What a difference a day makes!
Just last Friday, most gaming companies saw their share prices zoom upward, many reaching their highs for the calendar year. But the euphoria, which many considered was fueled by speculation that the Iraqi war would be over quickly or that Saddam Hussein was incapacitated or possibly dead, was short-lived.
On Monday, after a weekend of what many perceived to be setbacks in the war effort, the major stock indices fell dramatically and the gaming shares fell with them.
Adding to the concern of investors in the hotel industry was a pre-opening statement from Starwood Hotels & Resorts Worldwide Ind. (HOT) that it was withdrawing its earnings estimates because the war was hurting business. This was followed by a lower forecast from Host Marriott (HMT).
Some industry analysts were quick to point out that it was not unusual for people not to travel during wartime. One said he saw trends deteriorating during both February and March.
Starwood, whose Westin division is planning to re-open the defunct Maxim Hotel, just off the Las Vegas Strip in Las Vegas, was the hardest hit on Wall Street during the trading day on Monday. Their shares fell 10.04% to $24.11, down $2.69 for the day.
In the gaming group, Harrah’s Entertainment Inc. (HET) was the biggest loser, falling 7.94% to $35.71, a decline of $3.08. Following Harrah’s was MGM MIRAGE Inc. (MGG) with a drop of 6.58% to $29.12 or $2.05 less than Friday’s closing.
Mandalay Resort Group (MBG) saw its shares tumble 5.04% or $1.46 a share to its closing price of $27.50 while Park Place Entertainment Corp. (PPE), the country’s largest gaming company, fell 5.57% to $7.12, down $0.42.
Even Station Casinos Inc. (STN), considered by many to be immune to travel complications because their properties service the so-called locals community in Las Vegas, took a hit Monday falling to $0.95 to $20.67, a decline of 4.39%.
In a research note issued Monday, Robin Farley, chief gaming analyst for UBS Warburg, said that FIT (free and independent travel) room rates along the Las Vegas Strip fell 2% in April from last year’s rates based on a recent survey by UBS of rates six weeks in advance. She said the difference from the 2001 period was a decline of 8%.
"In the year-over-year comparison," she wrote, "both midweek and weekend rates showed slight declines in April. However, in the comparison versus April 2001, although weekend rates were actually up slightly, midweek rates showed double-digit declines. March rates surveyed two weeks in advance were up 2% year-over year, but still 7% below March 2001 levels."
Pressured by Illinois Gov. Rod Blagojevich, the Illinois Gaming Board reportedly has come up with a settlement agreement with the owners of the Emerald Casino riverboat license.
The new deal is scheduled to come up for a vote on Wednesday during a special meeting called by the gaming regulators.
This will be the second agreement the state has made with Emerald officials. The first, which required the sale of the license without Emerald profiting from the transaction, fell through when the specified timeline for the sale passed without any action being taken. Instead, the regulators scheduled a hearing for its April meeting at which time they would consider revoking the license. That discussion has since been pushed back to May 5.
Meanwhile, Gov. Blagojevich, who is facing a $5 billion budget deficit, has urged the matter be resolved so that the license could be sold and a 10th riverboat become operational. "The state needs the money," was the governor’s theme.
Shortly after some of the Emerald shareholders were charged with having mob ties, Emerald accepted an offer from MGM MIRAGE Inc. (MGG) of $670 million for the license. The offer subsequently was withdrawn when state regulators expressed their opposition.
An injunction issued by U.S. District Court in Nevada prohibiting Shuffle Master Inc. (SHFL) from making and marketing gaming machines using technology that WMS Industries says it has patented does not affect any of the games currently installed, says Dr. Mark Yoseloff, SHFL’s chairman and CEO.
"The court issued the injunction based on the knowledge that SMG games do not use the bonus method and that the ruling would not harm either Shuffle Master or WMS," Yoseloff said in a statement issued shortly after the court ruling.
The WMS lawsuit alleges among other things that Shuffle Master violates patents specifically related to WMS’s bonusing technology. WMS also charges that Shuffle Master was selling kits to convert WMS’s gaming machines into what appeared to be Shuffle Master machines.
But in February, Shuffle Master filed patent-infringement lawsuits against both Bally Gaming Inc., a division of Alliance Gaming Inc. (ALLY) and WMS alleging infringement of its "second event" multiplier patent.
Yoseloff, in his statement, declared that "None of Shuffle Master’s existing games or games currently in development, utilize the subject bonus method enjoined. The company will continue to fulfill orders and complete installations of slot games in the SMG Upgrade Kit that can be installed in WMS Model 550 boxes."
Jeremy Jacobs and his family owned Delaware North Corp. had to be jumping for joy last week when the proposal to put slots at the company’s Southland Greyhound Park received the backing of the University of Arkansas.
Speaking for the U of A system, Joyce Wroten, vice president of governmental affairs, said the four-year universities across the state could not afford to turn down any additional revenue that could restore money for scholarships.
The bill being considered in the state Senate is estimated to help generate $20 million for college scholarships with revenues from Southland and the state’s only thoroughbred track, Oaklawn Park, owned by Charles Cella.
Supporters, including the Arkansas State Chamber of Commerce and its manufacturing arm, Associated Industries of Arkansas, say the bill does not expand gambling since it restricts video lottery machines at the state’s two operating pari-mutuel facilities.
Jack Binion’s agreement to settle Louisiana charges against him and his company, Horseshoe Casino, for $7.4 million is being cited by gaming regulators in its battle with the legislature over fine limits.
Hillary Crain, chairman of the Louisiana Gaming Control Board, said that the only reason the board was able to negotiate the high payment from Binion was because it was able to make it a condition for licensing. Otherwise, Crain said, the board is limited to a top fine of $100,000, no matter how serious the violation.
Crain has pleaded with lawmakers to eliminate the fine ceiling, saying, "We are dealing with corporations that make hundreds of millions of dollars, and the most we can fine them under the law is $100,000, which is absolutely, in my mind, ludicrous."
Binion and his company were not charged with violating the law but were cited in an investigative report as having done business with certain Louisianans without having written contracts to identify these transactions.
Shareholders in Westwood Group Inc., (TWGI), owner of Wonderland Greyhound Park in Revere, Mass., would be short-changed if company management is permitted to buy out their interests and take the company private.
That’s the allegation of the Massachusetts Securities Division which filed a complaint against the proposal that would pay $4 a share in the buyout. The $4 figure was cited as being too low and "it would cheat the investors."
Beneficiary of the buyout would be Boston restaurateur Charles Sarkis, the company’s chief executive. In the complaint, Sarkis was charged with failing to disclose a potential conflict of interest with Alloutte Capital, the firm Westwood hired to evaluate the stock buyout. Alloutte had previously made personal loans to Westwood Group, loans that were not disclosed in the proxy, state officials charged.
Recent legislative efforts have been made to permit Wonderland and three other Massachusetts racetracks to install video lottery machines, a move that would provide the track with a financial bonanza.
Since the buyout announcement, the share price has moved from $1 to $4 but following the state’s allegations, the price of the shares moved up to $7.05.
The cash register was ringing loudly at the Aladdin Hotel/Casino in February, according to reports issued by the operators.
Citing high occupancy rates, property officials said the company earned a profit for the second month in a row. During February, the property showed a profit of $171,201, or nearly twice as much as it earned in January.
As for cash flow, the company said the amount recorded in February was $5.35 million, a figure that was flat with the January number of $5.34 million. Still, it was substantially higher than February, 2002, when the cash flow amounted to $1.6 million.
For weeks, International Game Technology (IGT) advertised that their Megabucks progressive slot machine jackpot was overdue for hitting. Still, the jackpot kept growing, beyond the $22.6 million that was paid the last time the $3 wager hit the jackpot.
But a new progressive jackpot record was established last Friday when a Los Angeles, Cal., software engineer turned away briefly and returned his eyes to the machine where the three Megabucks symbols were lined up on the payline for a return of $39,713,987.25.
The 25-year-old winner said he came to town to participate in the NCAA hoop-la and was gambling at the Excalibur Hotel/Casino when someone suggested he try for the Megabucks jackpot. After winning, he asked hotel officials to avoid photographs and maintain his anonymity.
The previous progressive jackpot record was $34.9 million that was hit at the former Desert Inn on the Las Vegas Strip on Jan. 26, 2000.
Even at the 3,000 machine level, Mountaineer Race Track & Gaming Resort in West Virginia is having trouble servicing their weekend customers so the company, MTR Gaming Group Inc. (MNTG) has asked the West Virginia Lottery Commission to increase the number of slot machines to 3,500.
Since the lottery officials have never denied a gaming company’s request for more machines, they are expected to move favorably on the request this week.
Said one lottery official, "Folks coming in on a Friday night or Saturday night cannot find a machine to play on."
The company also operates the Speedway Casino in North Las Vegas.
Maybe he was a sore loser, or it might have been that he had too much to drink, but a patron at the Mohegan Sun put his fist into three slot machines last week, causing about $250 worth of damage. He was charged with third-degree criminal mischief.
GWIN Inc. (GWNI), the company headed by sports analyst Wayne Allyn Root and advertised as the "America’s only publicly-traded sports handicapping firm," reported a net loss of $674,446 or $0.03 a share for the three-month period that ended on Jan. 31. During the comparable period of a year ago, the company had a net loss of $2.3 million or $0.12 a share.
Mandalay Resort Group Inc. (MBG) says it has closed on the sale of $350 million in convertible senior debentures due 2033.
Louisiana gaming regulators have approved a design and floor plan for the installation of video lottery terminals in Louisiana Downs in Bossier City, La. Harrah’s Entertainment Inc., which recently purchased the horse track, said it expects to have the slot machines in place as early as May.
Last week blizzards resulted in the loss of several millions of dollars in revenue for the Black Hawk and Central City, Colo., casinos. State regulators said the snowstorms forced the closure of 20 of the state’s 26 casinos for three days.