Barely touching on an explanation, officials of Boyd Gaming Corporation (BYD) announced Monday that its earnings for the third quarter would fall far below previous estimates.
In a press release, the company said it expects third quarter earnings to be in the range of $0.14 and $0.16 per diluted share. On July 30, the company said it expected third quarter earnings, before pre-opening costs, to be $0.21 a share. Wall Street estimates had expected earnings to fall between $0.21 and $0.23 a share.
The company reported that the principal reason for the shortfall was lower than expected earnings at its Stardust Hotel/Casino property on the Las Vegas Strip and at its Par-A-Dice Hotel/Casino in Illinois. A full report on the third quarter earnings will be made during the week of Oct. 20, the company said.
The news obviously did not sit well with investors on Wall Street who pounded the stock throughout the day on Monday, a relatively quiet day for the markets because of the Jewish Holy Day, Yom Kippur.
BYD, whose shares had traded as high as the mid-17’s in late spring as investors anticipated the opening of the $1.1 billion Borgata Hotel/Casino Resort in Atlantic City, saw the price of its shares tumble from Friday’s closing price of $15.15 to $13.57 with nearly two million shares changing hands. Boyd Gaming is a 50% partner with MGM MIRAGE Inc. (MGG) in the Borgata.
In the brief press release on Monday, Boyd officials restricted its earnings concerns to both the Stardust and to the Par-A-Dice, a property that is being impacted by the recent increase in taxes passed by the Illinois legislature.
Although both the Dow and the Nasdaq indices were up on Monday ”” Dow up 22.67 and Nasdaq up 12.89 ”” most of the major gaming stocks shed some value during trading. MGM MIRAGE Inc. closed at $36.48, down $0.35; Mandalay Resort Group (MBG) $38.98, down $0.49; Park Place Entertainment Corp. (PPE) $8.99, down $0.26; Harrah’s Entertainment Inc. (HET) $42.48, down $0.08; Station Casinos Inc. (STN) $31.25, down $0.14, and International Game Technology (IGT) $28.67, down $0.08.
Track president Bryan Krantz and his staff at the Fair Grounds in New Orleans breathed a sigh of relief over the weekend when the voters of Orleans Parish voted 58% to 42% in favor of permitting the racetrack to install slot machines.
The track filed for bankruptcy two weeks ago after a court ruled officials had used an incorrect formula to calculate the horsemen’s share of video lottery machine revenues. Because of the court’s ruling, the track said it faced a $100 million shortfall.
Krantz, who had argued the track needed slot machines to compete with area casinos, called the weekend vote "the first step in a bright future for the Fair Grounds."
There are three other racetracks in Louisiana and all either have or will soon have slot machines. Delta Downs, owned by Boyd Gaming Corp. (BYD), and Louisiana Downs, owned by Harrah’s Entertainment Inc. (HET), already have slots in operations while privately-owned Evangeline Downs is a building a new complex in St. Landry Parish and will open with slot machines.
Bay State drive
With an eye on their neighbors to the north, Massachusetts gaming supporters have begun the drive to put slot machines in three of the state’s four racetracks and, if proposed legislation is approved, to add two giant casinos.
State Sen. Mike Morrissey, a Democrat from Quincy, could hear the Suffolk Downs demonstrators on the steps of the Beacon Hill State House, as he described the gaming bill he is currently drafting. The bill would establish a new gaming commission that would put out bids for two casinos. These would be located on public land in the southeastern portion of Massachusetts and the second in the central or western part of the state.
Despite warnings from Gov. Mitt Romney that he opposes the expansion of gaming now that the state has found ways to balance its budget, Morrissey believes the time has come to put the state in the casino gaming business. He said his bill would force casino companies to bid on the two licenses.
As for the tracks, they would be expected to fight for the opportunity to install the video lottery machines with one of them to end up without a license, thus probably dooming their operation.
Rallying outside the State House were horsemen participating in the race meet at Suffolk Downs. Track officials have already indicated they plan to close down probably within a month and don’t plan to re-open until next May. This would leave the horsemen stranded since many of them usually participate in a winter racing schedule at the East Boston oval.
Left out of the casino plan is the Wampanoag Tribe that has been lobbying for several years for a gaming compact to build a casino in the southeastern part of the state.
On November 4, the voters of Maine will decide whether they want a casino to be built by two Indian tribes in Sanford. If approved, the casino will be financed and operated by the Las Vegas firm of Marnell Correo.
A player from Wyoming caught cheating at a blackjack table at a Deadwood, S.D., casino was convicted and sentenced to three years in prison.
The Missouri Gaming Commission believes that the state’s $500 loss limit per customer is putting the state’s casino industry at a competitive disadvantage.
Owners of Ormsby House in Carson City, Nev., have scrapped plans to demolish the landmark hotel/casino and will go forward with a $25 million renovation project.
Autotote’s plans for a television gambling channel have been rejected by Connecticut gaming regulators. The company hoped to promote its telephone wagering operation with live races over the cable channel.
Station Casinos Inc. (STN) will pay its second quarterly cash dividend of $0.125 per share on Dec. 4 to shareholders of record on Nov. 13.
GTECH Holdings Corp. (GTK) has signed a 12-year contract extension with the state lottery of the Czech Republic.
Two law firms have announced class action suits on behalf of persons who purchased shares of Midway Games (MWY) between Dec. 11, 2001 and July 30, 2003.
In a recent poll, 56% of the voters in Kentucky favor slot machines at the state’s eight horse tracks.