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Gaming Stocks Take a Hit

NEW YORK --Gaming stocks took a hit Wednesday, in tandem with the broader stock market, as three of the biggest Las Vegas-based casino operators saw company shares drop by at least 5 percent.

Harrah's Entertainment shares lost 8.2 percent of their value Wednesday, closing at $44.70, down $4. MGM Mirage shares dropped 8.2 percent to $31.68, down $2.82, and Mandalay Resort Group shares fell 5.8 percent to $30.51, down $1.89.

The Standard & Poors Casinos and Gaming Index dropped 35.96 points Wednesday to close at 689.77, a 5 percent drop; the Bloomberg Las Vegas Index, a price-weighted list of companies based in the region, fell 7.26 to 147.54, a 4.7 percent decline.

The gaming decline outpaced the 2.9 percent drop Wednesday in the broader market as measured by the S&P 500, which fell 21.79 to close at 776.76.

Mandalay Resort shares were cut to ''neutral'' from ''overweight'' by J.P. Morgan Chase & Co., citing a reduction in daily rates by the Strip's largest owner of hotel rooms.

Also contributing to the sector-wide decline was riverboat operator Argosy Gaming Co., which announced Tuesday that its third-quarter profit missed estimates because of higher taxes and competition in the Illinois market, where it runs two riverboat casinos.

''Argosy is one of the largest and most visible riverboat companies, so their warning is taking down other riverboat owners,'' said JP Morgan casino analyst Harry Curtis. ''Mandalay Bay isn't showing very strong pricing power in October when the expectation is that they would, so that's taking down the Las Vegas stocks.''

Curtis said Mandalay was forced to discount rooms at its Las Vegas casinos, including Mandalay Bay and Luxor, because the company failed to predict the weak demand for travel around the anniversary of the Sept. 11 attacks, when people were reluctant to fly. MGM Mirage has been able to book more rooms to convention goers at higher rates than Mandalay, Curtis said.

Park Place Entertainment fared a bit better than its big Strip competitors Wednesday. Park Place shares dropped 2.4 percent to close at $6.40, but the mark was the company's lowest in the past year.

Locals casino operator Station Casinos' shares recorded a 4.8 percent drop, closing Wednesday at $16.18, down 82 cents.

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