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

31 August 2003

The summer season is officially over; it is almost time for our annual pilgrimage to Mecca. Be prepared to be inundated by thousands of new products. IGT alone promises 300 new games, Aristocrat is bringing enough new product to "gain market share in Nevada," and others, like Alliance, Atronics, Sigma, Mikohn and their ilk, will try and match the big guys, and dozens of smaller manufacturers will be trying their hardest to catch your eye with their version of the exciting slot machine. The recall election in California is only a month away, and December is just around the corner after that.

August was a good month for the economy. The stock market closed the month at 9,415, its highest in 14 months. The tax cuts are in effect, and there is the smell of cash in the air. Consumer confidence and spending was up. Housing, productivity, large retailers, unemployment and holiday travel statistics all indicate the recession might have indeed receded.

America's consumers, aided by tax cuts that left them with extra cash, ratcheted up their spending in July by the largest amount in four months, a strong signal the economy is gaining momentum. The Commerce Department reported Friday that consumer spending increased by 0.8 percent in July, on top of a brisk 0.6 percent rise the month before. Jeannine Aversa, Associated Press, Yahoo, 8-29-03

The New York-based Conference Board said its Consumer Confidence Index rose to 81.3 in August, up 4.3 points from a revised 77.0 in July. Analysts had expected a reading of 79.6 this month. "The welcome bounce back in confidence this month was entirely due to consumers' optimism about the future," said Lynn Franco, director of the group's consumer research center. Meg Richards, Associated Press, Yahoo, 8-26-03

Home construction jumped in July to the highest level in more than 17 years as the red-hot housing market showed no signs of slowing down even as mortgage rates began to rise. …The gain, which lifted housing starts to the highest level since April 1986, was much better than expected. Martin Crutsinger, Associated Press, Yahoo, 8-19-03

Productivity — the amount that an employee produces per hour of work — grew at an annual rate of 5.7 percent in the April to June quarter, the best showing since the third quarter of 2002. Jeannine Aversa, Associated Press, Yahoo, 8-7-03

… New applications for jobless benefits fell by a seasonally adjusted 3,000 to a six-month low of 390,000 for the work week. Jeannine Aversa, Associated Press, Yahoo, 8-7-03

… (The) nation's largest retailers finally got a break in July as warm weather and heavy discounting helped lift sales above expectations for many merchants, even the struggling department store sector. Jeannine Aversa, Associated Press, Yahoo, 8-7-03

The number of U.S. travelers jumping into their cars this Labor Day holiday weekend is expected to be the highest in eight years, as more Americans favor driving over flying, a travel group said on Tuesday. Approximately 28.2 million people plan to drive 50 miles or more this weekend, up 2.2 percent from last year to the highest level since 1995, according to a survey by the American Automobile Association (AAA). Reuters, Yahoo, 8-26-03

There was a bit of bad news in the holiday travel reports. Fewer people are flying. Good news for all gaming jurisdictions that rely on a regional customer base, not so good news for Las Vegas. However, even the regional customers will have a bit less money to spend as gas prices are at an all-time high.

…The number of people planning to travel by plane for the Labor Day holiday is down 2.6 percent from last year to 3.7 million, according to AAA. Reuters, Yahoo, 8-26-03

The shortages pushed average retail gasoline prices up more than 15 cents a gallon nationally, the biggest two-week hike since the Lundberg Survey began keeping records 50 years ago. The survey of 8,000 service stations on Friday showed an average of all grades of gasoline reached $1.7484 a gallon, just short of the survey's all-time high weighted average of $1.7608 set last March 21, analyst Trilby Lundberg said Sunday. msnbc.com, 8-25-03

The biggest story of the month, at least for the casinos in Ontario, was the "GREAT BLACKOUT OF 'O3." The direct impact on casinos in the blackout area was slight, although Detroit casinos were closed for two days. More important, was the indirect impact. Millions of people's normal routine, including the ability to get to work and travel, was disrupted. The Ontario casinos suffered a more direct impact. The province of Ontario considered casinos to be "not critical" and closed Casino Windsor, Casino Niagara, five charity casinos and slots at racetracks. Casino Niagara was estimated to have lost $2 million a day; Casino Windsor lost money and market share in the Detroit area, forcing the casino to increase incentives. This has been a difficult time for Casino Windsor. September 11th, SARS, the Iraqi War and the blackout have each taken a toll on the casino.

The slot machines beeped and clanged. The blackjack dealers dealt their cards. The air conditioning was on. But that was little consolation to hundreds of gamblers stranded at casinos Thursday after their New York City-bound buses were delayed or canceled due to blackouts across the Northeast. Limited bus service started after 9 p.m., but the trip remained difficult. Associated Press, CNN News, 8-15-03

… "We got a big increase in business as soon as the power went out," Laura Yednorowicz, hotel concierge at the Mohegan Sun, said. "We were pretty close to sold out to begin with and then we got a whole bunch of calls, everybody trying to get out of the city." The Mohegan Sun was in an area that experienced a power outage, but it was not affected because it has a generator. "We didn't feel the effects of the blackout at all," said Mohegan Sun spokesman Severio Mancini. Jenny Bone Miller, Norwich Bulletin, 8-15-03

The power outage that swept the northeastern part of the country on Thursday also affected Las Vegas, for those who were either trying to leave town or get here. Six of the 13 flights scheduled to arrive at McCarran International Airport from the affected cities after 1 p.m. were either delayed or cancelled, airport spokeswoman Linda Healey said shortly after 5 p.m., when the crisis looked to be waning. Las Vegas Review-Journal, 8-15-03

Banks raced to open branches and put the "automatic" back into automatic teller machines affected by the northeast U.S. power outage, but New York banking was slow to recover on Friday, a day many workers get paid. Detroit was also a major problem area. Hundreds of bank branches were closed after Detroit Mayor Kwame Kilpatrick and DTE Energy Co. officials urged workers sweltering from a lack of power and water to stay home. None of the banks contacted by Reuters said they lost data or records in the blackout. Chris Sanders and Jonathan Stempel, Reuters, Yahoo Business, 8-15-03

Casino Windsor, host to more than 10,000 U.S. gamblers a day, will sweeten its rebates and discounts in September to lure back gamblers after a massive blackout forced it to close for nearly a week. …All four area gambling halls closed after the Aug. 14 power outage darkened homes and businesses in eight states and parts of Canada. But while Detroit's three casinos reopened Aug. 16, Casino Windsor didn't get approval to reopen from its civic leaders until Aug. 21, because it was considered a non-essential business. …The property saw its revenues drop 7 percent to $97 million (U.S. dollars). …That $97 million dropped Casino Windsor from first in market share in early 2003 to third in the latest three-month period. The key reasons: SARS, the Iraq war's perceived impact on border crossings and the narrowing gap between U.S. and Canadian dollars. Becky Yerak, Detroit News, 8-25-03

In a broad sense, the gaming industry is alive and well. The annual gaming report by Christiansen Capital Advisors is out, and gaming revenues increased 5.3 percent in 2002. Considering the state of the economy, that is good news. The bad news is found in the new taxes passed in 2003 to take advantage of the growth of the industry.  Illinois' action in particular indicate a very dangerous trend, one that even within the state is still causing a great deal of consternation and disagreement about the affect of increased taxation in general. Cutbacks in operating hours, reduced staff and vulnerability to competition from across a state line are the results thus far.  Some insist that reduced, not increased, tax revenues are the natural outcome of the Illinois policy of increasing tax rates.

Gamblers lost $68.7 billion at casinos, tracks, lottery outlets, legal sports books, bingo halls, charity gaming halls and card rooms in the United States last year. That's an increase of 5.3 percent over the previous year, according to the annual Gross Annual Wager compiled by Christiansen Capital Advisors and published in this month's issue of International Gaming & Wagering Business magazine. Commercial casinos won $28.1 billion, up 3.1 percent. Indian casinos won $14.2 billion, up 11.5 percent. Joe Weinert, Press of Atlantic City, 8-18-03

Illinois casinos already were losing gamblers to Indiana when new state taxes went into effect last month. Now gamblers say the added costs are giving them an extra push across the Indiana state line. Monday was when the Joliet casino began collecting a $5 general admission fee to offset the new state taxes that take as much as 70 percent of a casino's receipts. …In the fiscal year ending June 30, patronage at four Illinois casinos – one each in Elgin and Aurora and two in Joliet – shrank 5.7 percent to 10.5 million visitors while five casinos in northwest Indiana attracted 16.2 percent more people, or 12.9 million visitors. Las Vegas Review-Journal, 8-4-03

An out-of-session meeting of the Illinois House Gaming Committee today will try to determine who is crying wolf on the state's increased gambling taxes: the governor or the riverboat gambling industry. "I want to establish once and for all if (the governor) is right or not right," said Rep. Lou Lang, the committee's chairman. Mary Massingale, State Journal-Register, 9-2-03

More than a year ago, lawmakers increased gambling taxes to collect an additional $135 million – but garnered about $114.7 million. "Every month since October 2002, we've had lower revenues than the year before," said Tom Swoik of the Illinois Casino Gaming Association. Mary Massingale, State Journal-Register, 9-2-03

Overall revenues for the seven casinos owned by publicly traded companies are down $22.3 million – or 5.4 percent – compared with a year ago, according to figures provided by Deutsche Bank Securities on Wall Street. Mary Massingale, State Journal-Register, 9-2-03

 "They're all pretty horrible, and they're all tax-related," said Eric Hausler. "This is the worst year-to-year decline of any market in the country." Mary Massingale, State Journal-Register, 9-2-03

Technology continues to make the news. EZ Pay is leading the charge to eliminate coins from slot machines. Whatever the pros or cons of the issue, the process is clearly gaining steam and will be an accomplished fact sooner than you think. In Canada, a new use of technology – facial recognition systems to keep out addicts and crooks – is 20 years late, but George Orwell would recognize his vision in Manitoba casinos.

Beau Rivage is shuffling about 25 people out of its slot department because of changing technology and offering them other jobs in the Biloxi casino resort. This summer, the casino converted all of its 2,263 slot machines to EZ Pay machines, which instead of coins dispense printed receipts redeemable for cash. This has reduced the amount of work for the 277 slot employees, said Mary Cracchiolo, a spokeswoman for Beau Rivage. Timothy Boone, Biloxi Sun Herald, 8-5-03

Prodded by recent legal action against casinos for failing to keep out gambling addicts, casino owners across Canada are starting to buy facial-recognition systems that will photograph patrons and automatically identify unwelcome guests. "It's a huge revolution," said Maurits Vander Cruyssen, a casino security consultant and an avid booster of the technology. "Before Christmas this year, I can see almost every casino (in Canada) going from videotape to these digital systems." The Manitoba Lotteries Corporation said this week that it has allocated an unspecified amount of money to install facial-recognition technology in the Province's two publicly owned casinos. Graeme Smith, Globe Technology, 8-6-03

Do you have Internet gambling figured out yet? It is coming. It is here. It is legal. It is illegal. It is everywhere. Who plays? Who doesn't? Christiansen Capital Advisors estimated the online win at $4 billion, up 33.4 percent.

Think You Know Who's Gambling Online?  Based on the responses to a voluntary survey of 2008 active customers and compiled in a 33-page report, "The Online Casino Player: A Comprehensive Profile" paints an unprecedented portrait of the typical online casino player that's strikingly free of the negative images that, until now, have been freely attributed to this fledgling industry and relatively unchallenged. Among the revelations included in the report are: Regardless of gender, the typical online casino player is most likely to be a mature, well-educated and solidly middle class head of household. PRNewswire, Yahoo Business, 8-7-03

…That's how one Internet gambling addict described his predicament recently to Arnie Wexler, who runs a national hotline for problem gamblers. Wexler, who promises confidentiality to callers, is among the counselors dealing with a rapid increase in gambling addictions in teenagers and college students. They blame the addictive behavior on the growing accessibility of gambling Web sites – 25 in 1997, roughly 1,800 today. …At the Algamus Recovery Center in Anna Maria, Fla., director Rick Benson says that the treatment facility for gambling addicts has seen a 25% increase in Internet-related cases in the last two years. Benson says the majority are white, college-educated males, "with some high level of competitive sports participation in their background." Tom Weir, USA Today, 8-22-03

Who is responsible? A couple in California says banks and credit card companies. A court in North Dakota says the player is breaking the law; players don't agree.

A California couple that lost more than $100,000 by gambling online sues a host of credit card companies and banks, claiming the businesses shouldn't have processed their wagers. They also sued banks that issued the cards, including retailers National Bank and Citibank, and companies they said electronically transferred funds for some of their bets, including Western Union Holdings. Business Week, 8-12-03

A former Harwood man has pleaded guilty to placing sports bets over the Internet, in what one gambling law specialist says is a rare case. Jeffrey Trauman pleaded guilty to the misdemeanor charge in East Central District Court in Fargo on Monday. Judge Norman Backes gave him a one-year deferred sentence and fined him $500. Las Vegas Sun, 8-12-03

* The vast majority of both men and women online casino players say they do so for "entertainment / fun," in their "free" time from their own computers. While men say they prefer to play blackjack and women prefer slots, neither feel their favorite online activity is illegal or unethical and are highly aware of the time and money they spend online. PRNewswire, Yahoo Business, 8-7-03

There is a trend here, but I cannot see what it is. Internet gaming is not legal in the United States, but not always clearly illegal. Regular, everyday people routinely play online.  Internet gaming sites are advertised everywhere on the Internet and even in the traditional media. If it is illegal to play, it seems to be legal to advertise to people who cannot play. Only Colorado gaming regulators so far have seen the irony and taken steps to stop local radio advertising for Internet gaming. Whatever the trend, the facts seem clear: Internet gambling exists in the United States and continues to grow.

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.
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.