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Quick-takes: The month's trends in a glance - July 2003
31 July 2003
By Ken Adams
Another month removed from war, the evil sons have been eliminated,
only daddy left to find, electricity and oil almost equal the guns in the nightly
news coverage, and the economy seems to finally be on a serious mending trend.
The Dow Jones Industrial Average has been over the 9,000 level for two months.
And except for California, most states have solved their budget problems for
this year. It is time to get on with the rest of the year and start adapting
to the changes that legislatures have wrought.
The strongest wave of federal defense spending since the Korean
War helped fuel U.S. economic growth at a stronger-than-expected 2.4 percent
annual rate in the second quarter, the Commerce Department said on Thursday.
U.S. gross domestic product increased at a 2.4 percent annual rate…a separate
report showing a third straight weekly fall in new claims for jobless benefits,
sent stock prices and the dollar soaring. …Economist Joel Naroff of Naroff
Economic Advisors in Holland, Pennsylvania noted especially the solid pickup
in business investment, which had lagged noticeably since a tepid recovery
from the 2001 recession began. Glenn Somerville, Reuters, Yahoo Finance,
7-31-03
July was a Powerball month. Powerball is a clear example of
a phenomenon long known to slot operators: when a progressive jackpot gets to
a certain level, it triggers a dramatic change in the behavior of players.
The amount that triggers the change depends on the game. On a quarter video
poker machine, $2,500 seems to be the number. In Powerball, $200 million appears
to be the trigger, which brings in many more players. Players play more and
in the case of Powerball, traffic jams and long lines ensue. And then there
is the competitive response, the other casinos, or in the case of Powerball,
states watching the feeding frenzy, stand drooling and searching for an opportunity
to share in the rewards; at that point individuals and institutions act pretty
much in the same way, fighting for the winning ticket.
Powerball players have been anxiously awaiting Wednesday's
drawing for a $250 million jackpot. It's the fourth largest Powerball
purse ever. The numbers drawn Wednesday night were: 19, 26, 21, 31, 51
and the Powerball was 40. KARE
TV, St. Paul, Minneapolis, 7-10-03
The smell in the air wasn't fuel at a Rock Hill truck stop,
or french fries at a nearby restaurant on Carowinds Boulevard, or even peaches
north of Clover. York County reeked of money Wednesday, about $261.3 million.
The near-record jackpot available in Wednesday night's Powerball lottery
drawing caused such a huge sale of tickets it pushed the S.C. Highway Patrol
to help with traffic near the North Carolina border. Andrew Dys, Rock Hill (SC) The Herald, 7-10-03
Two tickets, one in Missouri and the other in Pennsylvania,
matched the numbers drawn in the Powerball lottery, splitting the estimated
$261.3 million jackpot, lottery officials said. The winning Missouri ticket
was sold at Hermann Fuel Mart in Hermann. (The) Pennsylvania ticket was sold
in Cranberry Township. Miranda Leitsinger, Associated
Press, Manchester Guardian, 7-10-03
The
state's interim lottery director says North Dakota plans to enter the multi-state
Powerball lottery game in the first quarter of next year. Chuck Keller says
he knows there's a lot of pent-up public demand to join Powerball. ...23
states, including Minnesota, Montana and South Dakota, currently offer Powerball.
KXMA TV, Rapid City, South
Dakota, 7-10-03
July was also dividend month. In June, Congress passed the
Bush tax bill, reducing the tax on dividends. By the end of July five gaming
companies, Boyd, Harrah's, Mandalay, GTECH and IGT, declared a dividend policy;
MGM reserved the right to add to stockholder value in other ways. In light
of the history of prices since the turn of the 21st century, the
low interest rates available from most conventional investments and the less-than-exciting
revenue figures from most gaming jurisdictions, dividends are appealing to
gaming investors. Congress in June passed President Bush's $350 billion tax
cut plan, reducing taxes on capital gains and dividends to levels not seen
since the Great Depression. Rod Smith, Gaming Wire,
7-31-03
Deutsche Bank analyst Marc Falcone said the change in tax
policy has been the major catalyst for all the companies initiating dividend
programs. "For gaming companies, dividends are a great way to return value
to shareholders. We'll probably see less share repurchase programs," he said.
Rod Smith, Gaming Wire, 7-31-03
Driven by investor demands, many major gaming companies have
launched dividend policies in recent months, with most paying yields higher
than the S&P 500 average. As the gaming industry has matured, investors
have expressed increasing interest in dividend programs to return shareholder
value as opposed to new development projects that could generate questionable
levels of returns, Fulcrum Global Partners gaming analyst Joe Greff said.
Rod Smith, Gaming Wire,
7-31-03
In addition, the Board of Directors [IGT] has declared a quarterly
cash dividend on post-split shares of seven and one half cents ($.075) per
share, payable on July 28, 2003 to shareholders of record on July 14, 2003.
PRNewswire-FirstCall, Yahoo
Finance, 6-4-03
Station Casinos,
Inc. today announced that its Board of Directors has declared a quarterly
cash dividend of $0.125 per share. The dividend is payable on September 4,
2003 to shareholders of record on August 14, 2003. PRNewswire-FirstCall, Yahoo Finance, 7-23-03
Harrah's Entertainment on Thursday joined a growing bandwagon
of gaming companies initiating quarterly dividend policies. The company declared
a quarterly cash dividend of 30 cents per share, payable Aug. 27 to shareholders
of record on Aug. 13. Rod Smith, Gaming Wire, Las Vegas Review-Journal,
7-25-03
Boyd Gaming bosses announced plans Wednesday to begin paying
dividends to shareholders at the same time they reported a 28 percent drop
in earnings for the company's second quarter, which ended June 30. Boyd executives
announced plans to begin paying a 7 1/2 cent quarterly dividend in September,
a 30-cent annual clip. Jeff Simpson, Gaming Wire,
Las Vegas Review-Journal, 7-31-03
MGM Mirage said it won't declare a regular dividend at this
time, despite recent tax changes, saying there are better uses of its capital
to go along with its business plans. "We generally believe that share repurchases
are a more attractive way to return capital to shareholders," said Chairman
Terry Lanni, adding better uses of the entertainment, hotel and gaming company's
capital would include debt reduction, continued reinvestment in proven resorts
that that will generate high returns such as the Bellagio casino-hotel in
Vegas, and investment opportunities overseas. Dow Jones, Yahoo Finance,
7-17-03
The tax and budget wars for 2003 may be over, that may be the
good news, but the tax increases are not good news for the gaming industry,
investors, employees, and, in many cases, customers. Gaming taxes increased
in Illinois, New Jersey and Nevada. Illinois passed the largest increase, to
a maximum of 70 percent. Comparatively, Nevada increases were minor, but to
operators already struggling, that is not much consolation. In the next few
months, the focus of the story is going to change from the budget crisis of
the states to the financial crisis of the operators. In Illinois, New Jersey
and Nevada changes are going to take place in the market place. Casinos in
Illinois are going to try to keep below the ceiling rate by whatever means;
in New Jersey there already has been an impact on investment; and in Northern
Nevada the real impact will start to become obvious by the first snowfall.
Reduced operating hours and amenities, lost investment and closed casinos may
ultimately lead to less tax revenue, but will certainly lead to lower employment
and reduced casino spending which will impact an entire community. We will
all, including the governors and legislators, wait to see the final result of
the 2003 gaming tax wars.
…As a combination of severely reduced table games, lower
marketing expenses, a lack of on-site amenities and higher taxes take
their toll on the market, we think Illinois could experience a 25 percent
decline in revenues over the next 12 months. …We expect Illinois' actual
tax revenues could decline by approximately $100 million, to around $600
million from the current $700 million. Marc Falcone, Casino Journal,
Vol. 16, No. 7, July 2003, p. 6 & 37
Despite improved second-quarter results in Atlantic City,
Park Place Entertainment is still balking at major expansion plans because
of New Jersey's unstable tax environment, the company's chief executive said
Thursday. ...Plans for a 1,000-room Caesars hotel tower and a 3,200-space
parking garage that were first suspended when the tax talk began in February
are no closer to reality now. Joe Weinert, Press of Atlantic
City, 7-25-03
There will
be no 62-story, $1.5 billion casino hotel on the old World's Fair site, nor
will there be a 4,000-room, $750 million casino hotel there. Donald
Trump is giving up on his troubled Boardwalk site. "Because of the politics
in Atlantic City, probably we're not going to develop that site," Trump said.
Joe Weinert, Press of Atlantic
City, 7-24-03
'The Governor's Got Your Money' Casino-Parking-Fee
Hike Cuts Valet Tips To Half, Even A Third. …Then there are the valets. They are paying
for the fee increase, too -- in the form of lower tips as customers figure
they have to save money somewhere…As part of Gov. James McGreevey's attempt to balance
the state budget, the casino parking fee was increased from $2 to $3. But
many properties charge $4 for the privilege of parking there, even for established
players. Elaine
Rose, Press of Atlantic City, 7-27-03
The levies, at $836 million – the biggest tax package ever
in the Silver State, will phase in during the next year with the lynchpin
– a 0.7 percent tax on payroll for every business – starting Oct. 1.
…The new half-point addition puts the maximum [gaming tax] rate at 6.75
percent for the largest properties. Throw in the payroll tax and a
75 percent hike in liquor levies, and casino operators believe they've
taken an unfair hit. "We feel like, as an industry, we not only stood up
and took our share, but we've been piled on," said Ferenc Szony, CEO
of the Sands Regency. Bill O'Driscoll, Reno Gazette-Journal,
7-26-03
Sports and gaming have a natural affinity or as the song says,
they go together 'like love and marriage'; but they have been kept as far apart
as possible by the amateur and professional leagues. As a lobbying force, organized
sports are powerful, very often much more powerful and influential with legislators
than gaming. When an individual crosses the line (such as baseball great Pete
Rose, Rick Neuheisel, former coach at the University of Washington or Florida
State player Adrian McPherson) and is caught gambling, the penalties are severe.
Las Vegas is denied a major sport professional team and not even allowed to
advertise at the Superbowl. Every Congressional session gaming officials can
expect Senator McCain to press for anti-sports wagering legislation. Still
there is a dynamic tension between sports and gambling. Throughout history
a gambler's favorite wager was a contest of skill between men or animals. In
Nevada, at least, sports and gambling fit snuggly together in a casino with
big screen television sets with every imaginable game, cuddled up to the sports
book counter, boxers strutting manfully past crap tables and cars racing around
the edges of the parking lot. In the last couple of years there has been some
momentum for a partnership between teams and casinos. In July, Manchester United
(the world's most famous and successful sports franchise) and MGM made news.
Sheldon Adelson, of the Venetian, went in search of his own franchise and an
NBA franchise player went looking for a casino for his hometown. Can a Steinbrenner
and Wynn union be far away?
The Desert Diamond Casino, quickly becoming Arizona's leading
boxing venue, is partnering with legendary 6-time World Champion and Olympic
Gold Medalist Sugar Ray Leonard and Sugar Ray Leonard Boxing to host three
upcoming world-class nationally televised boxing events. Sugar Ray Leonard,
SRL Boxing and the Desert Diamond Casino management unveiled the new partnership
at a press conference at the Desert Diamond Casino. Boxing
News, 7-29-03
Casino Omaha, owned and operated by the Omaha Tribe...opened
the Blackbird Bend Motorsports Speedway in July 2002. The 5/16-mile dirt track,
grandstands and pit areas were built on pasture land. "It's changed our demographics
in way that we couldn't have done, I don't think, with some other type of
marketing scheme," said Mike Cummings, the casino's general manager. "It's
brought a ton of people here that never knew where this place was located."
Races have drawn an average of 900 to 1,000 fans a night, said Brad Appleton,
the speedway's general manager. Associated Press, Las Vegas Sun, 7-28-03
Manchester United may have lost out in the sporting glamour
stakes when it sold David Beckham to Real Madrid. But the soccer club could
be about to gain some Las Vegas sparkle through a tie-up with MGM Mirage,
the world's largest gaming group. The two companies have held detailed talks
on a Man Utd-themed casino venture, with the proposals predicated on forthcoming
reforms of UK gaming legislation. Mathew Garrahan, Manchester
Guardian, 7-28-03
Isle of Capri, which owns riverboat casinos in Mississippi,
is to build its first UK casino in Coventry, together with a new stadium for
Coventry City soccer club. Mathew Garrahan, Manchester Guardian,
7-28-03
Gaming magnate Sheldon G. Adelson has already approached several
top clubs, including Chelsea and Arsenal, to discuss the idea. The casinos
would be huge, taking up around 30,000 square feet, and could make clubs as
much as £15million a year through a profit-share. …Arsenal has already rejected
the idea because the casino will take up too much room at their new Ashburton
Grove stadium, but other clubs are more interested. Raoul Simons, Evening Standard, 7-30-03
Now that he's back in Indiana as an executive with the Pacers,
Larry Bird says he wants to help bring a riverboat casino to his economically
depressed hometown. In a statement released Friday through his agent, Bird
said he is assessing how he can play a part in a riverboat project, particularly
in ways that might benefit French Lick. "My hometown is very excited about
the prospect of a new business bringing more jobs and economic support at
a time when they really need it," Bird's statement said. Orange County voters
are expected to decide in November whether to authorize a casino, the state's
11th, to boost the county's economy. By Sept. 19, interested casino companies
and investors are required to file applications with the Indiana Gaming Commission
and pay a $50,000 application fee. Associated
Press, Indianapolis Star, 7-28-03
So that is the opportunity. If things are going sour for you
in Nevada, New Jersey, and Illinois because of taxes, or in Colorado, Mississippi
or Indiana because of the threat of slots in the streets, take your dividends
and go to England and buy a soccer team and build a casino. But be careful,
not all teams or all locations are the same. Oh, and the Premiership is not
the only league, nor are the teams always in the best locations.
Copyright GamingWire. All rights reserved.
Recent Articles
Best of Ken Adams

Ken Adams is the principal in the gaming consulting firm, Ken Adams and Associates. Formed in 1990, Ken Adams and Associates specializes in information, analysis, and strategic planning for Indian tribes, casino operations and gaming manufacturers. Ken spent over 20 years in the hotel-casino industry, prior to founding Ken Adams and Associates. He held the positions of: Director of Casino Operations, Casino Manager, and Keno Department Manager. During this time, he developed numerous innovative marketing and customer development programs and systems for evaluating casino performance. Some of those programs, such as slot clubs and tournaments, have become industry standards. Ken is also actively involved in gathering and disseminating information that is important to the gaming industry. He is editor and publisher of and the Adams' Report, a monthly newsletter specializing in identifying trends in casino gaming, regulation and manufacturing, the Adams Daily Report, an electronic newsletter that provides electronic links to the key gaming stories of the day, and the Adams Review, a special report distributed by Compton Dancer Consulting that provides editorial commentary on gaming trends.
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Ken Adams is the principal in the gaming consulting firm, Ken Adams and Associates. Formed in 1990, Ken Adams and Associates specializes in information, analysis, and strategic planning for Indian tribes, casino operations and gaming manufacturers.
Ken spent over 20 years in the hotel-casino industry, prior to founding Ken Adams and Associates. He held the positions of: Director of Casino Operations, Casino Manager, and Keno Department Manager. During this time, he developed numerous innovative marketing and customer development programs and systems for evaluating casino performance. Some of those programs, such as slot clubs and tournaments, have become industry standards.
Ken is also actively involved in gathering and disseminating information that is important to the gaming industry. He is editor and publisher of and the Adams' Report, a monthly newsletter specializing in identifying trends in casino gaming, regulation and manufacturing, the Adams Daily Report, an electronic newsletter that provides electronic links to the key gaming stories of the day, and the Adams Review, a special report distributed by Compton Dancer Consulting that provides editorial commentary on gaming trends.
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