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New gaming rules in U.K.
still restricts slot machines

Jun 15, 2004 5:32 AM

Confusion about the changes in United Kingdom gaming laws caused a sharp decline in share value for several of England’s largest gaming companies on Monday. Still to be determined is the effect the announcement will have on U.S. firms.

During the past year, a number of American companies have linked up with companies in the U.K. to prepare for the expected expansion of gaming that has been highly restricted in the past. In April, a study commission issued a report that had all gamers smiling because it appeared the doors to gaming establishments would be wide open.

Among the companies making moves in England were MGM MIRAGE Inc. (MGG), Harrah’s Entertainment Inc., Kerzner International Inc. (KZL) and Isle of Capri Casinos Inc. (ISLE).

On Monday, Tessa Jowell, spokesperson for the Culture, Media and Sport Secretary, said that the agency had approved only 121 of the 139 reform recommendations announced in April. And, hardest hit would be the smaller gaming properties. The new rules would limit Las Vegas-styled slot machines offering unlimited prize money would be allowed only in the biggest casinos. Even they will be limited to 1,250 machines, far fewer than the number actually in play in casinos throughout the U.S. Even the so-called racinos, for the most part, have up to 3,500 machines.

English investors wasted no time hammering the gaming companies with shares in Stanley Leisure and Rank falling more than 5%. Also hard hit were the shares of William Hill, considered a blue chip holding in the gaming industry. Shares in the company began falling last week when it was announced that the company’s CEO David Harding had sold off most of his holdings in the company, generating about $9 million.

Wall Street took a more cautious view, apparently awaiting more details on the English plan.

Booming Borgata

Even as its neighbors struggle to equal revenues achieved in corresponding periods of a year ago, the Borgata Hotel/Casino, Atlantic City’s newest gaming property, continues to prosper.

During the month of May, the city’s gaming revenues increased by only 3.3%, despite the infusion of nearly $50 million generated in gaming revenue by the area’s newest casino. The Borgata, that opened last July, said it reported $49.6 million for the period while the city’s other 12 casinos collectively saw revenue decline by 9% to $267 million.

Every Atlantic City casino that was opened in May 2003, declined during the period.

Wynn Macau

Steve Wynn, chairman and CEO of Wynn Resorts Inc. (WYNN), has unveiled plans for his much-discussed gaming project in the Chinese enclave of Macau. The project will cost about $705 million and include 100,000 square feet of gaming space and a 600-room hotel.

In a filing with the Securities and Exchange Commission, Wynn indicated the construction will begin at the end of this month and will be completed in 26 months.

As for amenities, Wynn said the hotel/casino will have seven restaurants, about 28,000 square feet of retail space, a spa, a salon and entertainment facilities.

Macau officials awarded Wynn one of three casinos licenses, with the other two licenses being held by Stanley Ho, who has had a gambling monopoly in the former Portuguese peninsula, and Las Vegas’ Sheldon Adelson.

Illinois squabble

While publicly traded gaming companies watch nervously from the sidelines, Illinois politicians continued their battle for control of gambling in the state.

In the latest salvo, Atty Gen. Lisa Madigan has filed suit charging the Illinois Gaming Board does not have the authority to pursue a plan to acquire the states 10th riverboat license from the controversial Emerald Casinos Inc.

Despite a negative report from its staff the Gaming Board members accepted the Isle of Capri Inc. (ISLE) bid of $518 million to take over Emerald’s license and also located the casino in the same location of Rosemont, Ill. Madigan has been fighting the move because of Rosemont’s alleged involvements with underworld characters.

Prime mover of the ISLE selection has been Elzie Higginbottom, board chairman, whose term expires on July 1. Ultimately, since he will be in a position to replace Higginbottom, Gov. Rod Blagojevich may determine the path for future gaming. He is expected to consider gaming expansion as a way to help balance the state budget.

Buffalo booming

Almost without fanfare, the greater Buffalo, N.Y., has blossomed into one of North America’s larger gaming areas.

In just a few short years, the actions of New York State, the Seneca Indian Nation and their neighbors to the west in Ontario, Canada, have resulted in major casinos and slot operations being established within an hour’s drive.

Actually, the first was a temporary casino on the Canadian side of Niagara Falls that was opened and operated successfully by Las Vegas casino executive Larry Wolfe. That spurred the development of two government owned casinos in Ontario and a pair of major casinos on the U.S. side, built and operated by the Seneca Tribe.

Also, Buffalo Raceway has installed video lottery terminals. Soon, the Senecas will build a third casino in Cheektowaga, provided approvals are forthcoming.

THE INSIDER: The Federal Trade Commission has closed its review of the plans by Harrah’s Entertainment Inc. (HET) to acquire Horseshoe Gaming Holding Corp. Now, only approval by the Louisiana gaming regulators is needed for the acquisition to go forward.

Nevada casinos reported a record $826.9 million in gaming revenue during the month of April. This brought the fiscal year total to a level that is 5% higher that the previous year.

The New York Racing Association has voted to end its pari-mutuel equipment arrangement with Scientific Games Corporation (SGMS). They said the contract would be awarded to the privately held United Tote. SGMS says that the contract loss will impact its earnings for next year by only one cent.

The owners of Rosecroft Raceway in Maryland have accepted a buyout bid from the family of Peter Angelos, owner of the Baltimore Orioles. The $13.5 agreement for the track that could play an important role if lawmakers should approve racetrack slots guarantees racing purses for the next 10 years.

Midway Games Inc. (MWY), whose majority owner is Viacom, Inc., chairman Sumner Redstone, has named Kenneth Cron as chairman and Shari E. Redstone, Sumner’s daughter, as vice chairman. Also, the company has appointed Joe Califano as an independent director.

Two publicly traded gaming companies will announce their fourth quarter fiscal results on Thursday, June 17. Isle of Capri Casinos Inc. (ISLE) will report after the markets close with a conference call to be held on Friday at 7:30 a.m. CDT. Nevada Gold & Casinos Inc. (UWN) will report at 1:30 p.m. EDT.

Wheeling Island Racetrack & Gaming Center has added 200 slot machines to its inventory, raising the total to 2,400 machines.

A $10 million gift to UCLA has resulted in the naming of the new UCLA Medical Plaza the Peter Morton Medical Building. Morton owns the Hard Rock Hotel/Casino in Las Vegas.

Aztar Corp. (AZR) has sold $100 million of a 10-year senior subordinated note.

Standard & Poor’s Ratings Services has affirmed its ratings on the debt of Isle of Capri Casinos Inc. (ISLE).

Racing will be suspended at Charles Town Races & Slots during the period from Aug. 2 to Aug. 25, according to owner Penn National Gaming Inc. (PENN). The period will be used to upgrade racing facilities. Slots operations will continue during the period, however.