Eleven thousand must have been a dizzying height. The Dow ran up the mountain
in February, got close to record levels and then turned around very quickly and
ran back down the mountain to a more familiar altitude around 10,400; gaming stocks,
too moved lower in March. By the end of March, most of the companies had reported
year-end results and investors had a clearer picture of the expansions and mergers
in the works. In most states where expansion is on the horizon, it is now clear
that it will take longer than the initial enthusiasm indicated, and the major
mergers are also moving a little slower than originally predicted.
Concerns over the weather-related impact on tourism in January, a delay in
MGM Mirage's buyout of the Mandalay Resort Group and profit-taking by some
investors caused a slight dip in the stock prices of several of the gaming
industry's major companies, an analysis released Thursday by a Las Vegas-based
financial consulting company shows. It was the first time in seven months
that the Applied Analysis Gaming Index, a monthly weighted average of local
gaming stocks, showed a decrease. Three of the four major casinos operators
-- MGM Mirage, Harrah's Entertainment and Caesars Entertainment -- showed
decreases of 1 percent to 3 percent in their average daily stock prices in
March as compared with February. Only Mandalay was unchanged during the month,
mainly due to its pending purchase by MGM Mirage, which has a set stock price
of $71 per share. It was Mandalay's less-than-stellar quarterly earnings announcement
in early March, which included figures from January, that caused several gaming
stocks to slip. Howard Stutz, Gaming Wire, Las Vegas Review-Journal, 4-1-05
Unfortunately, crude oil prices did not have the same experience with the height
and continued to climb. Though the record high for oil was set 25 years ago
at $90 a barrel, today’s prices are setting modern-day highs weekly, if
not daily. Oil prices put pressure on the economy as few industries are without
a direct relationship to fuel costs. Gaming is impacted by increased airline
fares, increased gas prices [one newspaper predicted $3.50 a gallon by the end
of the year], and at some point the disposable income of most players.
Oil prices briefly topped $58 a barrel Monday …With oil prices up nearly
$15 a barrel since the year began, U.S. motorists are spending an average
of $2.15 per gallon for regular unleaded gasoline and analysts believe pump
prices could rise further as the summer driving season approaches. The surge
in fuel prices has strained segments of the U.S. economy, such as airlines,
independent truckers and low-income families, but rapid economic growth and
improved energy efficiency have blunted the broader impact. Brad Foss, Associated
Press, San Diego Union-Tribune, 4-4-05
Are you looking for some new ideas, a new concept or two in gaming? Try these
two. Okay, so they are not really new. Both are logical extensions of current
practices, but surprising, nevertheless. In Pennsylvania it has been suggested
that monthly player statements should be part of the legislative requirements.
As long as players can be tracked, let them know what they do. All slots will
be online, all play tracked, so why not keep track of your frequent flier miles.
Now you will know exactly what your coin-in was, your exact wins and loses,
and while we are at it, the number of hours you played, and spins of the wheel.
Sorry, but we can’t track cocktails. The other idea is more common-- linked
jackpots. Only here the suggestion is for states to cooperate and create mega-jackpots
across state lines.
Along with monthly statements from VISA and MasterCard, regular gamblers
might some day get letters from Philadelphia Park or other casinos telling
them exactly how much money and time they spent pumping quarters into slot
machines. In the next couple months, state Rep. Paul Clymer, R-145 (Bucks),
will introduce a bill to force the state's 14 future slots casinos to provide
monthly statements to patrons who sign up for rewards cards, sometimes called
players cards….The man who came up with the idea for the monthly statements,
Bill Kearney, swears he's not trying to shutter Pennsylvania casinos before
they even open. Instead, the ex-gambler says his plan could help keep others
from the cruel blows his addiction landed on his ex-wife, his kids and his
once-thriving manufacturing business. Rick Martinez, The Intelligencer, 3-2-05
Slot machine players at Delaware's three casinos will have chances to win
even larger jackpots under an agreement between three states. Delaware, Rhode
Island and West Virginia are in the process of developing a program that would
use revenue from the states' slot machines to form a large jackpot, said Richard
S. Cordrey, Delaware's secretary of finance. The system would be similar to
the Powerball lottery game, which pools revenue from 30 states into a single
jackpot. …By combining slots revenue from three states, Mr. Cordrey
said, Delaware can offer jackpots much larger than it could otherwise. The
bigger pots, he added, would hopefully keep customers coming to Delaware instead
of competing states nearby. Joe Rogalsky, Delaware State News, 3-9-05
Referendum legislation is simple. Voters approve a ballot imitative and there
is a new law that sets a ceiling for property taxes, defines marriage or puts
slot machines at the local race track. However, in practice it isn’t as
simple as one would imagine. In November, voters approved an initiative calling
for a local voter approval for slot machines at racetracks in two counties.
Broward and Miami-Dade voted on slot machines on the 8th of March; the result
was surprising for several reasons. First the counties voted differently. Broward
approved the measure allowing slot machines in the county and Miami-Dade rejected
the measure.
A day after Broward County voters approved slot machines, gambling opponents
and supporters were squaring off over a basic question: What is a slot machine?
The gambling industry, including the state's seven Indian casinos, says it's
Las Vegas-style machines with big payouts and more profit for casinos. Gov.
Jeb Bush and powerful Florida lawmakers want a more restrictive type of machine
already in use at Indian casinos around the state. …Johnson has filed
a bill that would define a slot machine as a device used in "Class II"
gambling, a federal classification for games such as bingo or poker in which
players compete against one another and the casino takes a portion of the
amount wagered. Alisa Ulferts/ Joni James, St. Petersburg Times, 3-10-05
Governor Bush campaigned hard against slot machines, especially in Miami-Dade,
and in Miami, he brought home the bacon. Bush has traditionally been anti-gaming;
for this election he had more than just a moral objection, he warned against
the spread of Indian gaming if the initiative passed. Seems that Mr. Bush was
correct. The Florida tribes immediately notified the governor of their intention
to take advantage of the legal slots and wish to compact for Class III slots.
Tuesday's vote approving slot machines gives the Seminole and Miccosukee
tribes unwelcome competition, but it also gives them leverage in their push
to bring not just slot machines, but craps, blackjack and other Las Vegas-style
gambling to their Florida casinos. Federal regulators said Wednesday the state
must now "negotiate in good faith' with the tribes on a gaming agreement,
called a compact, that would allow expanded gambling in exchange for a chunk
of the profits. If Florida doesn't negotiate fairly, the Secretary of the
Interior could ultimately give approval anyway, said Sean Pensoneau, spokesman
for the National Indian Gaming Commission. John Holland, Sun-Sentinel, 3-10-05
The younger Bush was not so easily beaten. It seems he had one more trick up
his sleeve. Who said slots automatically mean Class III games; slots could be
defined as Class II games, couldn’t they? The state legislature has to
create a basic structure, dealing with tax rates, hours of operation, type of
game and such. The first draft limits the hours, creates a difficult tax structure
and more important, limits the type of game to Class II. The battle is far from
over, but it did not turn out as simple as Isle of Capri or any of the other
would be operators once thought. Politics in Florida is a Class III game all
by itself.
Broward County's new slot machines would operate like electronic bingo games
instead of the traditional Las Vegas equipment under a bill approved Thursday
by a sharply divided House committee. The measure, included in a sweeping
bill that writes the rules for Florida's slot machines, passed by a 10-9 vote
of the House Business Regulation Committee. By limiting slot machines to the
Class II gambling now played at Indian gaming halls, the state is in a better
position to limit the expansion of gambling on Miccosukee and Seminole reservations,
said Rep. Juan Zapata, a Miami Republican who sponsored the amendment to the
bill. Mary Ellen Klas, Miami Herald, 4-2-05
A national housing trend is starting to make itself felt in Nevada. The trend
towards empty nesters moving out of suburban homes into condominiums in inner
cities is gaining movement nationally; when applied to Reno and Las Vegas, it
is not only a housing trend, but also a gaming trend. The customers are coming
home to roost.
Across the country, Leinberger said younger people and professionals want
to escape the monotony of suburbia and empty-nesters want to get away from
yard work, he said. Nationwide, almost 75 percent of all households are without
children, he said. He estimated that about half of them are interested in
leaving the suburbs. And when households are willing to give up one of their
two cars, he said, they generally can afford the extra cost for downtown housing.
“Downtowns are coming back far more rapidly than people think,”
Leinberger said. Sue Voyles, Reno Gazette-Journal, 3-30-05
In Reno the trend is a very important part of the redevelopment of the downtown.
Gaming in Reno has been declining for the last few years, mainly as the result
of Indian casinos in the neighboring states. Reno has always been just a regional
market with the majority of the customers driving to Reno and staying for a
couple of days. As the number of casinos closer to home increased, fewer people
felt the urge to drive to Reno. Today in downtown Reno there are eight casinos
when once there were 15 to 20. Having potential customers moving into the area
certainly offers hope for the surviving downtown casinos. The irony is in the
location; some of the new condo projects are located in former casinos.
The Comstock Hotel-Casino closed in November 2000. Since June, workers have
gutted the Comstock for a first-class renovation called the Residences at
Riverwalk. Ranging from studios to $1 million penthouse suites, 125 condos
will take the place of 306 former hotel rooms on 15 floors. All but 36 have
been sold since Jan. 15, said Erin Ruiz, managing sales agent. Buyers range
from hospital workers to young professionals to people buying second homes,
she said. No investors are allowed to rent the units. “It’s people
from all walks of life,” she said. Susan Voyles, 3-30-05
Las Vegas is, of course, a different animal. Land is a “little”
more expensive and more highly coveted. In fact land has become so expensive
that it is more valuable than its resident casino. For at least a year, it has
been reported that all interest in the Riviera was based on the value of the
land and not the profits of the casino. Every time a new casino opens on the
strip, the price for land goes up. Where a $500 million investment was once
enough to open a casino, followed by the billion-dollar casino, now it takes
more than $2 billion. Those values price under performing casinos out of the
market. Poor Phil Ruffin is also a dollar short in his plans and is still waiting
to make his mark. Each time he thinks he’s close, the dynamics of the
strip change and he is left with a dated plan and not enough money for a new
one.
The price of playing with the big boys on the Strip is limiting competition
for developers like Sheldon Adelson, the Venetian owner said. With Las Vegas
expected to attract a record of 38.2 million visitors this year, developers
are flocking to the hottest resort destination in the country to get a piece
of the action. Yet soaring land prices, driven by a boom in high-rise residential
construction, are driving up shares for casino stocks and pricing many buyers
out of the market at the peak of demand. That scenario leaves people like
Adelson, who gambled and won on a high interest rate bet to build the Italian-themed
Venetian resort, sitting in an enviable position that's unlikely to be duplicated.
The big gaming companies on the Strip have gotten to be too expensive for
many other companies to buy into the gaming industry…"There's a
lot of capital willing to be committed to Las Vegas," Falcone said. "It's
a much smaller pool of developers but it's not just gaming companies buying
land. It's commercial, residential and retail developers." Liz Benston,
3-4-05
Reflecting the skyrocketing value of land on the Las Vegas Strip and the
high-priced neighboring resorts he'll be competing with, the owner of the
New Frontier plans to spend $1.3 billion or more to build a new hotel and
casino on the site. Billionaire Phil Ruffin is getting closer to redeveloping
his aging hotel, the Wichita, Kan.-based developer said Monday. He's lined
up financing for the project and is narrowing down plans for the new hotel,
Ruffin said. "We're going to do this ourselves, with no partners,"
Ruffin said. "We have the money lined up." …Because of the
increasing value of Strip real estate and the top-notch resorts he'll be competing
with, including the $2.7 billion Wynn Las Vegas directly across Las Vegas
Boulevard, Ruffin said it no longer made sense to develop the kind of casino
he'd originally planned when he bought the property in 1998 for $167 million…."You
got Trump on the site, you got Wynn, you got the Venetian, and (Venetian owner
Sheldon) Adelson's new resort, you have to build something very nice,"
Ruffin said. "We'll spend $1.3 billion, and maybe even more." Jeff
Simpson, 3-8-05
Here is where the housing trend enters the Vegas market. It is not just casinos
driving up the price; the condo movement is significant in the increasing value
of every foot of ground on the Las Vegas Strip. The Donald may not have figured
out how to operate a casino or get into Nevada, except with his speculative
purchase of Riviera stock that he has since sold. He has, however, figured out
how to make a profit from casinos and the Strip.
The units generally range from 700 to 2,500 square feet in size, and cost
anywhere from $350,000 up to $4 million. …"We're tracking approximately
85 condominium towers, totaling 33,800 units, in the Las Vegas Valley,"
says Brian Gordon, principal of Applied Analysis, a Las Vegas-based economic
research firm. Tony Illia, Business Press, 3-12-05
During the Dec. 16 finale of last season's TV show The Apprentice, Donald
J. Trump unveiled a model of his first Las Vegas condominium tower. Trump
began taking $10,000 deposits that night and within a month had reservations
for 80% of the 1,282 units, at prices around $1,000 per square foot. In January
he announced plans for a second tower. "Everybody wants to be in our
building," The Donald told BusinessWeek. Trump's boasting aside, Las
Vegas has become one of the hottest condo markets on the planet. Developers
are filing for permits on 30 high-rises and are considering building 50 more.
The condos, most of them along the city's famed Strip, start at $350,000 for
one-bedroom units and run into the millions -- sky-high prices in a city where
the average condo sells for $203,000. The volume of projects amazes even boosters
of a city that prides itself on excess. "I went to a groundbreaking the
other day," says Las Vegas Mayor Oscar Goodman. "Half the units
were spoken for. People don't even know what their views will be. I never
saw anything like it." Yahoo Business Week, 2-14-05
MGM is promising to invest billions in a new project that will include condos--a
village of sorts. Terry Lanni called it an “urban metropolis.” Lanni
is just following the redevelopment popular wisdom: people living in the area
drive the economy; when you have enough residents, they build the local economy.
Downtowns around the country are trying to do the same thing--bring condos,
apartments and the income of the residents into the downtown core. The difference
here, of course, is the fact that MGM is going to spend billions to build their
own town, not redevelop an old and decaying one. Gives a new meaning to “company
town” doesn’t it?
MGM Mirage currently controls about 17,000 hotel rooms on the Las Vegas Strip
in resorts that include Bellagio, MGM Grand and the Mirage; when it closes
on the Mandalay deal, expected this quarter, it will have more like 30,000.
It is also undertaking an ambitious plan to create a multi-billion dollar
"urban metropolis" on 66 acres that will feature more hotels, more
restaurants, more gambling and residential developments that will roll out
in 2010. William Spain, Market Watch, 2-1-05
The February’s, except for Nevada’s month behind numbers, results
reflect the national economy, weather, number of days in the month and the usual
factors. Overall, there wasn’t much difference from last year.
Nevada's casinos…January's 3.9 percent increase…$917.1 million
gaming win reported Cy Ryan, Las Vegas Sun, 3-10-05
Atlantic City's 12 casinos made $388 million in revenue last month, up 0.5
percent from the same period a year ago… Suzette Parmley, Philadelphia
Inquirer, 3-10-05
The 11 casinos in Missouri had combined winnings of $122.6 million last month,
a drop of 0.4 percent. Christopher Carey, 3-11-05
The nine casinos in Illinois won $144.5 million, up 1.8 percent. Christopher
Carey, 3-11-05
Revenues for the three [Michigan] casinos rose $786,000 to $101.4 million
[February]. Associated Press, Detroit News, 3-14-05
Iowa February gaming revenues for 9.2% to $92.1 million. Gaming Industry
Weekly Report, 3-14-05
Louisiana's 14 riverboat casinos, the downtown New Orleans casino and the
three slot-machine casinos at race tracks took in $190.1 million last month,
compared with $189.7 million in February 2004. Associated Press, New Orleans
Times-Picayune, 3-15-05
Missouri gaming revenue was down 0.4 percent. Rick, Alm, Kansas City Star,
3-16-05
Colorado casinos posted adjusted gross proceeds of $62 million in February,
up 8.2 percent from the same period a year ago, the Colorado Division of Gaming
said. Rocky Mountain News, 3-17-05
Indiana February gaming revenues rose 5% to $213.5 million. Northern Indiana
casinos led with a gain of 6.4%…In Southern Indiana, gaming revenue
rose 3.6%. Gaming Industry Weekly Report, 3-28-05
In Washington members of Congress investigated steroids in baseball; Tom Osborne
introduced another bill to stop betting on college sports, and hearings were
held on gaming lobbyists. Where would we be without congressional committees
to investigate?
While the House Committee on Government Reform questioned every player present
at the hearing…on a day on which Representative Henry A. Waxman, Democrat
of California and the ranking minority member of the committee, issued a statement
saying there was a need to investigate "the full extent of the steroid
problem in baseball and other sports." Waxman, who near the end of the
hearing Thursday wondered out loud whether baseball needed new leaders, also
endorsed a "universal no-steroids policy for all levels of athletics."
Lee Jenkins, New York Times, 3-19-05
Rep. Tom Osborne, R-Neb., a renowned former college football coach, on Thursday
introduced a bill that would ban betting on college games in Nevada sports
books. Osborne unveiled the bill with little fanfare, unlike in previous years
when supporters of the legislation held high-profile press conferences that
coincided with the kickoff of the NCAA basketball tournament… In years
past, Sen. John McCain, R-Ariz., has been a vocal champion of the bill, generating
media attention as well as interest from a number of lawmakers in Congress.
But McCain is no longer chairman of the Senate Commerce Committee, which has
jurisdiction over the bill, and he has signaled that the fight is largely
futile given strong opposition by the gambling industry and Nevada lawmakers
led by Senate Minority Leader Harry Reid. Benjamin Grove, Las Vegas Sun, 3-18-05
Alive or dead; death took part in casinos during the last week of March. In
Florida legislators were too busy debating the life of Terry Schiavo to take
action on casinos and in Monaco the prince was kept alive long enough to finish
the Easter weekend. The casinos closed after the prince died, but not before
getting the last of holiday tourist dollars.
Local politicians become involved in Schiavo case
...The legislative delegation vowed to make nice in light of last week's hostile
sparring…over school funding to be generated by new slot machines. But
it was hard for lawmakers to focus on much else besides Schiavo. Miami Herald,
3-28-05
Casinos 'keep Prince alive'
Monaco’s Prince Rainier was said to be “clinically dead”
yesterday — kept alive on a respirator only until hordes of holidaymakers
have quit the casinos after the Easter break. When Rainier officially dies,
the population of 32,000 will go into mourning and businesses will close.
The Sun, 3-28-05
The price of gas hangs threateningly in the air above us, much like a stock
market or real estate bubble. Oil prices haven’t caused any problems yet
(unless you own airline stock), but it is hard to believe it won’t hit
the economy much like the dotcom crash of 2000. Fuel affects the price of everything
produced, the cost of traveling, and at some point disposable income. When the
prices reach levels that are twice or three times the price three or four years
ago, it has to affect the amount of money available for non-essentials, like
movies, vacations and gaming. Maybe that is the reason MGM wants its own village
of players. They won’t have to travel to get there, no airlines, no cars,
just walk down the street to the local “company” casino.
Copyright GamingWire. All rights reserved.