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Gaming stocks follow as Dow reacts positively to Bush

Mar 18, 2003 5:43 AM

All it took Monday was for the market to anticipate that President George W. Bush was going to place the country on a war footing and investors poured their money into stocks, sending the Dow Jones Industrials up more than 3.5% to 8,141.92.

And, joining in the fun were nearly all gaming-related companies led by America’s leading gaming machine manufacturer, International Game Technology (IGT) that rose 5.18% to close at $82.04 per share. Just a week earlier, the share price had dropped to $74.80.

All financial pundits credited the end to uncertainty relative to Iraq, and the U.S. coalition’s apparent decision to ignore further U.N. inaction and to go forward with the war. Most commentators were of the opinion that investors were reviewing the market’s reaction to the Gulf War of 1991 when the market skyrocketed following the firing of the first missiles.

IGT’s $4.04 increase in price on Monday developed throughout the day with the last $1 tacked on during the final hour. On an average day, a little more than a million shares changes hands but on Monday that number rose to 1,724,000 shares.

But, from a percentage point of view, the increase in price of shares in Pinnacle Entertainment Inc. (PNK) took the crown. The company’s shares opened at $4.37 and closed at $4.95, an increase of 13.27% for the day.

Other major increases were experienced by shares of Penn National Gaming Inc. (PENN), up $0.99 to $17.45; GTECH Holdings Inc. (GTK), up $1.56 to $32.19; Harrah’s Entertainment Inc. (HET), up $1.37 to $35.39; MGM MIRAGE Inc. (MGG), up $1.20 to $28.85, and Mandalay Resort Group (MBG), up $0.86 to $28.65.

Demonstrating that investors didn’t want to leave any company by the wayside, Carnival Cruise Lines (CCL) shares moved up $1.30 to $23.45 with 4,593,000 changing hands. This happened despite a pre-opening announcement that bookings for 2003 were substantially below expectations.

Horses on cable

Television Games Network (TVG), the country’s leading purveyor of horse racing simulcasts, has signed a multi-year agreement to have its 24 hour network of racing and interactive wagering system, carried by Cox Communications Inc.

To launch the new arrangement, Cox said it would begin carrying the TVG programming in San Diego next month. There was no immediate indication what other Cox cable markets would be added to racing network.

In announcing the agreement, Mark Wilson, president and CEO of TVG, said he felt the agreement "should spur additional growth to advance deposit wagering in California which benefits our partner racetracks and their horsemen."

TVG has exclusive rights to carry the racing signals of Hollywood Park and its parent company, Churchill Downs Inc. (CHDN). It has been unsuccessful in attempting to negotiate an arrangement with Magna Entertainment Inc. (MECA) that controls the racing signals of the California thoroughbred tracks.

Delaware under pressure

Suggestions that the state of Delaware might again begin making book on sports has raised the ire of the professional sports leagues.

The NFL, NBA, NHL and Major League Baseball all have responded negatively to the possibility that Delaware may join Nevada in booking sporting events, saying it would harm the image of professional sports.

"Our players cannot be expected to serve as healthy role models for youth if they are made to function as participants in gambling enterprises," the professional leagues told a gambling task force.

That was enough to bring on a response from Rep. William Oberle who sponsored the resolution that established the task force. "What a bunch of hypocrites they are," Oberle said. "Let’s talk about steroid use and drug abuse generally and some of the criminal activity of their players, and then we’ll worry about how young people perceive their heroes."

Back burner

Any hopes that Maryland Gov. Robert Ehrlich had of getting a bill passed to permit racetrack slots so that he could use the revenues to help meet a serious budget deficit were dashed last week when the lawmakers approved establishing a study committee.

Backers said the six-month study didn’t necessarily kill the "racino" proposal, but when the votes for the study were counted ”” 126-11 ”” they immediately said there was grave doubt such a gambling expansion could be passed this year.

Meanwhile, racino backers in the Senate began tinkering with the language of a proposal that would cut the tracks’ share of slots revenue to 38% from the current plan of 44%. The tracks reportedly were not very receptive to the idea.

Air show sponsorship

Boyd Gaming Corporation (BYD) announced Monday that it will continue its title sponsorship of Unlimited Air Racing at Aviation Nation, the Nellis AFB Las Vegas Air Show. This year’s show will be held on November 15-16.

Last year’s air show, Boyd noted, attracted 500,000 spectators.

Dan Stark, company director of marketing, said, "Las Vegas is quickly becoming the home of the most visible air show in the world and its air racing component, now the largest outside of the national championships in Reno, are one of the weekend’s show stoppers. The event has had a significant impact on the city, and one that we feel will only continue to grow.

Revenues down

The major snowstorms that crippled cities in the Midwest and along the Eastern Seaboard during the month of February took a major toll on gaming revenues.

Of the few states that have reported so far, three showed the effects of the storms. Taking the worse hit was New Jersey where the Atlantic City casinos reported gaming win of $297 million, down 13.5% from the previous year. This was said to be the second steepest decline in the state’s gaming history.

In Detroit, the three casinos reported a collective 7% decline when compared to February of last year. MGM Grand Detroit Casino had revenues of $30.2 million, down 11% from last year. Mandalay Resort Group’s MotorCity Casino posted revenues of $31.9 million that was off 5% while Greektown Casino tumbled 3% to $26 million.

GTECH acquisition

GTECH Holdings Corporation (GTK) announced Monday that it is acquiring Ohio-based Interlott Technologies Inc. (ILI) a leading provider of instant ticket vending machines company.

GTECH said it would pay $9 a share for Interlott and will assume the company’s debt of $21 million giving the entire deal a value of $85 million.

The purchase is expected to be consummated in July.

"The acquisition," said president and CEO Bruce Turner, "is part of GTECH’s strategy for growing the company’s core lottery business while creating sustainable long-term shareholder value. In addition, we will be able to optimize the game mix for instant tickets, deliver broader access to lottery products for consumers, and over time, add a wide range of capabilities and services for our customers and retailers."

Defining moment

How do you define a slot machine? The attorney general of Connecticut says he knows how and has branded a new gaming device, called Treasure Tower that was proposed by the state lottery as a video lottery machine.

He wrote to the director of the state’s Division of Special Revenue that the games, scheduled to be placed in service this week, "did not pass muster and is not permitted under existing legislation."

Not only did the game appear to be a VLT but "it has design features that appeal directly to young children," he wrote.

Treasure Tower players would have used their computers to lead a cartoon character in a series of adventures in search of cash prizes.

He’s back in town

A few years ago, Barry Sternlicht, chairman and CEO of Starwood Hotels & Resorts Worldwide, Inc. (HOT) decided that he didn’t want to be in the gambling business after all. So, he sold Caesars Palace and the Desert Inn, the former to Park Place Entertainment Corp. (PPE) and the latter to Steve Wynn.

Now, less than four years later, a division of Sternlicht’s company, Westin Hotels & Resorts, will return to Las Vegas as the operator of The Westin Casuarina Hotel & Spa, at the site of the former Maxim Hotel, located on the corner of Flamingo Boulevard and Koval Lane.

The completely renovated property will consist of 825 guest rooms, a spacious spa, luxurious pool with six pool-side cabanas, a 20,000 square-foot casino, a restaurant with private dining rooms and ample meeting space.

"Las Vegas has been part of Westin’s growth strategy and at the top of our development wish list for decades," said Sue Brush, senior vice president of Westin brand operations. We are pleased to finally have a strong presence in this important market where we’ll be able to meet our guests’ demands for Westin’s style of modern luxury."

The Insider

Midway Sports, a division of Midway Games Inc. (MWY), has released its newest version of MLB SlugFest, baseball video game.

Connecticut lawmakers are considering a bill that would remove state recognition from any Indian tribe that has not as yet received federal recognition. The move is being supported by those who want to limit casinos to the two existing properties.

Wisconsin law enforcement officials who successfully prosecuted the operators of an online betting service, including Jeff D’Ambrosia of Henderson, Nev., are now prepared to prosecute their financial adviser, a Florida lawyer named David Tedder.

Pinnacle Entertainment Inc. (PNK) has boosted its $110 million credit line to $225 million to provide enough cash for the company to build a riverboat casino in southwestern Louisiana.

Magna Entertainment Corporation (MECE) is lobbying the Oregon legislature to install video lottery machines at the state’s racetracks.

Acres Gaming Inc. (AGAM) has received an order valued at $2.7 million from the United Auburn Indian Community for its casino management and bonusing system at the new Thunder Valley Casino.