Gaming, where permitted,
continues to gain in popularity

May 18, 2004 4:34 AM

Gaming continued to show its popularity nationally during the month of April for some states, and for the month of March in Nevada, the most recently reported period.

In Atlantic City, N.J., where monthly revenue figures have been consistently high since the addition of the Borgata Hotel/Casino Resort, gaming regulators said revenues jumped 15.7% to $394.2 million.

Missouri, benefiting from major expansions at some of its licensed riverboats, showed an increase of 11.6% to $120.5 million.

And in Iowa, the gaming win rose 9.8% to $89.3 million, despite the fact that its gaming properties were competing with a Native American casino that had reopened after been closed.

Showing a not-unexpected decline was Illinois where casino operators curtailed their operations after the state substantially increased the state gaming tax. Revenues declined by 4.6%.

Still the kingpin was Nevada whose revenues for March reached a record $930.3 million, a gain of 11.5% over the same month in 2003. The previous monthly record was achieved in January 2001, when the win reached $900 million.

Showing the way were the casinos on the Las Vegas Strip that surged 17.7% to $465.4 million, also a number for the record books. Other records were posted in Mesquite, Boulder City, North Las Vegas and the outlying Clark County markets.

Taking a hit were the Downtown casinos that showed a drop of 10.9% primarily because of the closing of two properties.

Florida slots

After years of lobbying, the dog and horse tracks and jai alai frontons in Florida have won the right to have the voters decide whether they can install slot machines at their facilities.

The Supreme Court of Florida ruled last week that the referendum proposal submitted by Floridians for a Level Playing Field meets all the legal requirements to become a ballot issue. That is, the measure will appear on November ballots provided the proponents are able to certify another 250,000 signatures of registered voters.

Acting on the referendum will be the voters statewide, not only those located in track vicinities. In the past, voters have three times rejected similar gambling measures.

Competition has had a devastating effect on their tracks, operators contend. "The first thing that came along was the Lottery and that was devastating," said Fred Havenick, CEO of Flagler Greyhound Track in Miami.

"Then, we got the Indians and the boats to nowhere and they are totally unregulated and totally untaxed. What we’re saying is tax us and regulate us and put us on a level playing field."

Michigan taxes

Two major gaming companies based in Las Vegas took a Wall Street hit last week when Michigan lawmakers in the lower branch voted overwhelmingly to double the gaming tax.

Affected by the move that would increase the tax from 18% to 36% were both MGM MIRAGE Inc. (MGG), owner of the MGM Grand Detroit Casino, and Mandalay Resort Group (MBG), majority owner and operator of MotorCity Casino, also in Detroit.

The measure swept through the Michigan House on a vote of 85-20 and was immediately taken up by the Senate leadership. "This is a serious proposal and it is worth looking at further," said Senate Majority Leader Ken Sikkema.

This is the second gaming bill to be approved by Michigan lawmakers during the past month. Earlier, the Senate approved a "racino" bill that would tax slots revenues at 70%. The bill must now be adjusted with the House version that set a 40% tax rate on racetrack slots.

Some political observers suggested the bill to double the casino tax rate was only a ploy to force the three Detroit casinos, including privately held Greektown, to end their lobbying efforts against the racino bills.

With a declining market in Monday trading, MGG closed at $42.11, some $5 lower than earlier this month while MBG was at $51.33 nearly $8 lower than its trading price in early May.

THE INSIDER: The six-week strike that closed Casino Windsor in Ontario, Canada, ended last week The strike, according to officials, cost the casino about $51.2 million.

GTECH Holdings Corp. directors have authorized the company to repurchase up to $100 million of its outstanding common stock.

Minnesota lawmakers have killed, for the current session, the proposal to turn Canterbury Park (EPC) into a racino. However, they did approve Cantebury’s plan to increase the number of tables at its card club from 50 to 100.

California Gov. Arnold Schwarzenegger has signed a law that will increase some pari-mutuel takeouts to help cover the cost of workers’ compensation for backstretch employees at the state’s racetracks.

Rhode Island Gov. Don Carcieri has gone on record as opposed to a casino being approved for West Warwick to be built by Harrah’s Entertainment Inc. (HET) and its partner the Narragansett Indian Tribe.

Boyd Gaming Corporation (BYD) is proposing to buy the 9.5% Senior Subordinated Notes due 2009 issued by Coast Casinos, a company it is in the process of acquiring.

Analysts at Credit Suisse First Boston have upgraded their rating on Mandalay Resort Group (MBG) from neutral to outperform.

Harry Hagerty has resigned his post as chief financial officer at Caesars Entertainment Inc. (CZR).

The Eastern Band of Cherokee Indians has extended for an additional seven years the contract with Harrah’s Entertainment Inc. (HET) to manage its casino in the North Carolina Great Smokey Mountains.