Spurred by favorable comments by some Wall Street analysts on Monday, investors made early moves into the marketplace and raised the share prices of the major companies.
This contrasted with last Monday when many gaming company shares tanked after it was learned that Illinois lawmakers had raised the state’s tax schedule on riverboat revenues.
MGM MIRAGE Inc. (MGG), following an upgrade by Robin Farley, chief gaming analyst for UBS Warburg, rose to a high of $37.45 before falling back to $37.14 at closing. This was a jump of $1.03 over the Friday closing and $1.91 higher than the level reached a week earlier.
Mandalay Resort Group Inc. (MGB), actually one of the company’s affected by the tax increase, rose to $31.75 Monday, following an upgrade from Bill Schmitt, who handles gaming stock ratings for CIBC World Markets. Last week, the share price dropped to $30.50 when the tax increase was announced.
Trading volume for both companies exceeded the normal daily amount. MGM MIRAGE saw 1,869,700 shares change hands when on a normal day some 865,000 shares would trade. As for Mandalay Resort Group, the normal day would be 700,000 shares but Monday that number rose to 908,000.
Other companies that saw their shares trade higher on Monday were Harrah’s Entertainment Inc. (HET), which closed at $47.77, up $1.40 for the day on trades involving 1,350,000 shares. Park Place Entertainment Corp. (PPE) rose $0.20 to $11.30 and Station Casinos Inc. (STN) was up $0.57 to $17.90.
Another gaming stock that rose dramatically in trading on Monday was Penn National Gaming Inc. (PENN). The shares closed at $32.59, an increase of $1.68 for the day. Analysts felt that the move was stimulated by talk in Pennsylvania of placing slot machines at its racetracks.
Argosy Gaming (AGY) moved barely $0.10 upward Monday after announcing that the new Illinois tax increase would reduce earnings estimates by an expected 22 cents for the second half of the corporate year. And, Hollywood Casino (HWD) shares dropped $0.22 a share to $9.08 after saying that the tax hike would reduce earnings this year by about $0.02 a share.
American Wagering Inc. (BETM) has restated its financial results for the period ended on April 30 following the decision to either sell or close its Australian Internet company, Mega$ports.
The company said the Nevada Gaming Commission had set a deadline of July 25, 2002, for the termination of the Internet operation. As a result, the company said, it was reclassifying Mega$ports from "continuing operations" to "discontinued operations."
Both revenues and operating costs and expenses were lower and other income dropped from $13,420 to $12,804.
What remained constant, however, was the net income that was $106,933 or $0.01 per share.
Two individuals well-known to Louisiana regulators are putting together plans to seek a license to build horse tracks in the southern part of the state.
Shawn Scott, the Las Vegas investor who bought Delta Downs for $10 million and later sold it to Boyd Gaming Corp. (BYD) for $130.1 million, wants to locate a multimillion-dollar racetrack and slot machine parlor in Cameron Parish (County).
Louie Roussel, the lawyer-turned-banker-turned horse trainer who is a member of a politically-powerful family, has proposed a Quarter Horse track in Caddo Parish, not far from Louisiana Downs.
The moves have upset some legislators who oppose the expansion of gaming and who see the moves as opportunities to establish slot machine parlors. They have asked the state racing commission to withhold approval of any more racetracks until the legislature can study the effects of these tracks on the current gaming scene.
Scott reportedly has bought 200 acres of land about 20 miles closer to Houston than Vinton where Delta Downs is located.
Business at Delta Downs has made the site particularly attractive. State records have indicated that Boyd Gaming has developed gross revenue of $32 million in less than three months of operation.
Since both gubernatorial candidates in Pennsylvania are on record as supporting the placement of slot machines in the state’s four racetracks, the gaming issue has become an issue in other races.
Two Republicans who represent Crawford in the House and Senate have been adamant in their opposition to expanding gaming in the state. This has provoked a more moderate position by their opponents. They have indicated that the issue should be decided by the constituents rather than by their representatives.
One candidate said he would insist that the idea be placed on the ballot so that the voters could decide whether they favor the move.
Another, who supports the move, said that Pennsylvania residents have been going to West Virginia, Delaware for the slots and to Casino Niagara in Canada for the casino experience.
A different view
In the early 90’s, the residents of Polk County, Iowa, were so desperate to have a horse track that they agreed to back a $65 million loan so that the developers could go forward with Prairie Meadow Racetrack in their community.
The track went bust and the county was left with the debt.
Then the legislature approved slot machines at the track and money flowed in almost faster than it could be counted. The debt was wiped out and the benefits of the operation, including the employment of about 1,000 people, gave a big boost to the economy of the City of Altoona.
Now the state says Iowa voters must decide on Nov. 5 whether to renew gambling licenses. That brought out the anti-gambling activists who say the residents should consider the social costs of gambling.
An early newspaper poll has 65% of the Polk County voters favoring the license renewals.
Officials of MGM MIRAGE Inc. (MGG) indicated last week that the company was considering reviving plans for a new tower at the Bellagio Resort Casino on the Las Vegas Strip.
A spokesman said the company is expected to decide on the 1,000-room $300 million expansion by the end of the summer. The plan initially was conceived and drawn by Mirage Resorts developer, Steve Wynn.
The comments came on the heels of announcements of other developments. The Venetian Hotel-Resort-Casino said it had completed the financing for a 1,000 room tower at its facility and Mandalay Resort Group (MBG) said it would build a 1,000-room $255 million tower at its Mandalay Bay Resort on the south end of the Strip.
Soon to be completed is a 1,000-room tower at the venerable Caesars Palace, owned by Park Place Entertainment Corp. (PPE).
Despite the tax hikes passed by the Illinois legislature last week, Gov. George Ryan said the state is still $724 million in the hole. He called the lawmakers back into a special session to deal with the deficit.
Vestin Group (VSTN) has agreed to provide a $48 million loan for the construction of the Cannery Hotel and Casino in North Las Vegas.
Former Louisiana Gov. Edwin Edwards, who during his heyday was a flamboyant high roller on the Las Vegas Strip, is still trying to stay out of jail. Last week, he told an appeals court, through his attorney, Harvard law professor and well-known television personality Alan Dershowitz , that the trial judge was "hell-bent" on a getting a verdict and avoiding a hung jury.
Those loose slots at the Casino Queen riverboat casino in East St. Louis, Ill., will remain despite the higher taxes, officials announced last week. The property is managed by Charles "C3" Bidwill, who had as one of his original partners, Michael Gaughan of the Coast Resorts properties.
Gtech Holdings Corp. (GTK) has received a contract valued at $40 million to provide lottery equipment and services to the Minnesota State Lottery.
Directors of Canterbury Park Holding Corporation (TRAK) have declared a special cash dividend of $0.25 per share to shareholders of record on June 28. The payment will be made on July 12.
Magna Entertainment Corp. (MIEC) has agreed to buy Flamboro Downs Holdings in Hamilton, Ontario, Canada, for $47 million.
Standard & Poor’s rating agency has revised the financial condition of Coast Hotels & Casinos Inc. from stable to positive. Coast Resorts has announced it is in the process of preparing a public offering of its stock.
Wayne Allyn Root, CEO of Global Sports & Entertainment Inc. (GWIN) was scheduled to be a guest on the CNBC program "Kudlow & Cramer" on Tuesday, Jan. 11, at 5 p.m.