The valuation of gaming industry stocks slipped slightly in June, which followed two consecutive monthly increases.
The Applied Analysis Gaming Index (AAGI) reported a 7.0-point (or 2.9 percent) decrease for June, while reaching an aggregate value of 233.03.
Gaming operator stocks contributed to the bulk of the decline with a 10.2-point drop in value; MGM MIRAGE (MGM) posted the largest drop-off with a 25.4 percent slide, compared to the previous month (May 2009).
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Conversely, gaming equipment manufacturing stocks reported a 3.2-point increase in valuations, led by IGT’s 8.4 percent month-to-month increase. Bally Technologies (BYI) enjoyed a 6.3 percent month-to-month increase, while the balance of the sector saw weakening demand for their stocks.
Compared to the broader market Standard & Poor’s 500 stock index, gaming stocks moved in the opposite direction in June as S&P 500 stocks reported a 2.6 percent increase compared to May 2009.
The Applied Analysis report, which was released Wednesday, cited concerns over the depth and breadth of the national recession as factors in visitation and consumer spending in the gaming sector.
"Hotel price cutting has become commonplace as operators seek to capture their fair share of occupancy in Las Vegas’ 140,000 hotel rooms," the report stated. "The consumer mix is having an impact on all revenue sources and a disproportionate effect on the margin."
The report also cited the high-profile bankruptcy filing of Fontainebleau Las Vegas, a $3.1 billion construction project on the Las Vegas Strip, as cause for consumer concerns.
The Fontainebleau, although more than 70 percent completed with an opening previously set for fall 2009, is embroiled in a court fight with its lenders.
With a court date set for later this month, the Fontainebleau could be back on track within a few weeks.
Question? Comment? E-mail me at: David Stratton