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Howard Stutz

Storms, building delays lead to dip in earnings for Ameristar Casinos

21 February 2008

LAS VEGAS, Nevada -- Ameristar Casinos told investors Wednesday that adverse economic conditions, winter storms and unintended delays in building projects hurt the company's fourth-quarter earnings.

Earlier in the day, the Las Vegas-based gaming operator received news that could hinder future results at one of its largest casinos.

Ameristar reported net income of $8.2 million, or 14 cents per share, for the quarter ended Dec. 31, down from net income of $17.8 million, or 31 cents per share, a year earlier.

Analysts polled by Thomson Financial expected Ameristar to earn 20 cents per share in the quarter.

Quarterly revenue rose 24.1 percent to $302.8 million from $244 million.

For all of 2007, Ameristar had net income of $69.4 million, or $1.19 per share. In 2006, Ameristar had net income of $59.6 million, or $1.04 per share.

Twelve-month revenue rose 8 percent $1.08 billion from $1 billion.

"Although slowing market growth, severe weather and construction-related disruption negatively impacted our fourth-quarter performance, Ameristar demonstrated substantial resilience in the face of this confluence of factors," Ameristar Chief Executive Officer John Boushy said in a statement.

Meanwhile, the Missouri Gaming Commission on Wednesday approved the addition of a new riverboat casino in the Kansas City market, which would be located about 10 miles from the Ameristar Kansas City, the state's largest casino.

The commission's consultants told regulators a new riverboat casino could take away up to $60 million annually in gaming revenues from Ameristar Kansas City.

Wachovia Capital Markets gaming analyst Brian McGill said the move by Missouri, which had opposed additional casinos, was being done to compete for customers with neighboring Kansas, which is expected to add four land-based casinos in the next few years.

"Much to the chagrin of Missouri casino operators, the (commission) has apparently changed course of late and is now looking to optimize tax revenues through new casino expansion," McGill said in a note to investors. "We view the addition of a new riverboat casino in the Kansas City market as a long-term negative."

Boushy said Ameristar Kansas City increased its cash flow by almost 4 percent in 2007 despite weather interruptions and the expansion by a competitor.

During a conference call with analysts and investors, Ameristar co-Chairman Gordon Kanofsky said the Missouri Gaming Commission should refrain from adding a new casino in Kansas City.

He added that Ameristar supports a move in the Missouri Legislature to end the $500 per player loss limit that has been in place since the state legalized casinos.

Ameristar reported earnings Wednesday after trading closed on the New York Stock Exchange. Company shares rose 67 cents, or 3.3 percent, to close at $20.95.