Gaming Guru

Quicktakes - The month's trends in a glance - January 2004

In January, the Dow rose 0.3 percent, the S&P 500 gained 1.7 percent and the Nasdaq gained 3.1 percent. According to the "January Barometer" devised by economist Yale Hirsch, stocks tend to follow for the year the direction set in January. Only four times since 1950 have stocks ended the year lower after the S&P 500 gained in January. Rachel Cohen, Reuters, Yahoo Business, 1-30-04

Gross domestic product rose at a 4 percent annual rate in the 2003 final quarter, less than half the third-quarter's 8.2 percent pace as consumers cut back spending. Wall Street economists had forecast a 4.8 percent rate of increase. Rachel Cohen, Reuters, Yahoo Business, 1-30-04

A closely watched gauge of consumer sentiment rose in January, with Americans' increasing confidence in the economy tempered only by doubts about jobs, an industry group reported Tuesday. The Conference Board said its consumer confidence index rose to 96.8, the highest level since mid-2002, following a dip in December to a revised reading of 91.7. Adam Geller, Yahoo Business, 1-27-04

Sales of previously owned homes set a record high in 2003 as decades-low mortgage rates proved too good for many buyers to pass up. The National Association of Realtors reported Monday that existing-home sales totaled 6.1 million last year, shattering the previous record of 5.57 million set in 2002. Last year's sales represented a 9.6 percent increase from 2002's level. Jeannine Aversa, Associated Press, Yahoo Business, 1-26-04

In downtown Las Vegas an era ended, and it ended in a sad, almost pathetic way: Binion's Horseshoe closed. The story doesn't need my comment; over time it will generate a great deal of editorial comment, but I can't resist the temptation. The Las Vegas Horseshoe has been too significant to the historical development of the entire gaming industry not to add my two bits worth.

Deputy U.S. marshals entered Binion's Horseshoe late Friday armed with two court orders authorizing them to seize up to $1.9 million in cash from the casino, an action that forced the closure of the 52-year-old property's casino. Gaming Wire, Las Vegas Review-Journal, 1-10-04

The Horseshoe, long before the Wynnized Strip of today, was the personification of Las Vegas gambling. It did not offer gaming and it was not a casino. The Horseshoe was a gambling joint, or at least it was when Benny Binion (or his son Jack) ran it. The Horseshoe was famous for taking any wager; once Benny booked a million dollar craps wager; it was famous for displaying a million dollars in cash; it was famous for the World Series of Poker; it was famous for offering a player the best odds, at one point ten times odds on craps; the Horseshoe was famous for gambling.

A few years ago I was conducting the interviews for Always Bet on the Butcher with Warren Nelson in the Cal Neva in Reno. After each interview we always ate lunch and he told stories, the kind of stories that never made it into the records. Warren knew everyone in the industry--Baron Hilton, Jackie Gaughn, Benny and Jack Binion. Warren understood players and gambling, and he too was willing to book a bet and give the player good odds. One day Jack Binion came by to talk. Afterwards I commented to Warren that Jack's style was the same as Warren's. Warren agreed, except to say that Benny and Jack Binion had a "bigger bankroll" and "bigger b…"

Benny Binion is dead; Jack Binion moved on to the Midwest and built an immensely successful gaming company that he recently sold to Harrah's for $1.45 billion. Five and half years ago, Becky Binion Behnen took over ownership and management of the Horseshoe. She may have inherited many things from her father, but an instinct for running a gambling joint was not one of them. There is a popular joke in Vegas that says when Becky sold the million dollars on display that she got nine hundred thousand dollars. At the end of her tenure the creditors were lined up around the block, except for the ones that marched in the front door and took the bankroll.

Becky Binion Behnen's 5 1/2-year stint as owner of Binion's Horseshoe was a disaster, industry experts agreed. What was once a dynamic gambling hall, a place that won money faster than any downtown casino not named Golden Nugget, is now closed, the victim, experts said, of massive incompetence. Jeff Simpson, Gaming Wire, Las Vegas Review-Journal, 1-18-04

When she took over control of the property from brother Jack Binion in 1998, she made a number of changes that experts say transformed the property… Gone was the casino's liberal comp policy and well-known policy of accepting any size bet. …Perhaps the most mentioned change was [the] removal and sale of the…famed million-dollar display… Jeff Simpson, Gaming Wire, Las Vegas Review-Journal, 1-18-04

Binion's creditors, including the Internal Revenue Service with two liens, seven landlords that lease the land under the club to Behnen, the Fremont Street Experience, and several gamblers who keep front money in the property's cage, have been circling the property in the past two weeks. Gaming Wire, Las Vegas Review-Journal, 1-10-04

Harrah's made it clear when purchasing Jack Binion's Horseshoe Gaming Holding Corp. empire that they wanted the Horseshoe brand in Nevada too. It is after all the gambling brand. Becky couldn't seem to make her mind up, or was it her son's or her husband's mind--Las Vegas rumors suggest a Svengali somewhere in the background. Harrah's waited and stepped in immediately. The deal was done, or was it; by the end of the week, Becky still had not signed.

Harrah's Entertainment Inc. is expected to…retain the rights to the Horseshoe brand for use elsewhere in Las Vegas, experts say…also would retain the popular World Series of Poker tournament that draws hundreds of poker fans to the property every spring. Liz Benston and Jeff German, Las Vegas Sun, 1-13-04

Sources said Thursday that Harrah's, which has tentatively agreed to buy the hotel-casino for an estimated $50 million, mostly in the form of assumed liabilities, said it gave Behnen a definitive agreement Tuesday, but she had not signed or responded to it. …The Harrah's spokesman said it was understandable that the talks are taking time because of Behnen's involvement in the property and her family's history in Las Vegas. "This casino has been part of her family since she was a baby. She may be feeling some seller's remorse," he said. Gaming Wire, Las Vegas Review-Journal, 1-17-04

The deal did get signed with no mention of Becky's tears smearing the ink. Harrah's promised to reopen the casino soon and keep the World Series of Poker. And then hidden in the fine print of an announcement, the enticing hint that Jack might come back to manage the Horseshoe. Part of the original purchase agreement with Jack Binion did call for Jack to act as a consultant to Harrah's, which is beginning to make more sense in light of current events. I don't know, Michael Jordan. Do you really have the energy to start over? In my opinion Jack is about the only person that could make a success of the Horseshoe. Harrah's has not done well managing other brands--do you remember the first three years of the Rio--and downtown Vegas is challenged to put it mildly. But Jack coming back to a very much changed downtown would be much like Michael and the Wizards, an uphill battle.

"We plan to re-open the property as soon as practicable," said Gary Loveman, president and chief executive officer. PRNewswire-FirstCall, Yahoo Business, 1-22-04

Harrah's to continue World Series Of Poker; gaming company plans to host richest card game on earth at its longtime Las Vegas home in 2004. …"This tournament has a long and colorful history, and we look forward to preserving the traditions that have made it the world-renowned phenomenon it is today," Loveman said. PRNewswire-FirstCall, Yahoo Business, 1-22-04

…Loveman also said….Harrah's has "a flexible agreement" with Behnen's brother, Jack Binion, because of the pending $1.45 billion acquisition of Horseshoe Gaming Holdings…Loveman indicated that Harrah's might offer Binion a role in managing a reopened Horseshoe, he also said his company is "not obliged to do so." Rod Smith, Gaming Wire, Las Vegas Review-Journal, 1-23-04

Park Place is gone; Caesars is back. Whether ringing the opening bell on Wall Street or bidding on a Chicago license, Caesars is making a strong statement that the company is going to be a major player. At the end of 2003, the old Park Place, by selling the Las Vegas Hilton, put the industry on notice that it would become more competitive and stronger by getting rid of its underperforming assets.

Caesars Entertainment President and Chief Executive Officer Wallace R. Barr will ring The Opening Bell(TM) accompanied by the costumed Caesar and Cleopatra characters. The company will begin trading under the new ticker symbol CZR. Business Wire, Yahoo Business, 1-5-04

A dormant Illinois riverboat casino license attracted bids from seven casino operators that want to locate a new gambling venue in one of five Chicago suburbs, the state's gaming board said on Tuesday. Three operators, Caesars Entertainment, Isle of Capri Casinos and Penn National Gaming, submitted bids choosing Rosemont, a suburb hugging Chicago's O'Hare International Airport, as their location. Reuters, Yahoo Business, 1-20-04

Last year the mayor of Chicago said he wanted the city to own its own casino; the governor of Illinois wanted (and did) to create a tax structure that would make the state the de facto owner of the state's casinos. This year in Maryland and Kansas politicians are suggesting serious legislation for state ownership; that sounds like a trend to me. And at the last moment (to be a January story) Penn National made a proposal that would make the state of Illinois a casino owner. Those eying state-owned slots are not the only initiatives to watch; Maine, Maryland Minnesota and Pennsylvania are among the states with some form of legislature or proposal up for consideration.

House Speaker Michael E. Busch said yesterday that he remains opposed to the legalization of slot machines in Maryland…he will use the results of a study to be released next week to push for the state to build and operate the gambling dens. Greg Garland, Baltimore Sun, 1-24-04 Staff

Gov. Kathleen Sebelius will propose a state-owned casino near the Kansas Speedway…"If this is done right, it would be a very big boost" to the economy, Sebelius' chief counsel Matthew [said]. Scott Rothschild, Lawrence Journal-World, 1-14-04

Rep. Tom Holland, D-Baldwin [Kansas], said he would embrace legislation supporting a state-owned casino …"The state needs to be in the driver's seat, setting the agenda. That's how we're going to produce revenue." Lawrence Journal World, 1-17-04

A bill for expanding gambling would have developers compete to manage one or more state-owned casinos, a top aide said Saturday. John Hanna, Associated Press, Lawrence Journal-World, 1-18-04

Penn National Gaming…pay upwards of $500 million for the license and sell it back to the state for $1. The state then would sign a long-term deal with Penn National that would see the company manage the casino, to be located in Rosemont. Chris Fusco, Chicago Sun-Times, 1-30-04

The government owned casinos might not be much of a benefit to the major casino companies, but every expansion helps the manufacturers, especially IGT. The slot manufactures are feeling the pressure of Wall Street. To show growth quarter over quarter requires exceptional new products, new markets or some other strategy to gain market share from the competitors and that usually means IGT, not an easy proposition. The new market strategy is getting lots of attention. Multimedia and Sierra Design are seeking expansion outside Indian gaming; Alliance, IGT and Williams are looking abroad for new markets; and Alliance and IGT are trying to enter the Class II Indian gaming market.

Multimedia Games, Inc. announced today…installation of approximately 194 units at the Greenetrack Greyhound Racing…entered the charity bingo market with the initial installation of approximately 300 units at the VictoryLand Dog Track in Shorter, Alabama. Multimedia participates, on a recurring basis, in the net gaming win of its installed base of charity bingo units. Business Wire, Yahoo Business, 1-8-04

Nevada-based slot machine maker Sierra Design Group narrowly averted revocation of its Missouri gaming license by winning a court order late Tuesday temporarily blocking the action. …The threat of revocation also could affect the pending acquisition of privately owned Sierra by publicly traded Alliance Gaming Corp. Rick Alm, Kansas City Star, 1-22-04

WMS Gaming Inc…announced today that it has formed a UK-based subsidiary, WMS Gaming (UK) Limited, to focus on game development and sales and distribution of gaming devices throughout the United Kingdom and other key international markets. Business Wire, Yahoo Business, 1-27-04

Alliance Gaming Corp. has acquired U.K. video gaming machine company Crown Gaming from Crown Entertainment Ltd., expanding its operations in England in anticipation of liberalized gambling laws… Dow Jones, Yahoo Business, 1-7-04

Japan's largest manufacturer of pachinko machines has approved a partnership with Reno slot maker International Game Technology to cooperate on the manufacture of pachinko devices as well as other gambling machines in anticipation of the legalization of casinos in Japan. Liz Benston, Las Vegas Sun, 1-7-04

IGT is doing more than just looking into new markets; IGT is still exploring what seems to be every opportunity to acquire games, platforms or licenses to strengthen its position and limit competition. No one more than IGT itself realizes that for the other companies to grow they need to take market share from IGT. In the meantime, IGT is growing.

Shuffle Master, Inc. announced today that it has entered into an agreement to sell certain of its slot assets to IGT. …will sell to IGT its share of their strategic alliance slot operations, related inventory and will convey to IGT certain intellectual property, including slot product patents and licenses. Additionally, the Company will terminate its initiative to develop retrofit games on IGT's S+ game platform. Business Wire, Yahoo Business, 1-12-04

International Game Technology…posted a sharp rise in quarterly profit on Thursday as foreign sales jumped and domestic gambling operators bought new-technology machines that pay jackpots with printed tickets instead of cash…net income rose to $176.3 million…from $91.6 million…Revenue increased to $608.1 million from $531.5 million. Peter Henderson, Reuters, Yahoo Business, 1-22-04

Coast Casinos, Inc. has signed an agreement to purchase 100 percent of its gaming machines for its new Southcoast Resort…from IGT. The new Southcoast casino will feature approximately 2,500…slots. PRNewswire-FirstCall, Yahoo Business, 1-22-04

The rest, the other players, are struggling to find the winning combination. Mikohn is still searching for the game that will work and drive company growth. Aristocrat is trying to use new platforms and former IGT executive Bob McMonigle's corporate sales skills to grow the company's sales. And Sigma is struggling just to get the basic licenses and game approvals, so that even after 20 years, Sigma is more of an entry-level player than major industry player.

Mikohn Gaming Corporation today announced that it has entered into an additional exclusivity agreement with Isle of Capri Casinos to launch Mikohn's new Garfield(TM) video slot game. Isle of Capri Casinos, will have a 90-day exclusive on the new Garfield(TM) game, which is expected to debut in casinos in early 2004. Business Wire, Yahoo Business, 1-9-04

Aristocrat Technologies…announced an agreement with Harrah's Entertainment, Inc. to supply up to 1,000 video slot games at Harrah's 25 casinos. "This agreement with Harrah's is very significant for Aristocrat," said Gavin Isaacs, President of Aristocrat Technologies, Inc. PRNewswire, Yahoo Business, 1-6-04

Aristocrat Technologies...announced that the Mississippi Gaming Commission has approved its MKVI(TM) slot machine platform. PRNewswire, Yahoo Business, 1-17-04

Sigma Game Inc., marking twenty years as a casino provider in 2004, today announced that it has received approval to sell its latest video reel game equipment to casinos throughout Mississippi. PRNewswire, Yahoo Business, 1-26-04

Government regulation is becoming more significant to the gaming industry. The money laundering regulations and the terrorist money tracking regulations are difficult, but some other terrorist measures are also going to impact gaming.

Government nuclear experts last month began working undercover in major U.S. cities…The Energy Department's Nuclear Incident Response Teams were sent to scour Las Vegas, Los Angeles, New York and Washington immediately after the nation's terror alert status was upgraded on Dec. 21… John Heilprin, Associated Press, San Francisco Chronicle, 1-8-04

Authorities began scanning fingerprints and taking photographs of arriving foreigners as part of a new program that Homeland Security Secretary Tom Ridge said will make borders "open to travelers but closed to terrorists." Mark Niesse, Associated Press, 1-5-04

Terrorism, travel and money laundering are not the only areas where government regulation is going to impact the gaming industry. As he does every year, Arizona Senator Kyl is introducing his Internet gambling bill, and the Department of Justice is attacking Internet gambling through advertising. And one experienced Internet gaming operator thinks they are both wasting their time; the estimated revenues suggest that he is right.

Arizona Sen. Jon Kyl said he will try again to usher Internet gambling restrictions through the Senate, even though it is an election year. "My plan is to try to get it up for a vote," Kyl, the chairman of the Senate Republican Policy Committee, told the Las Vegas Review-Journal for a Wednesday report. He said he did not know when a vote might occur. Associated Press, USA Today, 1-29-04

The U.S. Department of Justice has been issuing subpoenas in Las Vegas and nationwide to intimidate and discourage publishers and broadcasters from accepting advertising for online gaming sites, media and legal officials said Monday. …first effort in the United States to prosecute criminally any media based on the content of its advertising, according to Cabot, chairman of the gaming practice group at Lionel Sawyer. Rod Smith, Gaming Wire, Las Vegas Review-Journal, 1-13-04

Steve Schillinger…says internet gambling gave him a comfortable life on a Caribbean island. …Schillinger takes in about $US600 million ($A780 million) a year in bets. …"I don't regret starting this business," Schillinger said. "The US can't control the internet. There is tremendous growth opportunity here." The Australian Age, 1-28-04

…Despite U.S. restrictions, Bear, Stearns & Co. estimated online gaming revenue exceeded $5 billion last year, more than 70 percent wagered by Americans, and the General Accounting Office estimated there are more than 1,500 Web-based gaming sites. Rod Smith, Gaming Wire, Las Vegas Review-Journal, 1-13-04

Lotteries made the headlines between Christmas and New Years when three major lotteries hit. In all three cases, the prizes were in the millions of dollars. Rarely does one person win the big jackpot; usually there are several winners who must split the prize.

Wishes for a prosperous New Year came true for two lottery players from Pennsylvania and South Carolina who will share a $221.5 million jackpot from the New Year's Eve Powerball lottery, organizers said on Thursday. Reuters, Yahoo Business, 1-1-04

One ticket won last night's jackpot of $88 million and matched all six…sold in Seal Beach and will be worth $88 million. Business Wire, Yahoo Business, 1-5-04

An Ohio woman on Tuesday collected a $162 million lottery prize, saying the winning ticket was in her hands all along and had not been lost, as another woman had claimed. Reuters, 1-6-04

Even when one person does win, there are often competing claims to the money; husbands and wives demand half, work place associates claim a part, and then people who simply claim that their ticket was lost or stolen.

On Monday news leaked out that a woman had filed a police report saying she lost the ticket outside the store where it was purchased…was sure the ticket she lost when she dropped her purse was the winner. The disclosure prompted a number of people to descend on the area near the store to search for the supposedly missing piece of paper. Reuters, 1-6-04

January had a bit of each--a stolen ticket, a lost ticket and a divorce over a winning ticket, proving that winning is not always a matter of luck or necessarily lucky. The woman in Ohio who claimed to have lost her ticket expressed the desire that overwhelms people at times and challenges their integrity when she said: "I just wanted it so badly." She may have wanted it too badly; she doesn't get the money and may have to go to jail, and she is probably not the only one. A clerk in Chicago will get his chance at the judicial lottery it seems. And the couple with the Valentine's Day ticket won the divorce lottery. Not what any of them bargained for when they lusted after the big prize. Several winners had trouble this month, but the biggest lottery winner yet getting arrested for DUI proves winning the lottery may not solve all of your problems.

At first, the $175,000 Mega Millions lottery ticket seemed like a stroke of New Year's Eve luck. But a week later, the ticket is missing, lottery officials have put a freeze on payments and a longtime clerk at the Chicago Board Options Exchange has been charged with felony theft, accused of stealing the ticket from a group of traders. Jon Yates/Jeff Coen, Chicago Tribune, 1-8-04

Elecia Battle.who said she lost the winning ticket for a $162 million lottery prize was charged on Friday with filing a false police report. Reuters, 1-9-04

Elecia Battle…pleaded no contest to the charge…and was found guilty…carries a possible penalty of 30 days to six months in jail and a $1,000 fine. Associated Press, 1-15-04

Connie Parker, 74, handed her dying ex-husband about $1.8 million in order to avoid a nasty divorce trial, sources said. …bought the lucky ticket while shopping for a Valentine's Day card for her husband…She won about $7.3 million after taxes. A frail-looking Kenneth Parker, 77, who was pushed into the courtroom in a wheelchair with an oxygen tank in tow, had sued for half her winnings, claiming it was his $20 bill she used to buy the ticket. Richard Weir, New York Daily News, 1-21-04

The man who won the largest single lottery jackpot in U.S. history is in trouble again. Jack Whittaker, who hit the $314.9 million Powerball jackpot on Christmas 2002, was charged Sunday with drunk driving - just weeks after being charged with trying to assault a bar manager. Associated Press, Yahoo Business, 1-28-04

Management of lotteries has not been without a bit of controversy either. Several states are auditing their lottery at the insistence of members of the state legislature. Colorado, Oregon and Minnesota are three states that want a better look at the way the lotteries are managed. Two state lottery directors resigned over the pressure, but the director of the Minnesota lottery took it most personally.

The longtime director of the Minnesota State Lottery died Tuesday, apparently by suicide, a day after meeting with legislative auditors examining the lottery's operations. Cmdr. Scott Malinosky of the Washington County Sheriff's Office said it appeared that George R. Andersen, 53, killed himself, probably with a knife. A note was recovered, but Malinosky would not describe it. Associated Press, Duluth News Tribune, 1-28-04

There is at least one person who took winning with a bit of humor. Phil Lee used his winning as inspiration to make a statement about his life after he is gone. And Tennessee's lottery got off the ground this month, selling $10 million in tickets the first day, and $41 million the first week.

Phil Lee…says he'll use some of the [what] he won in the lottery to buy a less than reverent tombstone…will read, "Been there, done that" and show "a champagne glass, a royal flush, a slot machine, a nude woman facing backwards and a stick of dynamite with a lit fuse." Associated Press, San Francisco Chronicle, 1-29-04

Some things get more attention than others--Pete Rose, his gambling and apology for example. At times, the story rivals Iraq and the presidential campaign for media attention. The Rose story has dominated the sporting news all month. All the major newspapers in the country, the sports publications and sports-talk radio have all had a go at Pete. Everyone seems to have an opinion. Some think he is a husker and a liar, some think he is not. Some think he is contrite, has apologized and therefore should be forgiven; some think not. Some believe he is a true great hall-of-famer and should be allowed back into baseball; some think not. The people at Foxwoods Casino think he should be there, signing books and entertaining high-rollers.

Pete Rose is coming to an eastern Connecticut casino to sign his recently published book and dine with high-rollers. …Foxwoods spokesman Bruce MacDonald said Rose has made several paid appearances at Foxwoods and that as many as 300 gamblers have been invited to attend. "We're getting a strong response," MacDonald said. "Our players are interested in what Pete has to say. I think he'll get a good reception." Associated Press, Hartford Courant, 1-23-04

I have no opinion on Pete Rose, except to say the longer Pete Rose's gambling stays in the headlines the more long-term damage it will do to the industry. The industry has to be content with legislatures trying to tax it nearly to death and governors, mayors and legislators that would own it. Gaming does not need a three-ring circus clown making it look foolish and corrupting.