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Polls kind to gambling

Nov 12, 2002 5:55 AM

   Gambling came up a winner in Election 2002. And, no, we’re not just talking about the Nevada governor’s race.

   Pennsylvanians elected Ed Rendell for governor. He backs slots at racetracks, riverboats and video poker bars.

   Marylanders elected Robert Ehrlich to lead their state. He also wants to legalize slots at tracks.

   Tennesseans approved a constitutional amendment to allow for a state lottery.

   Pro-gaming governors also were re-elected in California and New York while gaming-friendly Brad Henry won a ticket to the governor’s mansion in Oklahoma.

   In addition, lawmakers could approve some form of gambling in Iowa, Kansas, Kentucky and Nebraska in the next 18 months, predicts Andrew Zarnett of Deutsch Banc Securities.

   The election results were particularly good news for equipment manufacturers such as IGT, Alliance/Bally and WMS. Lottery providers like Scientific Games, GTECH and IGT also stand to profit in Tennessee.

   “This should fuel gaming expansion in the Northeast,’’ said Christa Short, an industry watcher for Bear Stearns.

   Even Ohio voters — who re-elected Gov. Bob Taft, an ardent opponent of racinos — provided some encouragement to the casino industry, Short reasons.

   “The election of Bob Taft favors existing casino operators in the Midwest, who are now less likely to face increased competition from slots at tracks in Ohio,’’ Short said.

   In Maryland, Ehrlich has proposed allowing up to 2,500 slots at each of the state’s four tracks. Pennsylvania, meanwhile, will consider a 2,000-machine cap, which would generate slot sales of 10,000 to 14,000.

   By ending the ban on a state lottery, Tennessee clears the way for a new round of lottery expansion in the Southeast.

   One potential loser in all of this is Atlantic City. Aztar, Harrah’s and Park Place are considered the most vulnerable because of their heavy reliance on the New Jersey market.

   “We expect that operators in Atlantic City will move aggressively in the coming years to mute the cannibalization of revenues by new gaming developments in New York Pennsylvania and Maryland through higher promotional spending and a renewed focus on offering a differentiated, more upscale gaming/entertainment product,’’ Short said.

   In other words, Atlantic City’s tight margins are going to get even slimmer.

   Laughlin may be another casualty as Arizona voters narrowly approved an initiative to expand Indian casino gaming. Proposition 202, the most expensive ballot campaign in the state’s history, will allow tribes to offer house-banked blackjack.

   The move toward more Las Vegas-style gaming could siphon tourist dollars from Laughlin, a Colorado River resort town that relies heavily on traffic from the south.

   Fortunately for Nevada casinos, two other Arizona propositions were defeated. Prop. 200 would have allowed even broader expansion of Indian gaming while Prop. 201 would have permitted racinos.

   Two gaming companies — Magna Entertainment and Penn National — figure to score big in any Pennsylvania-Maryland expansion.

   Magna owns and operates one harness racetrack, The Meadows, outside Pittsburgh. The company also acquired Pimlico and Laurel Park in Maryland.

   Penn National owns and operates Pocono Downs and Penn National Racecourse outside Philadelphia.