February was not a bad month for the economy, and if you measure the economy
on stock prices, it was a pretty good month. The stock market has been flirting
with record highs since the middle of February leading one to think better times
are indeed on the way. Other economic indicators were also favorable, if not
great, with the caveat that oil prices and interest rates continue to increase
and are bound to impact the economy at some point, though for now we are getting
accustomed to gas at over two dollars (so what is so difficult about three dollars)
a gallon, and interest rates have a long ways to go to reach the highs that
completely stifle economic growth.U.S. stocks rose on Tuesday, pushing the Dow
and S&P 500 to fresh 2005 highs, as retail shares got a boost from better-than-expected
January retail sales, while an unsolicited bid for Circuit City Stores Inc.
raised hopes for more M&A activity to come.
…M&A activity, in addition to sparking talk about which other companies
could be targeted, is positive for stocks as it indicates a general confidence
in the economy. The Dow Jones industrial average was up …to finish at
10,837.32. The Standard & Poor's 500 Index was up…to end at 1,210.12…The
Dow and the S&P 500 closed at their highest points for 2005. Megan Davies,
Reuters, 2-15-05
Good economic news and merger buzz set the tone for the day. The Commerce
Department Friday revised GDP for the fourth quarter to 3.8%, at the higher
end of forecasts, up from the 3.1% estimated a month ago. And while U.S. home
sales fell 0.1% to a seasonally adjusted annual rate of 6.8 million units
in January, that's still well above economists' expectations. Now all eyes
are turned to February job numbers and manufacturing data, which are due next
week. The Dow rallied for the third straight day, closing at 10,841.60, a
high for the year. Julia Boorstin, Fortune, 2-25-05
U.S. employers created 262,000 jobs last month, the biggest gain in four
months and double January's pace. Reuters, Yahoo! Finance, 3-4-05
U.S. stocks rose on Friday, boosted by oil company shares, which touched
historic highs, and a government report that showed growth in the fourth quarter
was slightly better than Wall Street had expected. With oil prices above $51
a barrel…boosted price targets on major oil companies. Anupama Chandrasekaran,
Reuters, 2-25-05
…buying frenzy on oil markets is setting the stage for sharply higher
gasoline prices as early as next week. Crude oil futures traded above $53
a barrel again on Friday. Associated Press, Yahoo! Finance, 3-4-05
A brightening jobs picture, early tax refunds and a later date for the largest
single US sports event boosted February sales at Wal-Mart, other discount
retailers and warehouse shopping clubs…. Overall, same-store sales rose
4.8 percent last month, beating average expectations of a 3.8 percent rise,
according to Retail Metrics LLC. Retailers faced a tough comparison with February
2004, when the companies reported 7 percent comparable sales growth. Pakistan
Daily Times, 3-4-05
For the last four or five years, investors have dreamed of the glory days when
the Dow danced around 11,000. Those days are getting closer and closer; the
Dow closed at 10,940 on Friday, March 3rd. If the NASDAQ could just hit 5,000
again, possibly we could all believe in a dotcom world, a "new economy"
with every investor a millionaire again.
Modest but steady gains from U.S. stocks in the past few weeks have sparked
trader talk that the blue-chip Dow could soon breach 11,000, a level not seen
in more than 3-1/2 years. …"I don't think 11,000 will be much more
than a psychological resistance level, because it's a round number,"
said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. "I
was looking for a week or two of pullback and then for the market to start
to rally -- so sometime in March or April, we should be able to surpass the
11,000 level." Megan Davies, Reuters, 2-18-05
Instead the NASDAQ is at 2,000, brick and mortar stores are still a fundamental
part of nearly every business model, even where internet sales are a significant
if not major segment of sales. In general the economy looks much as it always
has, and that means mergers and acquisitions as a way for the biggest of companies
to grow, expand and gain market share.
The look and feel of a Sears-Kmart combination started to take shape yesterday
when Sears announced it would open 25 "Sears Essentials" stores
this spring. …Sears and Kmart announced plans of their $11-billion merger
in November, setting off speculation about what the transaction might mean
for consumers and for the identities of the two storied but troubled icons.
Lauren Weber, NY Newsday, 2-9-05
The $11 billion takeover of May Department Stores by Federated Department
Stores will create a retailing giant with more than 1,000 stores and $30 billion
of annual sales. David Litterick, UK Business Telegraph, 2-28-05
The only thing in the merger story that a gaming observer might find startling
is that gaming mergers are now as large as the mega mergers in other segments
of the economy. $10-billion dollar companies seem to be the size of the day.
Granted MGM-Mirage-Mandalay is only $8-billion, but Harrah's will meet the test.
Retail chains measure their empires in thousands of stores. By that measure,
gaming company mergers of 20 or 30 casinos reflect an industry that is unique
in its profitability.
The biggest gaming story of the month may well have been the Federal Trade
Commission and Nevada's approval of the MGM-Mirage merger. The deal is widely
being report as creating the largest casino company in the world, that is, of
course, until the Harrah's-Caesars deal is approved. The approval of Nevada
and the FTC are being treated in Nevada as the final step in the process.
The Federal Trade Commission on Wednesday approved MGM Mirage's proposal
to buy rival Mandalay Resort Group…The commission voted 5-0 to close
its investigation and place no conditions on the transaction.. Adam Goldman,
Associated Press, 2-21-05
The Nevada Gaming Commission…MGM Mirage's $7.9 billion acquisition
of Mandalay Resort Group…board concluded that the deal is in the best
interests of the public and unanimously voted to clear the way for the formation
of what will become the largest casino company in the world…Richard
N. Velotta, Las Vegas Sun, 2-25-05
That might be true were it not for a couple of wrinkles in Michigan and Illinois.
In Michigan all casino deals are tied up by a lawsuit claiming the original
licensees were illegally awarded. For years, the suit has prevented permanent
casinos in Detroit. Illinois is just as complex; there has been no functioning
gaming commission for months and no prospect for one in the near future. The
governor attacked the commission over a casino license, claims their decision
lacks integrity. In the meantime, there are no decisions, and so far he has
refused to appoint additional members. The governor claims no one is willing
to serve. Neither of these situations in Michigan and Illinois suggests a quick
and simple final approval of the merger.
For eight years, a tiny Upper Peninsula Indian tribe has tied up $1.5 billion
in construction on three permanent hotel-casinos in downtown Detroit, claiming
in a federal lawsuit that the original bidding process was tainted. Now, the
500-member Lac Vieux Desert Band of Lake Superior Chippewa Indians is asking
the 6th U.S. Court of Appeals in Cincinnati to block the sale of any Detroit
casino until the lawsuit is settled -- a move that threatens to complicate
the $7.9 billion purchase by MGM Mirage of the Mandalay Resorts Group. Joel
J. Smith, Detroit News, 2-24-05
Millions of dollars worth of construction and untold numbers of jobs have
been on hold for months because Gov. Rod Blagojevich has failed to fill vacancies
on the state board that oversees gambling. Since August, the vacancies have
prevented the remaining two members of the Illinois Gaming Board from moving
forward on several issues simply because they lack a quorum — the board
must have at least three members to take any action. …The governor knocked
heads with the board last year, saying the public couldn't trust its actions
after board members approved allowing a casino in Rosemont over the objections
of their own staff. Previous board members in 2001 had opposed a Rosemont
casino, citing allegations of connections to organized crime. The village
of Rosemont contends there are no such connections. Maura Kelly Lannan, Associated
Press, Chicago Sun-Times, 2-17-05
Gov. Rod Blagojevich's suggestion that he might overhaul or even eliminate
the Illinois Gaming Board drew warnings Friday from the gambling industry,
which said doing so without legislative approval could violate state law,
and criticism from a key lawmaker, who said the governor wasn't providing
enough details. Maura Kelly Lannan, Associated Press 2-19-05
The situations in Michigan and Illinois would seem unique as well as bizarre
if Indiana were not embroiled in a very similar situation. The issue in Indiana
is very much the same as Illinois. The governor objects to the way the commission
granted a license. In Indiana that was the last license granted to Trump for
French Lick. The press coverage of Trump casinos' financial woes caused more
than one person to question the choice. The governor, however, was the only
person with the power to impact the process.
At least four of the members have submitted resignation letters to the Governor.
If they are accepted, the resignations would give the new governor more control
over the planned development of a floating casino in Orange County. The seven-member
commission chose Trump Hotel & Casino Resorts last year to operate the
proposed casino. However, the deal has been questioned by many officials ever
since Trump filed for bankruptcy. Governor Daniels has asked the commission's
new executive director to review the deal. Inside Indiana Business, 2-1-05
This is deadline week for the Indiana legislature. …Some key measures
that remain to be passed out of the House include…a bill to allow the
Governor to replace members of the Indiana Gaming Commission… Inside
Indiana Business, 2-17-05
There are other gaming battles in the country, and they are even reaching into
Bush country. Things are changing in Bush country, long known as territories
unfriendly to gaming; Texas and Florida are knee-deep in gaming wars. Florida's
will come to a head first on March 8th, when voters in two counties vote on
allowing slot machines. Texas, the other Bush country, is facing a large variety
of gaming bills, at least one of which may reach the ballot in November. The
Florida campaign has not been friendly nor cheap. Nor does it promise to end
with the vote. If the anti-slots factions lose, lawsuits and constitutional
amendments are being threatened. Governor Bush is doing everything within his
powers to defeat the initiative, but as the Terri Schindler Schiavo case demonstrates,
the governor does not always get his way. In the past gaming legislation has
easily been defeated in Texas, but this year there is a different feel in Austin.
For one thing, a statewide poll indicates the majority of Texans favors gaming,
but not income or increased tobacco taxes, as a way to increase state revenues.
Neither Florida nor Texas is likely to solve the issue and end the wars any
time soon; both are important to gaming in general and promise large new markets
if and when they decide to permit gaming.
Emotions and cash are flying in the final weeks before a March 8 vote to
permit slot machines at pari-mutuel facilities …in Miami-Dade and Broward
counties in south Florida. …Yes for Better Schools and Jobs, is in the
process of spending much of the $3.7 million it raised from locals and the
seven licensed pari-mutuel operators. …Meanwhile, a cadre of elected
officials, including Florida Gov. Jeb Bush, has lined up to defeat the measure.
In a letter to the Christian Coalition of South Florida …Bush contends
that passage would create "a snowball effect" that would lead to
full-blown casinos throughout the state. …Bush has asked Secretary of
State Glenda Hood to investigate the industry's involvement in funding the
election. In the legislature, central Florida Rep. Randy Johnson, a Republican
strongly opposed to gambling, has filed a resolution in the Florida House
that would place an amendment on the ballot statewide repealing slots. Johnson,
too, has begun lining up support for harsh regulation on the operation of
slots should the measures pass March 8. Scott Davis, Blood-Horse News, 2-28--5
Downtown Houston and Galveston Island could become casino destinations to
compete with anything Las Vegas has to offer, a Houston senator said Thursday.
"Why should we subsidize Louisiana and Nevada when we can create jobs
and boost economic development here at home?" Sen. Rodney Ellis asked.
Ellis filed a proposed constitutional amendment Thursday that would let Texans
decide whether to allow seven casinos in urban areas, two on Gulf Coast islands
and three in targeted economic development areas. Janet Elliott, Houston Chronicle,
2-25-05
A full circle; legend has it that ancient governments, such as the Chinese
(and early American states) used lotteries to raise money for armies and ultimately
wars. Modern lotteries in the United States most often have been established
to help fund education. Now in Indiana a legislator would like to create a special,
once-a-year Veteran's Day lottery to help support the state's National Guard.
I wonder if President Bush has thought of that. We could have special national
lotteries for specific purposes, wars in Iraq, social security or maybe a new
computer system for the FBI, CIA and others to unite the efforts of the Homeland
Security Secretary; just a thought.
An Indiana lawmaker expressed disappointment Thursday that her proposal for
a special lottery to support the Indiana National Guard will not get a chance
to advance in the state Senate. …proceeds from an annual, one-day special
lottery to benefit the Guard could be used to supplement arms and equipment
for Indiana soldiers The bill would require the lottery to conduct a special
ticket sale on Veteran's Day and put the money in a fund to benefit the Indiana
National Guard. Lottery Post, 2-11-05
When the Sands began reporting results from Macau gaming, the world began to
pay more attention to Asia. The bidding for Macau drew some interest, but nothing
like Singapore has done. Singapore is riding on the reputation of the revenues
from Macau, but appears to be on a level of its own. Even the first days of
euphoria in England caused by impending changes in regulations did not draw
the interest that Singapore is creating. The major American companies have submitted
a proposal, as have the major Australian gaming companies. Add to that list
South African, Chinese and Malaysian companies and you have a Who's Who in the
world of gaming lining up to play in Singapore. The legislation has not been
passed, nor have regulations been drafted, so everyone is flying blind, but
flying they are.
Singapore's first proposed casino has drawn strong international interest,
with at least 15 groups hailing from the United States, Australia, Macau,
Malaysia and even South Africa expected to put in their proposals by today's
noon-time deadline. Jostling for a piece of the action in the controversial
mega-resort are the big names in the gambling world, names like Las Vegas'
MGM-Mirage and Harrah's Entertainment. …The latest among them is South
African casino and resort operator Sun International, which until now, has
kept a low profile. …Other gambling companies which have made proposals
include American entrepreneur Steve Wynn's Wynn Resorts and Australian media
mogul Kerry Packer's Publishing and Broadcasting Limited, which owns the Crown
Casino in Melbourne. Also joining the fray may be the joint venture between
Mr Packer and Macau gambling king Stanley Ho's Melco International Development,
as well as Mr Ho's own Sociedade de Jogos de Macao, The Straits Times understands.
So, too, Sydney's Star City casino owner Tabcorp and Macau's Greek Mythology
Entertainment Group. The US' Las Vegas Sands and Malaysia's Star Cruises will
be putting in bids as well, sources said. Industry players are not ruling
out entries from New Zealand's Skycity Entertainment Group, Britain's Stanley
Leisure, and European operators Casinos Austria International and Accor Casinos.
Among the local companies which have tied up with the foreign giants are Keppel
Land, which is partnering with Harrah's Entertainment. CapitaLand has two
separate partnerships, with MGM-Mirage and Kerzner International. Other local
property developers such as City Developments, Hotel Properties and Far East
Organisation, are also believed to be thick in the action as the main parties
in the construction of the resort. Glenys Sim, Hotels, 2-28-05
The gaming results for January by jurisdiction primarily reveal improvements
over the year before. In most cases, nothing to write home about, but enough
to understand why legislators and governors are thinking about increasing taxes
and enough to understand why Harrah's, MGM-Mirage, Boyd and others want to own
a piece of every jurisdiction.
Iowa casinos January gaming revenue rose 3.6% to $82.9 million. Gaming Industry
Weekly Report, 2-14-05
Illinois January casino win rose 3.2% to $139.6 million. …Chicago area
was up 6.5% while the St. Louis market was up 2.9%. Gaming Industry Weekly
Report, 2-14-05
The gaming industry [New Jersey] was down fractionally [0.6%] in January
to $364.1 million… Press of Atlantic City, 2-11-05
Detroit casinos in January 2005 ran 7.7 percent ahead of 2004 in revenue,
taking in more than $100.6 million compared to $93.4 million a year earlier.
Crain's Detroit Business, 2-11-5
Nevada win was up 11 percent in December, totaling $852.5 million. More than
half of that total came from the Las Vegas Strip, which showed a 15.5 percent
spike from December 2003. Reno Gazette-Journal, 2-11-05
Revenues statewide at Missouri's 11 casinos were up 4.1 percent for the
month, to $124.2 million. Rick Alm. Kansas City Star, 2-16-05
Louisiana January casino revenues rose 0.8% to $184.5 million. Gaming Industry
Weekly Report, 2-28-05
Indiana January casino win fell 5.7% to $179 million as nasty winter weather
dealt yet another state a blow to their casino revenues. Gaming Industry Weekly
Report, 2-28-05
Mississippi January casino win jumped 10.1% to $263.6 million. Gaming Industry
Weekly Report, 2-28-05
Colorado January casino win rose 3.5% to $60 million. Gaming Industry Weekly
Report, 2-28-05
Two months into 2005 and a few things seem clear. We have not seen the end
of the trend of the big getting bigger; competition between jurisdictions will
increase and competition within each jurisdiction will become more intense and
expensive; there will be long and sometimes ugly political battles over new
gaming legislation, as in Maryland, and the regulation of new jurisdictions,
such as Pennsylvania and possibly Florida; the willingness by all of the major
gaming companies to move to any country that promises to enable gaming; and
a gaming industry that the bigger it gets the more it will resemble other industries
and responds to the same forces that effect the broader economy.
