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Gaming stocks slump in 2011

4 January 2012

LAS VEGAS, Nevada -- Good riddance to 2011.

A majority of the gaming sector saw its average daily stock prices nosedive during the year despite a perceived economic recovery in most of the major gambling markets, including Las Vegas.

Seven out of the 10 casino operators and slot machine manufacturers followed by Las Vegas-based financial consultant Applied Analysis for the company's gaming index finished December below their average daily price from December 2010.

Five companies suffered double-digit declines.

"While gaming companies' stock and financial performances outpaced 2010 in aggregate, individual operators and manufacturers experienced varying degrees of success," Applied Analysis Principal Brian Gordon told clients in a research report.

"During the final month of the year, speculation about the impact of Internet-based poker, new developments in emerging markets and broader economic conditions were key drivers of the sector's performance," Gordon said.

Slot machine maker WMS Industries ended 2011 with the biggest 12-month decline in average daily price per share of any company, falling almost 57 percent. WMS had two poor reporting quarters this year

Casino operator Boyd Gaming Corp. had the second-largest drop, with its daily price per share off almost 33 percent from a year ago.

Of the three companies whose average daily stock price grew in 2011 over 2010, Wynn Resorts Ltd. had the largest increase, up almost 7 percent. The casino operator finished on the positive side despite a nearly 10 percent decline in its average daily stock price in December compared with the previous month.

Six of the companies charted by Applied Analysis saw their average daily stock prices dip in December.

The average daily share price of Las Vegas Sands Corp. fell 6.5 percent in 2011 while MGM Resorts International saw its average daily stock price declined almost 29 percent. Both companies, along with Wynn Resorts, are exploring gaming expansion opportunities in Asia and U.S. markets, including Florida and Massachusetts.

"Speculation continues as the majority of operators seek to expand their footprint," he said.

Gordon said the stock prices of the major gaming companies rallied somewhat earlier this week after the U.S. Department of Justice reversed a long-standing opinion on the Federal Wire Act of 1961 regarding online gaming restrictions.

Also, Nevada gaming authorities approved regulations that could potentially make the state the first to allow for Internet-based poker.

"The move positions Nevada to take advantage of any changes at the federal level, should they occur," Gordon said.

During December, the Applied Analysis Gaming Index posted its third consecutive monthly decline. At year's end, the composite score for the Gaming Index, which takes onto account more than 300 market variables, fell to 426.90, a decrease of 6.7 percent compared to November.
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