A combination of weak February numbers and the announcement that Donald Trump has hired Merrill Lynch to look over his company’s prospects sent a bit of a chill on gaming stocks on Monday.
February saw the first full month of competition for Atlantic City from two new slot parlors in the Philadelphia area. Slots revenue for A.C.’s 11 operating casinos was $264.4 million, down 7.8% from last year. In January, slots revenue fell 7.2%.
It is now generally agreed that this will be the first year since gaming was approved that slots revenue has fallen for the year.
Operators of Philadelphia Park and Harrah’s Chester Casino and Racetrack are on record as saying they have been gearing their marketing toward Atlantic City customers.
Trump Entertainment Resorts Inc. (TRMP) has twice been in bankruptcy and is still having trouble getting its head above water.
A client note from analysts at Prudential Equity Group said they believed the company was at risk over the next two years because all of its casinos — Trump Plaza, Trump Marina and Trump Taj Mahal — are in Atlantic City where the Pennsylvania competition will be stiff especially in light of the state’s restriction on smoking.
However, Trump’s assets could prove valuable to potential buyers, analysts concluded.
Especially attractive, they say, could be the land adjoining Trump Marina. The property is prime real estate that is near the Borgata Resort, considered the most hip property in Atlantic City.
A vacant site next to the Borgata is being considered for development by Borgata partner, MGM MIRAGE Inc. (MGM).
Accounting missteps are being blamed by executives of Isle of Capri Casinos Inc. (ISLE) for the requirement that it restate numerous financial statements going back three years.
The company said it would have to restate its results for the 2004, 2005 and 2006 fiscal years and the final two quarters of 2007.
The planned adjustments will mean that its retained earnings through the fiscal quarter ending Oct. 29, 2006, could drop by as much as $12 million, the company disclosed.
It all goes back to a lease space agreement it signed in 2004 with Arena Coventry Convention Center in England. Isle of Capri said it now realizes that, for accounting purposes, it must be treated as the owner of the convention center and as a result, it will have to record fixed assets of about $51 million as well as interest expenses and adjustments to depreciate the assets.
Also affected, the company said, was its British subsidiary, Blue Chip Casinos LLC.
Steve Wynn may have plenty to chew on with billion dollar projects in Las Vegas and Macau but that hasn’t stopped him from seeking other ventures.
Such as, horse racing in New York State.
Up for grabs is the racing franchise issued by the state of New York which will give the successful applicant the right to operate Saratoga, Belmont and Aqueduct racetracks.
Wynn’s group, represented by prominent New York lawyer and influential lobbyist Sid Davidoff, is one of six groups seeking the franchise. Davidoff said the group is now talking with track owners about joining the group.
In addition to operating the tracks, the franchise winner will be able to construct and operate a slots parlor at Aqueduct with 4,000 slot machines.
THE INSIDER: Unable to compete with tracks that benefit from slot machines, Meadowlands Racetrack has reduced its live racing to four days a week. The track that is only 12 minutes from downtown New York City is being considered by N.J. Gov. Jon Corzine for slot machines.
Lakes Entertainment Inc. (LACO) will review its fourth fiscal quarter on Thursday, March 15 at 11 p.m. PDT.
Cash Systems Inc. (CKNN) will release its fiscal experience on Thursday, March 15 at 2 p.m. PDT. The company also announced that CEO Mike Rumbolz has signed a two-year contract extension.
International Game Technology (IGT) will pay a $0.12 quarterly dividend on April 2 to shareholders of record on March 19.
Tom Aronson, who developed his racing knowledge as an assistant to HTA Executive V.P. Stan Bergstein, has been named vice president by Churchill Downs Inc. (CHDN). He formerly was with TVG.
Australia’s Publishing & Broadcasting Ltd. is restructuring its gaming division to pursue international expansion, according to Chairman James Packer. Packer, a partner with Lawrence Ho in a Macau casino, reportedly has shown an interest in a Las Vegas operation.
Dave Coskey is the new vice president of marketing and Drew Schlesinger is the new Water Club general manager at the Borgata Hotel Casino & Spa in Atlantic City.
Boyd Gaming Corp. (BYD) has been upgraded to "buy" from "hold" by Morgan Joseph analyst Adam Steinberg.