Pennsylvania market could unlock gaming profits

LAS VEGAS, Nevada -- The approval of table games in one West Virginia county may be just a prelude to Pennsylvania.

If the Keystone State follows suit, Las Vegas-based table game providers could be doubling down.

Jefferson County voters this month gave their OK for live table games to be added to the casino at the Charles Town Racetrack, which Penn National Gaming operates. Jefferson County is the fourth and final county in the state to legalize table games.

Penn is expected to add 85 tables to the casino, which is good news for Las Vegas-based Shuffle Master Gaming. The company expects to pick up market share by adding automated card shufflers and several of its nontraditional table games, such as Three Card Poker and Let It Ride, to the racino.

Roth Capital Partners gaming analyst Todd Eilers said the news coming out of Charles Town is not huge. However, the trend toward racinos and other markets adding table games is something that should interest investors.

"Shuffle Master is the best way for investors to play this conversion, in our opinion," Roth said in a recent research note.

Delaware could be the next state to add table games. Three racetrack casinos hope to have table games by spring.

Meanwhile, Pennsylvania looms on the horizon. State lawmakers have been debating table games, and approval could happen by the end of the year. Table games could start landing in Pennsylvania casinos by the middle of 2010.

Between the two states, Shuffle Master investors could be smiling.

Eilers estimated Delaware table games could be worth up to $3 million in annual revenue to Shuffle Master and that Pennsylvania tables could add $9 million a year.

Macquarie Securities gaming analyst Joel Simkins also considered the recent table game developments as good news for Shuffle Master.

Shuffle Master has been licensed in West Virginia and Pennsylvania because its electronic dealerless table game has been classified as a slot machine by gaming regulators in those states.

Playing catch-up with Shuffle Master is Las Vegas-based table game provider Galaxy Gaming.

The company, which went public in April, is applying for gaming licenses in Pennsylvania, West Virginia and everywhere else table games are coming online.

The company provides casinos with side wagers for blackjack and pai gow poker and offers several nontraditional table games.

Galaxy Gaming Chief Operating Officer Bill O'Hara said the company has been in contact with state gaming authorities and some of the casino operators.

"A few of the racinos have been in touch with us and told us to get ready," he said.