Shares of Wynn Resorts Ltd. (WYNN) were among the high-flyers Monday in the wake of the announcement by Chairman Steve Wynn that the company had sold for $900 million cash a Macau casino "sub-concession" to Publishing and Broadcasting Limited (PBL), the Australian company owned by the late Kerry Packer.
Initially, the government of Macau Special Administrative Region of the People’s Republic of China, had granted three main licenses to longtime gaming magnate Stanley Ho, whose SJM Co. has granted a "sub-concession to MGM MIRAGE Inc. (MGM) and its partner Pansy Ho, Stanley’s daughter; Hong Kong-based Galaxy, who later granted a substantial "sub-concession" to Las Vegas Sands Corp. (LVS), and Wynn Resorts Ltd.
PBL, now headed by Kerry Packer’s son, James Packer, plans to develop a Macau casino with Melco International Development Ltd., a company with a relationship to Stanley Ho. The Australian company is experienced in the gaming industry since it operates casinos in Melbourne and Perth.
The casino "sub-concession" sale must be approved by the Macau government.
Wall Street reacted quickly to the announcement, sending WYNN shares up more than 16% to the $75 per share level. The shares later came down from that level as profit taking set in.
In a research note, Celeste Brown, an analyst for Morgan Stanley, said it was the $900 million price of the deal that surprised investors.
"We had expected a sale price of $200 million in our previous target," she wrote. "The $900 million price even exceeds what we believed to be the high-end of any sale range."
Immediately after the sale announcement, analysts raised their price targets for the Wynn stock. Also, some analysts speculated that the move would keep Harrah’s Entertainment Inc. (HET) from entering the Macau marketplace since the Wynn "sub-concession" was the last gaming license to be available until at least 2009. In order for Harrah’s to build a casino in Macau the company would have to find a partner that is already licensed.
Wynn, in making the announcement, remarked, "Making it possible for PBL to enter (the Macau market) was a positive and dynamic step toward upgrading and expanding the quality of investment in Macau. What’s good for Macau is good for Wynn Resorts."
Packer noted that "Our company has a long-standing relationship with Steve Wynn and this transaction will hopefully be the first of many. I value the relationship enormously."
Galaxy, the operator of the Waldo Casino and Hotel in Macau expects to have a second property in operation by next year, a time when MGM MIRAGE also will be operating its casino.
Reno’s four largest casinos have had their tax assessments reduced. The assessments have been under appeal since 2003.
The reductions announced by the Washoe County’s assessor’s office were as follows:
The Eldorado Hotel Casino, reduced by $12 million; the Silver Legacy, down by $32 million, Circus Circus, lower by $18 million, and Harrah’s Reno, by $11 million.
In effect, the city’s downtown redevelopment district will be shy $74 million in annual revenue because of the reductions in assessments.
With the latest reductions, more than $370 million in casino taxable values have been wiped out in Washoe County since the Sept. 11, 2001 terrorist attacks.
A bill providing a $20 million bailout of the New York Racing Association (NYRA) has received legislative approval and needs only the signature of Gov. George Pataki to become law.
The bill will make available the funds needed to have MGM MIRAGE Inc. (MGM) go forward with the construction of a facility to house 4,500 slot machines at Aqueduct racetrack.
But, the funds also will keep the franchise operators for the operation of racing at Aqueduct, Belmont and Saratoga from going broke. Prior to the legislation providing the funds, NYRA said it would be forced into bankruptcy since it didn’t have the money to pay its bills.
The bill to save NYRA was pushed through the Senate by Republican Senate President Joseph Bruno over the serious objections of Senate Democrats who called the measure, "throwing good money after bad money."
The NYRA franchise expires on Dec. 31, 2007.
A new player
He’ll be joining the Mississippi Gulf gaming operators as a new player but in reality he’ll just be a former operator returning home.
Marlin Torguson has received approval from the Biloxi, Miss., city officials to build a $500 million casino/condo development in the hurricane-ravaged city.
Although Torguson Gaming Group Inc. is a relatively new player in the gaming market, former operators will remember that it is the same Marlin Torguson that founded and operated Casino Magic, Inc., a firm that built and operated Casino Magic Bay St. Louis and Casino Magic Biloxi, properties now owned by Penn National Gaming Inc. (PENN) and Pinnacle Entertainment Inc. (PNK).
Torguson said he now plans to seek approval from the Mississippi Gaming Commission to begin construction of the Bacaran Bay Casino this spring.
THE INSIDER: American Wagering Inc. (BETM) has completed the acquisition of and commenced operations at Sturgeon’s Inn & Casino in Lovelock, Nev.
Analysts at Harris Nesbitt have upgraded the shares of MGM MIRAGE Inc. (MGM) to "outperform" from "neutral."
Shuffle Master Inc. (SHFL) will conduct an earnings conference call on Monday, March 20 at 2 p.m. PST.
Riviera Holdings Corp. (RIV) will announce the results of its fourth fiscal quarter on Wednesday, March 8 at 11 a.m. PDT.
Scientific Games Corporation (SGMS) has contracted with the West Virginia Lottery to supply instant lottery tickets and related materials for three years with provisions for two potential one-year extensions. Also, the company announced that Michael J. Regan has been appointed to the company’s board of directors.
Alliance Gaming Corp. (AGI) says March 13 will be the effective date for the company’s name change to Bally Technologies, Inc. The company’s stock will trade on the New York Stock Exchange with the ticker symbol BYI.
TouchPlay machines, described by some state officials as gambling devices, have been ordered shut down within the next 30 days by the Iowa state Senate. The committee vote was 16.0.
Analysts at Jefferies & Co. have downgraded the shares of Nevada Gold & Casinos Inc. (UWN) from "buy" to "hold."
Beau Rivage Casino Resort in Biloxi, Miss., will have three new restaurants, including one by famed chef Todd English, when it reopens on Aug. 29.
Ellis Landau, chief financial officer of Boyd Gaming Corp. (BYD) since 1990, has announced his retirement effective June 1.