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Gaming shares lose value with Wall Street in freefall

Jul 23, 2002 8:00 AM

Battered again by new allegations of secret questionable financial dealings, Wall Street stocks Monday continued their freefall to levels not seen in several years. Unfortunately for gaming investors, many of whom were sitting on substantial gains since the beginning of the year, the negative view also caused a decline in their numbers.

From a Las Vegas point of view, both MGM MIRAGE Inc. (MGG) and Mandalay Resort Group (MBG) fell to levels not seen for several months. MGM Mirage, which had been trading in the mid 30’s during most of the year, closed Monday at $30.02, a decline of $0.98 for the day with heavy volume of 1.135,400 shares changing hands.

Mandalay Resort Group closed at $25.25, down some 30% from its better levels achieved several months ago.

Also falling were Park Place Entertainment (PPE) which ended the day at $8.40, a $0.20 fall for the day while Harrah’s Entertainment Inc. (HET) settled at $41.58, lower by $0.14.

Probably hardest hit from a percentage level was Penn National Gaming Inc. (PENN) which lost $1.24 during the day’s trading to close at $12.96. Boyd Gaming Corp. (BYD) fell by $0.49 to close at $13.20 while Ameristar fell $0.45 to $21.05.

Among the equipment manufacturers, International Game Technology (IGT) barely changed at $52.28, lower by three cents while Alliance Gaming (ALLY) loss $0.24 to $12.36 and Shuffle Master Inc. (SHFL) dropped $16.49, down $0.35 for the day.

Transparency

Concern over the financial information being distributed by publicly-traded companies has resulted in a new requirement from the Securities and Exchange Commission that senior executives from the country’s major companies certify their company’s financial statements.

Included among the country’s top 945 companies that will require executives to submit sworn written statements to federal securities regulators will be the four biggest gaming companies. They are Harrah’s Entertainment Inc. (HET) (Phil Satre, chairman and CEO); Park Place Entertainment Corp. (PPE) (Tom Gallagher, president and CEO); MGM MIRAGE Inc. (MGG) (Terry Lanni, Chairman and CEO), and Mandalay Resort Group (MBG), (Mike Ensign chairman and CEO).

The deadline for submitting the sworn statements is Aug. 14.

Slots grow

Wall Street investors may have become skittish but that hasn’t affected the business at the two Indian casinos in Connecticut. Foxwoods Resort Casino won a record $66.1 million during the month of June while its neighbor, Mohegan Sun banked $61.6 million from its slot action.

Also benefiting from the record action was the state treasury that received $30.8 million under the revenue Âí­sharing agreements with the two casinos.

"The numbers are strong and we’re pleased with the continued growth of our business," said Bill Sherlock, president and CEO at Foxwoods.

His Mohegan Sun counterpart, Bill Velardo, agreed that "they’re good numbers." He noted that June "is generally a good month, and July and August tend to be the busiest" for the two properties.

Mohegan Sun’s handle was 24% higher than last June’s figure while the win was up by 17.2%. Business was better by $4.4 million Foxwoods that currently has 529 more slot machines that Mohegan Sun.

Slots slow

Gaming was not quite as robust in Detroit, Mich., where the city’s three casinos last month recorded the lowest monthly revenues generated during any period this year.

Combined revenues for MGM Grand, MotorCity and Greektown amounted to $88.5 million, a 7% decline from the month of May. However, it was 10.5% better that the month of June, 2001.

Leading the pack in Detroit was the MotorCity Casino, operated by 53% owner Mandalay Resort Group. They took in $32.8 million, or a 37% market share. Following closely was MGM Grand Detroit, the city’s oldest casino, with revenues of $30.7 million. Third was Greektown with $25 million.

All three casinos paid $7.16 million in state taxes and nearly $9 million in city taxes.

On the small side

The casino in Coachella, Cal., is small by everyone’s standards but considering the size of the Indian tribe that owns it, it is gigantic.

Listed as the owner of the property is the Augustine Band of Cahuilla Mission Indians. But, when the property opened last week there was but one adult member of the Band. That was Chairperson Mary Ann Martin.

Operating the casino is Las Vegas-based Paragon Venture, whose president, Diana Bennett, is the daughter of legendary casino operator, Bill Bennet, and the former president and chief operating officer of Casino Data Systems.

Martin lives on the tribe’s reservation with her three children and her brothers’ four children.

The casino, smallest in the area, has 349 slot machines and 10 table games.

The Insider

Prudential Securities analysts said on Monday that they had raised their ratings on MGM MIRAGE Inc. (MGG) to "buy" from "hold." They said they expect the company to report better than expected earnings for the second quarter of this fiscal year.

Moody’s Investor Service has revised the ratings outlook on the debt of Herbst Gaming Inc. of Las Vegas from negative to stable saying the company’s casinos and grocery store slot operations posted strong numbers.

A controversy and resultant lawsuit involving the lottery contract in Florida has been resolved with both bidders, Automated Wagering International (AWI), a wholly-owned division of International Game Technology (IGT), and GTECH Corporation (GTK) agreeing to end the dispute while the Florida Lottery Commission will prepare a new Request for Proposals to be available by Feb. 28, 2003.

Acres Gaming (AGAM) says it has received another order from Station Casinos Inc. for additional Acres Bonusing software. The contract has been valued at $1.5 million.

Isle of Capri Casinos Inc. (ISLE) announced it had extended until 5 p.m. EDT Thursday, July 25, its offer to exchange its senior subordinated notes due 2012.

Prairie Meadows Racetrack and Casino and the Harrah’s Council Bluffs Casino have been fined $10,000 each for "not keeping underage gamblers out of their venues."