Favorable comments from a respected industry analyst came just at the right time Monday as the price of shares in leading gaming companies rose substantially on a day when the major indices rose accordingly.
At mid-day, Harry Curtis, who now analyzes the gaming market for J.P. Morgan Securities, reiterated his "buy" rating on Harrah’s Entertainment Inc. (HET) which he said was trading at "an absurdly low" multiple given its strong same-store revenue growth in the current "challenging environment." The boost was perfectly timed to coincide with the broad market rally. The Dow was up 169.74 points while the Nasdaq closed up 51.69 points.
Harrah’s closed at $47.86, up $2.83 for the day. Joining in the rally were MGM MIRAGE Inc. (MGG), closing at $38.47, up $1.37; Mandalay Resort Group (MBG), $38.47, up $1.36; Park Place Entertainment Corp. (PPE), $11.65, up $0.67, and Aztar Corporation (AZR), $21.28, up $0.82.
Even "locals" company, Station Casinos Inc. (STN) benefited rising $0.75 to $17.75, as did manufacturing giant, International Game Technology (IGT), $63.33, an increase of $1.46.
Curtis said he met with the Harrah’s management team last week and came away convinced that "Harrah’s results are accelerating; that second quarter results should once again be a positive surprise."
Curtis’ assessment generally agreed with the opinions of Jason Ader, chief gaming analyst at Bear Stearns. In his weekly industry report, Ader said that "clearly, the regional/riverboat markets continue to outperform expectations" as seen in recent results. Harrah’s is a prominent player in both the regional and riverboat markets.
Ader added that he believed "investors will continue to be attracted to the high transparency of earnings that gaming stocks offer, as gaming continues to be one of the most highly regulated and scrutinized industries in the country."
The question of "transparent earnings" has become prominent in the thinking of investors, particularly in light of the Enron and Global Crossing debacles.
- Harrah’s Entertainment Inc. (HET), $47.86, up $2.83
- MGM MIRAGE Inc. (MGG), $38.47, up $1.37
- Mandalay Resort Group (MBG), $38.47, up $1.36
- Park Place Entertainment Corp. (PPE), $11.65, up $0.67
- Aztar Corporation (AZR), $21.28, up $0.82
- Station Casinos Inc. (STN), $17.75, up $0.75
- International Game Technology (IGT), $63.33, up $1.46
A bill banning Internet gambling is scheduled to be heard by a House committee on Wednesday. And sponsor Rep. Bob Goodlatte of Virginia should have strong support form the horse racing industry.
The bill that Goodlatte has proposed, called "Combating Illegal Gambling Reform and Modernization Act," would focus only on what has been termed as "illegal" gambling on the Internet. Protected are such things as interstate horse race betting and account wagering. These items were addressed last year in an amendment to the Interstate Horseracing Act of 1978.
But, that has become the problem, since some members of the House Judiciary Committee want to amend the bill to eliminate provisions that protect horse racing. The Goodlatte bill has been floundering for years and there has been no great groundswell of support for the measure.
Those Las Vegas Nights
In the early 90’s, when the Mashantucket Pequots wanted to expand their Connecticut bingo hall into a casino, then Gov. Lowell Weicker refused to negotiate a gaming compact that had been authorized by the 1988 Indian Gaming Regulatory Act.
A court decision ended that impasse. The court ruled that since the good citizens of Connecticut enjoyed charity gambling at so-called Las Vegas Nights, the Indians had a right to pursue similar gambling activities.
Weicker capitulated and the result was Foxwoods Resorts, believed to be the most successful casino in the world. Foxwoods was followed by the Mohegan Sun complex, also hugely successful.
Now, there are several other Indian tribes seeking casino opportunities. And that has raised the ire of one lawmaker who last week sponsored a bill to eliminate the existing statute that permits charitable gambling. He failed to attract the necessary co-sponsors and the bill never received a hearing.
The lawmaker has vowed to renew his efforts next year, hoping that it won’t be too late to stop casinos by such tribes as the Eastern Pequots, the Paucatucks, the Schaghticokes, and possibly others.
Meanwhile, it’s next-door neighbor, Massachusetts, postponed any further efforts of expanding gambling from the existing horse and dog tracks and the state lottery by sending gaming requests to a committee for a six-month study.
Following two days of debate over whether slot machines should be permitted at the state’s horse and dog tracks, the lawmakers ordered the creation of a study committee with instructions that a report be returned by December.
Similar action was taken by Maine lawmakers, while Rhode Island failed to approve additional slots for the existing pari-mutuel tracks.
New Hampshire rejected all gaming proposals outright while the lawmakers of the other New England state, Vermont, didn’t even see a gambling bill.
The rapid gain in popularity of so-called "penny slots," was the subject of a seminar at the Southern Gaming Summit in Biloxi, Miss., last week.
"Low limit players," explained Mac Seelig of AC Coin & Slots, "are generally looking for entertainment, wanting to have fun while gambling away $20." The penny slot machines provide that entertainment. However, even though the machines can be activated for only a penny they also offer a gambler an opportunity to wager up to $100 on a spin by betting dozens of credits on multiple lines.
Also discussed was the subject of new machines. Kent Young of Aristocrat Technologies, noted that the life cycle of machines has been getting shorter because of the frequency of play. He added that players "are looking for good scripts with the games to keep them coming back."
Mick Roemer of Bally Gaming said that he believed "there will always be a wild mix" of machines including both the video slots and the reel slots.
MGM MIRAGE Inc. (MGG) may be months away from going online with its Internet license issued by the Isle of Man but the developers of the software believe strongly that they will be able to satisfy the concerns of regulators.
Paul Mathews, vice president of WagerWorks, the company developing the Internet technology said last week the company hasn’t set a date as yet but he was confident the technology would be able to verify the identification, age and location of every player using their Internet system.
Speaking as a panelist at the Millennium Hospitality Summit last week, Andrew Pascal, president and CEO of WagerWorks, said "We have the means for ID verification, age validation and geo-verification." It’s believed that regulators such as those from Nevada would require these verifications before approving Internet gaming activities.
Robert Haddock, executive vice president and CFO of Aztar Corporation (AZR) has been promoted to the position of president and CFO. Paul Rubeli remains chairman and CEO. Haddock has been with the firm since 1980.
Mikohn Gaming Corporation (MIKN) has been awarded a contract for design and interior visual displays worth $2.8 million by Ameristar Casinos Inc. (ASCA).
Despite a lengthy discussion by the Illinois Gaming Board last week, no solution to the impasse regarding the Emerald Casino Inc. riverboat gaming license was forthcoming. A court hearing is scheduled for May 20.
The Sands Regent (SNDS), operators of the Sands Regency Casino and Hotel in Downtown Reno, Nev., reported a third quarter net loss of $0.08 a share compared to last year’s $0.02 a share.
Europa Cruises Corp. is planning a $400 million casino resort in Hancock County, Miss. However, before the project gets underway, the company said it needs a cash-rich partner.
Nevada casino revenues fell 5.8% during the month of March, according to figures released by the Nevada Gaming Control Board. Total casino revenues amounted to $807.1 million. Last year for the same period, the revenues were $856.6 million.
Acres Gaming and MGM MIRAGE Inc. had ended their relationship with the auditing firm of Arthur Andersen.
Moody’s Investors Service has revised the debt rating outlook of Sun International Hotels (SIH) to stable from negative.
Scientific Games Corp. (SGMS) has terminated its talks to acquire the gaming and merchandising company, MDI Entertainment Inc.