Quick-takes: The month's trends in a glance - May 2003

The House passed a $330 billion tax cut early Friday that will deliver rebate checks to parents and larger paychecks to workers this summer. Mary Dalrymple, Associated Press, Yahoo Finance, 5-23-03

The Commerce Department said gross domestic product, the broadest measure of economic output within U.S. borders, grew at a revised 1.9 percent annual rate in the January-March quarter, better than the 1.6 percent estimated a month ago.  Glenn Somerville, Reuters, Yahoo Finance, 5-29-03

Easing war fears, respite from tax boosts, help raise issues in month, analysts say. Local gaming stocks surged almost 20 percent in May, largely on the back of a broad market rally. …Despite early second-quarter warnings from a few of the major Strip operators, Gordon said expectations that the leisure market would improve contributed to the price increases.  The monthly average price of Harrah's Entertainment shares increased 10.1 percent, though MGM Mirage's stock price declined 2.9 percent, the only decline in the group. Also, International Game Technology posted a 7 percent gain compared with April and a 40.9 percent gain for the year.  Rod Smith, Gaming Wire, Las Vegas Review-Journal, 6-3-02

There are some dark clouds on the horizon for gaming, however.  Illinois, New Jersey and Nevada are still working on taxation legislation that, if passed, will impact gaming.  Atlantic City is also bracing for the opening of Borgata.  Nevada is bracing for the opening and expanding of Indian casinos in California; most important will be the June opening of Thunder Valley, near Sacramento, and its impact on Northern Nevada.  A sampling of headlines from around the country indicates that gaming is flat at best, making increased competition and additional taxation even more significant.  A couple of states did report higher gaming revenues; those were less than 4 percent, unless, of course, you count Connecticut.

Combined revenues at Detroit's three casinos were $92.5 million in April, down 5 percent from the same period last year.  Detroit News, 5-15-03

Louisiana March Gaming Revenue Fell 4.3%.  Gaming Industry Weekly Report, 5-2-03

Blizzard Slows AGP Growth.  …Casinos statewide reported $57.0 million in March…down 10.3 percent form $63.5 million in March 2002.  Gaming Update: Colorado Division of Gaming, Vol. XII, Issue 5, May 2003

Indiana's riverboat casino revenues dipped slightly in April, dropping nearly $17 million statewide.  Kristina Buchthal, Indianapolis Star, 5-21-03

For the second consecutive month, Kansas City's four riverboat casinos in April failed to match gross revenues from a year ago.  Rick Alm, Kansas City Star, 5-15-03

War, a bad economy and Easter doldrums led to a third straight month of declines in gambling revenue for the casino industry.  Joe Weinert, The Press of Atlantic City, 5-5-03

Las Vegas visitor volume fell in March from last year's levels, primarily due to the outbreak of the Iraq war and the city hosting a major convention in 2002 that wasn't here this year.  Las Vegas Sun, 5-13-03

Casinos show 6.9 percent decline  in April - the result of a tourism slump caused in part by the Iraq war.  Brendan Riley, Associated Press, Las Vegas Sun, 6-6-03

Expansion has not gone away, but it is certainly making less noise than it was in November around election time.  In New York, Illinois, Ohio, Maryland, Maine, Pennsylvania and Washington, expansion is still on the radar screen, even though, with the exception of Pennsylvania, the picture is pretty blurred and still mired in party politics. 

The measure headed to the House floor would allow hundreds more slot machines at riverboat casinos and put thousands of slots at horse tracks for the first time.  Two other measures sponsored by Lang -- giving Chicago its own casino and legalizing video poker machines at restaurants and bars -- will be brought up for consideration soon, he said.  Las Vegas Sun, 5-9-03

…18,000 slot machines in bars, bowling alleys and bingo halls across the state…the Entertainment Industry Coalition, the group of nontribal businesses and charities that pushed the plan, went back to the drawing board, reloaded and will launch a new campaign today.  Kenneth P. Vogel; The News Tribune, 5-14-03

The casino-in-the-city issue continues to generate publicity, regardless of the "real" possibilities for success: New York, Pittsburgh and Chicago are the big city stories this month.

New York City off-track betting centers would get thousands of lottery-controlled slot machines under a last-ditch city bailout plan proposed by Gov. George Pataki yesterday…  John Milgrim, Ottaway News Service, Times Herald-Record, 5-14-03

State Sen. Jim Ferlo introduced a bill Tuesday that would allow either a land-based casino or a riverboat casino to open in downtown Pittsburgh.  Ferlo, a Democrat from Highland Park, said a casino would be an attraction for tourists and out-of-towners attending conventions. The Pittsburgh Channel, 5-16-03

Mayor Daley doesn't just want a casino in Chicago. He wants a piece of the action. Since floating the idea of a city gambling palace last year, the mayor has been touting Ontario, Canada, as a model for the way the state could own casinos and make more money from them. Now, Gov. Blagojevich is talking about Ontario, too, much to the gambling industry's chagrin.  Chris Fusco, Chicago Sun Times, 5-11-03

Gaming does not need any new issues, but one is developing, nonetheless -- smoking.  It has been a national trend for years to ban smoking in public places.  Most states opted for prohibiting smoking in retail outlets and restaurants.  California took the next step and banned smoking in bars.  In Australia the idea of prohibiting smoking in casinos and "pokie" clubs has gained favor with the anti-gambling lobby.  In Delaware and Australia it has impacted gaming revenues.  Now the non-smoking movement seems more clearly headed toward casinos and slot parlors.  New Jersey is the first "gaming" state to consider banning smoking; Connecticut is not really a gaming state and cannot force the tribes to enforce a ban in Indian casinos.  In Maine, the tribal bingo games exception is being written into the law.  And in New York, bars and restaurants with lottery terminals are planning a protest to show the state that banning smoking hurts business, including the state's take from the lottery terminals.

A [New Jersey] Senate committee took testimony Monday on a bill that would ban smoking in nearly every indoor space that is accessible to the public -- restaurants, bars, taverns, casinos, racetracks, and shopping malls. There are some important exemptions, but the "Clean Indoor Air Act" would be the most sweeping anti-smoking measure in state history.  The Record, Hackensack, Knight Ridder/Tribune Business News, Hotel Online, 5-20-03

A day that began with poll numbers showing that most state voters want smoke-free restaurants and bars ended with the approval Wednesday of a smoking ban by the state Senate. The bill now goes to the House.  … One issue that is unresolved is whether such a ban would apply to the state's two casino operations, which are located on sovereign, tribal lands. Although smokers may light up in most areas of both Foxwoods and Mohegan Sun, both casinos have smoke-free gambling and dining areas and sophisticated smoke-removal systems.  Garret Condon, Hartford Courant, 5-1-03

Smoking would be banned in Indian casinos under a bill two state lawmakers from Central New York plan to introduce. The bill would add "any Indian nation with a current or pending compact with the state that operates a casino" to the lengthy list of establishments where smoking will be prohibited when a new state ban takes effect July 24. But even one of the bill's sponsors said he's doubtful the provisions would be enforced.  Erik Kriss, The Syracuse Post-Standard, 6-3-03

The Maine Senate reversed its stance Wednesday and agreed to exempt the Penobscot Indian Nation's high-stakes bingo games from a statewide ban on smoking at beano events. …While majorities in both chambers favored banning smoking at all other bingo games, the bill was in danger of dying altogether for lack of agreement between the House and Senate over the exemption for Penobscot games.  Bangor News, 5-16-03

Some upstate bar and restaurant owners plan to turn off Quick Draw lottery game machines Monday to protest the passage of a law that virtually bans smoking in any place of business in New York.  Those participating in the protest said that, by depriving the state of revenue from the Quick Draw game, they hoped to publicize concerns that the smoking ban will hurt business at bars and restaurants.  The state legislation, signed into law by Gov. George Pataki in March and scheduled to go into effect in July, would end smoking in many places where it is allowed despite the state's 1989 Clean Indoor Air Act.  Associated Press, News Day, 5-19-03

Jupiters, from Australia, is still blaming smoking for its problems.  The revenues from gaming are down, a would-be suitor may not be and the stock price is down all due to, if you believe the press releases, the impact of banning smoking.

Tabcorp's share price dropped yesterday from an opening of $10.52 to as low as $10.15 before recovering to close at $10.35, after the company announced late on Thursday night that smoking bans were hurting gaming revenue.  Andrew Fraser, NEWS.com.au, 5-17-03 

It isn't completely clear to me what the long-term impact of non-smoking legislation would be on the casino industry.  In the beginning, it would impact revenues, but one could argue that over time players would simply accept the situation and return to their pre-ban patterns.  It is another issue completely if Indian casinos allow smoking while others cannot, or if casinos in one state ban smoking while those just a few miles away in another state allow it.  It may be too early to develop specific statrategies, but it is not too early to watch your state legislation for non-smoking legislation.  Nor is it too early to watch for signs that the anti-gambling lobby is using smoking as a Trojan horse to get inside the casino city.

Regulation in the gaming industry is complex; it is specific and unique to each jurisdiction.  However with the spread of gaming to nearly every state, the federal interest in money laundering, Indian gaming, the Internet and federal political interest in sports betting, it is increasingly interrelated. 

Take the case of Nevada.  Nevada has always resisted federal regulation, beginning in the 1950s and 1960s, and because of the activities of Estes Kefauver and Bobby Kennedy, Nevada tried to craft regulation that answered federal concerns without federal oversight.  But as Nevada companies moved to other jurisdictions, Nevada wanted to retain some control over those companies. 

Nevada requires companies with operations in Nevada to meet Nevada standards wherever they operate.  The two seemingly opposite positions have been highlighted lately.  Several major casino companies have been fined for violating Nevada money laundering regulations and therefore, federal standards.  The violations were significant enough to attract federal attention.  Secondly, Station Casinos is opening an Indian casino in California.  Nevada is not exactly pleased.

Casino industry sources are increasingly wary that recent disclosures of anti-money laundering procedures being breached could trigger federal intervention in Nevada gaming regulations.  MGM Mirage and Station Casinos have both admitted to failing to file volumes of currency transactions reports….Park Place Entertainment Corp. also has entered a stipulated agreement with state regulators admitting employees falsely completed two such reports…Even before these recent disclosures, however, authorities in Washington were discussing revoking Nevada's exemption from federal control over the currency transaction reports….the Financial Crimes Enforcement Network, which receives the currency reports from Nevada casinos, "is coming to the conclusion the feds will eliminate any and all exemptions." Rod Smith, Gaming Wire, Las Vegas Review-Journal, 5-5-03

Federal gaming regulators said Tuesday they were placated by the civil agreement between MGM Mirage and the Nevada Gaming Control Board, staving off for now moves to revoke Nevada's exemption from federal anti-money laundering regulations.  Rod Smith, Las Vegas Review-Journal, 5-28-03

"If we thought (Nevada) wasn't complying (with anti-money laundering regulations) or enforcing them, we could pull the exemption," said Alma Angotti, senior enforcement counsel for the federal Financial Crime Network.  Rod Smith, Las Vegas Review-Journal, 5-28-03

On the one hand Nevada is doing everything possible to stave off federal oversight; and on the other hand, the Nevada Gaming Control Board was very specific with Stations about the state's authority, saying: "if you have trouble there [California], you'll have trouble here [Nevada]."

"It would appear that without written policies, you'd be setting yourself up for legal challenges," Siller said. "It seems like it is an accident waiting to happen. With all due respect to Indian gaming, they own the casino, regulate it and run their own courts. You're operating in the blind. And if you have trouble there, you'll have trouble here."  Jeff Simpson, Gaming Wire, Las Vegas Review-Journal, 5-8-03

Gaming regulation is not simple and is becoming more complex.  Meanwhile back in Washington D. C., Congress is looking at Internet gaming, and once again sports betting.  Hold on to your parlay card, McCain is back.

Sen. John McCain is taking another swing at banning Nevada casinos from taking bets on college sports.  The Arizona Republican reintroduced a bill Tuesday that would strip Nevada casinos of their legal right to take bets on college games. McCain has tried twice before, but his legislation has never made it to the Senate floor.  "By allowing betting in any state, we send a confusing message to our youth as to whether gambling on amateur sports is, in fact, legal or illegal," McCain said.  Doug Abrahms, Reno Gazette-Journal, 5-7-03

On the lighter side, new ideas are the life-blood of any industry and gaming is no exception.  Particularly in times as trying as these, it will take new ideas and appealing to a broader audience for gaming to continue to grow.  However, not all ideas are equal, nor are all new ideas good ideas.  This idea from down under is a little startling and just may not be the best one to have surfaced this year.  Las Vegas has an international reputation as "Sin City," but this takes the concept to a new level. 

The world's first listed brothel, The Daily Planet Ltd., wants to open a "sex theme park" in the international home of gambling, Las Vegas.  The Daily Planet Chief Executive Andrew Harris said the group would have expanded regardless of last week's successful listing on the Australian Stock Exchange… "A number of things have changed as far as funding perception, people's willingness to deal with us and these opportunities have come forward and presented themselves very quickly to us," Mr. Harris told AAP.  …He said that with around 35 million visitors a year, Las Vegas was the "ideal place to put this sex theme park".  Jonathon Moran, The Courier Mail, 5-9-03

Publicly traded sex parks on the Strip, now why didn't I think of that?