming and Systems because its parent company, Alliance Gaming Corp. (AGI) had failed to file a required year-end earnings report with the Securities and Exchange Commission.
Alliance Gaming has been seeking an extension for the filing from the SEC because its auditors had found some improper accounting relative to a terminated contract and was attempting to restate the company’s earnings for both 2004 and 2005.
Penn National Gaming Inc. (PENN), the state’s only licensed racino operator had planned to outfit a popular Bangor restaurant with 300-400 slot machines while working on a permanent slots location at Bangor Raceway. The company did not comment on the Bally Gaming problem.
Churchill Downs Inc. (CHDN) announced Friday that it had completed the sale of Hollywood Park racetrack in California to Bay Meadows Land Company LLC for $257.5 million.
The $260 million sale price announced on July 6 was reduced at closing by $2.5 million to cover the costs of addressing certain physical conditions at the property.
Bay Meadows said that it planned to conduct racing for the next three years in hopes that the state will permit the track to add video lottery machines to its gaming menu. If that happens, Churchill Downs will have an option to reinvest in the track to take advantage of the additional revenues.
Churchill Downs acquired Hollypark from Hollywood Entertainment Inc. (HPK) for $140 million. HPK now does business as Pinnacle Entertainment Inc. (PNK).
No sure thing
Mississippi legislators will be called back into an emergency session this week to view recovery issues in the wake of Hurricane Katrina’s wrath that decimated the state’s economy.
Although Gov. Haley Barbour did not place casinos at the top of the agenda, legislators were gearing for a major fight on whether to permit gamers to build their properties on land rather than on water, as the law currently mandates.
Gambling opponents, such as the Mississippi Baptist Convention and the American family Association, have announced their intention to use the destruction of the 13 Gulf casinos as a basis of that argument that gaming should be banned in the state.
Supporters, however, plan to point to the $500 million the state is losing while the casinos are closed and the thousands of residents who are and will continue to be unemployed if the casinos are not permitted to rebuild on solid ground.
THE INSIDER: Opposition is growing in Reno, Nev., to plans by Station Casinos Inc. (STN) to build a major resort in the Redfield Regional Center. Union members reportedly are joining with gaming opponents in attempting to keep STN from building a facility that the company has described as being similar to Green Valley Ranch in Henderson.
Mikohn Gaming Corporation, doing business as Progressive Gaming International Corporation (PGIC), announced the resignation of Michael Dreitzer as company executive vice president and general counsel. The company said it had agreed to a one-year consulting agreement with Dreitzer.
The directors of MGM MIRAGE Inc. (MGM) said they have signed the company’s top five executives to employment agreements that will last until 2010.