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Best of Ken Adams

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Quick-takes: The month's trends in a glance – January 2006

11 March 2006

Except for Mississippi, and Mississippi is on its way back with three casinos opening in December, gaming is still showing growth. 2005 has been a good year for the gaming industry, if not a great year. The economy in general has had a good, if not a great year. The stock market is ending the year pretty much where it began the year. The Dow closed the year at 10717 down slightly from 10783 in December 2004. Unemployment is down; job creation, consumer confidence, retail spending and housing are all up, though housing is showing signs of finally slowing down. The cost of crude is down to the $60 per barrel range after hitting nearly $70 in September. However, airlines are struggling. Independence Airlines began 2006 announcing it was going out-of-business, and drastic price increases are predicted from most other airlines. The price of fuel is higher that last year, but travel does not seem to be impacted, yet, by the increased costs in fuel, airline tickets or hotel rates. An estimated 63 million people were expected to travel for Christmas or New Years, and Las Vegas is expecting record crowds -an estimated 300,000 for New Years Eve on the Strip.

Illinois November casino revenue rose 8.7% to $149 million. Alan R. Woinski, Gaming Industry Weekly Report, 12-12--05

Nevada casino gambling revenue rose 14.4 percent to $1.06 billion in October, driven by a 14.5 percent surge on the Las Vegas Strip. Reuters, 12-9-05

Atlantic City gaming revenue climbed 6.6 percent to $399.7 million for November…Eight of the 12 casinos posted gains for the month and five standouts had double-digit increases… Donald Wittkowski, Press of Atlantic City, 12-10-05

Louisiana's state-licensed casinos won $184.4 million from players in November, up from $167.1 million in November 2004. Associated Press, 12-13-05

Missouri's 11 casinos posted $126.1 million in revenues, up 6.2 percent. Rick Alm, Kansas City Star, 12-14-05

Mississippi gaming revenue declined 38.1% to $134.8 million in November from $217.9 million in November 2004. Bear Stearns, 12-20-05

Detroit November gaming revenues rose 7.2% to $100.2 million. Alan R. Woinski, Gaming Industry Weekly Report, 12-19--05

Iowa November gaming revenue rose 1.1% to $86.6 million. Alan R. Woinski, Gaming Industry Weekly Report, 12-19--05

Colorado…gaming industry reported…$59.6 million in November, an increase of 11.8 percent. Rocky Mountain News, 12-15-05

Indiana November Gaming revenues rose 4.7% to $193 million. Alan R. Woinski, Gaming Industry Weekly Report, 12-26--05

The country's second largest New Year's party (after New York - but how can you beat a 76-year old teenager and a 1000 pound crystal ball?) was on the Vegas Strip. Though buffeted by strong winds and rain, the party went on for some 300,000 partygoers, which is more than you can say for Reno or Tahoe. Reno had the smallest crowd in 20 years and Tahoe had half the people it expected. On New Years Eve on the west coast, it rained and snowed - then rained and snowed some more. That makes two years in a row that both Reno and Tahoe lost one of the best weekends of the year due to weather.

Neither wind nor rain nor the chance the Strip would skip its annual fireworks show kept scores of revelers from packing Las Vegas Valley streets and resorts for Saturday night's New Year's Eve bash. As many as 300,000 people were expected to line Las Vegas Boulevard -- which was closed to traffic from Russell Road to Sahara Avenue -- to welcome in 2006 with booze, bustle and bravado. Nearly 16,000 folks jammed downtown's Fremont Street Experience. Omar Sofradzija, Las Vegas Review-Journal, 1-2-06

Floods, torrential rain and snow gave way to a partly starry sky on New Year's Eve at Stateline in Lake Tahoe as tens of thousands of revelers swarmed Highway 50 to ring in 2006. A week of unusually inclement weather did not deter about 25,000 [50,000 had been predicted] people from their migration to the casino corridor…to join the biggest annual impromptu party at the lake. Amanda Fehd, Tahoe Daily Tribune, 1-2-06

Relatively tame crowds greeted the new year in the Reno-Tahoe area after the region's worst flooding since the New Year's Day 1997 flood, authorities said. In Reno, police estimate only 5,000 to 7,000 celebrants joined Mayor Bob Cashell in the countdown to 2006. Officers called it the smallest throng in nearly 20 years. "No one could get in and out because of road closures and floods everywhere," Reno police Sgt. Jack Munns said. Officials also attributed the smaller crowd to cancellation of the city's annual New Year's Eve fireworks show after the flooding. Associated Press, Reno Gazette-Journal, 1-2-06

But it could be worse. In California floods also dampened the day, and in New Mexico fires closed the doors. And look at what weather did to the Gulf Coast. Biloxi had only three casinos open, and New Orleans will have to wait another year to celebrate New Years.

The River Rock Casino in Geyserville, CA, closed down on New Year's Eve, having to postpone its specially planned $100,000 "Winner Wheel Celebration" after heavy rains fell from the sky, causing floods and the closing of two nearby bridges. At one point that night, the entire area lost power, causing the cancellation of several other parties as well. In our second casino-related natural disaster, grass fires broke out in Eastern New Mexico yesterday, causing the local fire department to evacuate the Black Gold Casino in Hobbs. Online Casino News, 1-2-06

Those with crystal balls (not the thousand pound ones, just the regular look in the future kind) are looking into the future and seeing good things for 2006. As it was for New Years, Las Vegas is the benchmark for gaming and the forecasters see good things on the horizon. Las Vegas is not the only good news; the Gulf Coast is going to start coming back, and Atlantic City is building to combat Pennsylvania.

I expect major Las Vegas business - especially big casino industry news -- to be the norm again in 2006, with some of the most significant events taking place during the first part of the year…One of the biggest -- and first -- major gaming stories of the year should be Bill Boyd's announcement of his company's plans to redevelop its prized 63-acre Stardust property on the north Strip…The World Market Center's impact on Las Vegas…twice-a-year expos will demonstrate the dramatic contribution the wholesale furniture shows will have on the Las Vegas Valley…Station Casinos plans to open Red Rock Resort in the first part of the year, and I expect the property to be a rousing success…Wynn Resorts opens its second branded Wynn hotel in Macau in September, and I expect the billion-dollar resort to immediately become the most successful American-owned casino in the Chinese enclave… One of the side effects of Wynn's competition for the biggest bettors with Strip titan MGM Mirage has been an evolving cooperative relationship with national casino goliath Harrah's Entertainment. Harrah's has only one super-premium property in Las Vegas, Caesars Palace, and Wynn has only his one property until his planned Encore resort opens next to Wynn Las Vegas in 2008. Both companies see MGM Mirage as their chief competitor and see the partnership as a logical tactic. Jeff Simpson, Las Vegas Sun, 1-2-06

The outlook for the gambling sector is favorable for 2006 based on reasonably strong consumer spending growth, solid advanced booking trends in Las Vegas, and limited room expansion, according to Fitch Ratings… regional markets such as Atlantic City and the Midwest are expected to show modest growth, while the Gulf Coast will undergo a period of significant redevelopment following Hurricanes Katrina and Rita, Fitch said. Overall, the largest gaming companies should be in a position to deliver strong margins and operating cash flow again next year. Business New Orleans, 12-6-05

Neither rain nor regulation appears to be holding back the sprawling gambling industry, casino lobbyist Walton Chalmers told tourism officials Monday in a "state of the industry" address. The loss of several Gulf Coast casinos to hurricane damage was a tragic setback in a year otherwise marked by huge profits, consolidation and domestic and overseas expansion, said Chalmers, the vice president of the American Gaming Association. Gross gambling revenues in the 445 commercial casinos in the United States increased 7 percent in 2004 to $29 billion. Mergers created three of the four largest gambling companies in the world. Surveys have found more than 90 percent of elected officials and civic leaders believe casinos in their communities have exceeded their expectations, Chalmers said in a speech at the annual Nevada Gov.'s Conference on Tourism. "Markets from Atlantic City to Kansas City are witnessing an increase in capital investment, creating more rooms and more amenities for an increasingly sophisticated clientele," he said. Regulators in Pennsylvania and Broward County, Fla., are expected to approve plans to introduce slot machines there this year, Chalmers said, and expansion into Asia - largely Macau and Singapore - promises to bring more success. Kathleen Hennessey, Associated Press, Las Vegas Sun, 12-13-05

The industry still has challenges, of course. In Washington there are still those that would like to punish the gaming industry even more than the hurricanes did. In Nevada a petition is afloat to triple gaming taxes. But, as they say, into every life a little rain must fall; tripling the gaming taxes in Nevada would be more than just a little rain - it would look more like the floods in Reno and would close many of the less profitable operations.

House Republicans decided Tuesday to stop casinos, massage parlors and liquor stores from cashing in on tax breaks for businesses in Gulf Coast communities ravaged by hurricanes…A House bill…fulfills the order for a special investment zone. It prohibits country clubs, casinos, hot tub facilities, liquor stores, massage parlors, private or commercial golf courses, racetracks and tanning parlors from using tax incentives special to the Gulf Coast. Mary Dalrymple, Associated Press, 12-6-05

A southern Nevada activist tried Tuesday to file an initiative petition to raise taxes on the state's largest casinos and use the revenue to pay single-family homeowner property tax bills …initiative petition to amend an existing Nevada law can't be filed with the secretary of state until Jan. 3. If he collects the necessary 83,184 signatures by Nov. 14, the measure would go to the 2007 Legislature. If it fails there, it would go to the voters in 2008…the proposal, which would increase the gambling tax on the biggest casinos from the current 6.75 percent to 18.25 percent and raise about $800 million in new revenue. Smaller clubs would be taxed at a 5.5 percent rate. Associated Press, Reno Gazette-Journal, 1-29-05

For the last couple of years I have included articles from around the country, Canada, Australia, and New Zealand about smoking regulations. The trend to regulate smoking to non-public, strictly personal and private space is constantly gaining in strength. The story is rarely a gaming story, except when casinos are included, and that, up to this time, is rare. Or when one group is included while another is excluded as in Washington State that includes all businesses, casinos included, but does do not include Indian casinos; in that case it is a competitive story. When all businesses are included, the arguments rage about the impact on casinos. Only California, where smoking is forbidden in bars (but not in Indian casinos), offers us any insight. It is said that business dropped immediately, but in time recovered, as people grew accustomed to the situation. We have no way of predicting the long-term impact on gaming in any jurisdiction when anti-smoking legislation is passed, but it is reasonably certain to have a major negative impact short-term. It is equally certain, if the trend continues, that most jurisdictions will pass some anti-smoking legislation in the near future. We can hope (and I am rabidly anti-smoking in my personal life) that most states will deal with it as New Jersey has and exclude casinos, or allow, as some counties in New York have, exceptions to certain types of businesses. The American Gaming Association is making it a focus of the organization for next year.

The Oneida Indian Nation has asked Oneida County for a waiver from the state's smoking law at Turning Stone Resort and Casino, saying the nation already has spent "several million dollars" on an air-cleaning system. The request comes in response to a smoking fine issued by the county last month against Turning Stone. The county has granted more than 30 waivers to businesses to allow some smoking, said Raymond Bara, an assistant county attorney who represents the county Health Department. Waivers were granted for two basic reasons: if the business lost money after the smoking ban went into effect in July 2003; or if the business had invested in special smoking rooms or air-handling systems before the ban went into effect. Turning Stone should get a waiver for both of those reasons, wrote nation lawyer Peter Carmen in a seven-page letter to the county Health Department. Carmen said the resort would lose business if smoking were banned at Turning Stone. Glenn Coin, Syracuse Post-Standard, 12-21-05

One of the key issues the American Gaming Association will tackle next year will be fighting initiatives across the country that would ban smoking in casinos. The association's chief executive, Frank Fahrenkopf, said the industry is "tremendously concerned" about the proliferation of anti-smoking petitions and other measures. Smoking bans hurt business for casinos because some gamblers prefer to smoke, Fahrenkopf said. As an alternative, the American Gaming Association is pushing casino members to adopt improved air filtration systems that can suck up smoke and blow in fresh air. The association is working with the American Society of Heating, Refrigerating and Air Conditioning Engineers to create a "best practices" air filtration standard that casinos can follow, Fahrenkopf said. Liz Benston, Las Vegas Sun, 12-21-05

Problem gambling is going to get more attention, not because it is a new trend, but rather because more people are paying attention. The industry has started to take more of a leading role, and if for no other reason than survival, it should take a larger part. More research is needed as is more funding for research and for treatment. There have been a couple of interesting reports of late about causes, diagnoses and treatment. We haven't found a solution, but we are moving from the polarized debates of the 1980's and 1990's to a more serious one - one that recognizes the problems and seeks to find remedies. Iowa is trying a unique treatment; put yourself on the banned list and you cannot collect winnings even if you play and win.

More than 80 percent of the U.S. population gambles at some time in their lives. It might be the lottery, bingo or poker. Most never need treatment for problem gambling, but others lose control and lose their houses or cars and damage family relationships as a result of compulsive gambling. Little is known about why people gamble and how to predict who is likely to become a pathological gambler, but researchers at Washington University in St. Louis have developed a diagnostic tool for identifying pathological gambling disorder, and they're beginning to learn who is at risk and what causes the problems. Investigators from the Department of Psychiatry in the School of Medicine and the George Warren Brown School of Social Work have developed a tool known as the Gambling Assessment Module (GAM)© that can help determine whether a person is a pathological gambler and what particular type of gambling triggers problems for that individual. Phys Org, 12-6-05

For problem gamblers dealing with an addiction to slots or blackjack, help may soon come in the form of a pill. Used for years to treat other addictions such as alcohol and heroin, drugs could become more available in the future to effectively treat compulsive gamblers based on some early successes and consistent results in drug experiments. That's according to Dr. Jon Grant, a leading researcher in the field of drug and addiction research. He revealed the results of a soon-to-be-published study at a gambling addiction conference in Las Vegas last week. Liz Benston, Las Vegas Sun, 12-13-05

The Iowa Lottery voted today to permit gambling addicts to voluntarily sign restrictions that will prevent them from collecting big cash prizes. Under the new rules, people who agreed to "self bans" would be prohibited from entering the lottery's five regional offices. Such a restriction means they can still collect prizes under $600 while playing games at Iowa Lottery retailers, but they can't obtain pay-offs on larger cash prizes, such as Powerball and Hot Lotto jackpots. "If somebody is willing to sign this and they understand they can't win and they can't get a refund of the products they've purchased, then what's the use in playing? Therein lies the deterrent," said Lottery Board member Tim Clausen, a Sioux City lawyer. The Iowa Lottery is believed to be the first lottery in the United States to adopt such a ban, said Iowa Lottery Vice President Mary Neubauer. William Petroski, Des Moines Register, 12-6-05

Kerry Packer died on December 26, 2005; he was a legend in the casino world. In one year it was reported that he played and lost $25-30 million dollars - in Vegas he won and destroyed the state's win for the month (a year earlier he had lost an equal amount on the Strip); later that year he lost it back in London - making their year. He liked casinos so much he bought one - gaming accounts for 40% of the revenue of PBL. He and Ho (not the uncle - but Stanley, you know the one whose daughter is in partnership with MGM, but is outside the influence of her father) looked like they were going to change the face of gaming in Asia - a deal that unwound within two weeks of his death.

Packer had some advantages and disadvantages the rest of the world does not have. He was born rich, but not as rich as when he died - the richest Australian - 94th richest person in the world. He was also born with a learning disability, dyslexia, and contacted polio as a child. He was also declared clinically dead in 1990 and was revived by a defibrillator. He later bought one for every ambulance in Australia - dubbed the Packer Whacker by the popular culture. Whatever he had or did not have, he made more out of his life than most of us do.

He will be missed by many and not just for his play in the casinos of the world. Packer is much loved in many places besides the strip. In sports, particularly cricket, his is a legend also. His impact on sports was felt not only in Australia, but also in India and Pakistan (and one would suspect in England). Packer has been one of the major forces in the news media for the last 20 years. He was a force in Australia, in sports and in gaming. People with that much drive and intellect are very rare in the world and very hard to replace. And certainly for Las Vegas and London, it will be a long time before a player comes along with the same flare - and bankroll.

One of the best gambling legends about Kerry Packer is of him facing off against a Texas oilman in Las Vegas. The Texan, apparently angered by the noise Packer's entourage was making at baccarat, boasted he was worth $US100 million ($A137 million). "Toss you for it," was Mr Packer's reported reply. The media magnate's gambling exploits are hard to verify, but he admitted to enjoying a bet and was known for his hefty tips - $125,000 to a cocktail waitress to help pay off her mortgage. Mr Packer was known as a hit-run "whale", those big spenders who splurge millions quickly at casinos, who play baccarat and blackjack while also engineering some memorable plunges on horses. "It'll (his death) be huge news here because he was a high-roller," said Jeffrey Compton, gaming analyst for Las Vegas-based Compton Dancer Consulting. Mr Packer was almost a sign of success for casinos. "If Kerry Packer visits your casino, you're on the A-list," Mr Compton said yesterday. Liam Walsh, Courier-Mail, 12-26-05

Mr. Packer was sent to boarding school at the age of five but a year later developed poliomyelitis or infantile paralysis. He spent nine months immobilized in an iron lung and by the time he returned to school at the age of nine, he was way behind his classmates. Further disadvantaged by his dyslexia, Mr. Packer achieved more on the sporting fields of Cranbrook and Geelong Grammar than in the schoolroom. "My life was sport. I was academically stupid. My method of surviving through school and those sorts of things was sport," he said. ABC News Online, 12-27-05

It is difficult to predict what will happen tomorrow or next week, much less next year. However, the gaming industry does appear to be on solid ground - barring of course another major disaster or terrorist attack - for growth. Pennsylvania and Florida should have some slots operating by the end of the year; Atlantic City will continue to improve itself; the Gulf Coast, particularly Biloxi, will be rebuilding and be offering a much improved product; the permanent casinos in Detroit should be well on their way to completion by the end of 2006, and even New York should be closer to the casino dream world promised by the governor in the days immediately after the attacks of September 11, 2001. Macau, Singapore, Europe (but probably not the UK this year - like washing your car before a rain, maybe if I say they won't - they will, it is worth a try!) and maybe Thailand, Taipei and Japan are all growth opportunities for American companies and investors.

There are some causes for concern. Congress is knee deep in the Abramoff investigation. That investigation will have some impact on gaming; the question now is simply what? Congress is also investigating Indian gaming in general and holding hearings on IGRA and that process too is guaranteed to have some impact on gaming. And then there are the initiatives, such as the tax increase initiative in Nevada, that are always a threat.

In my opinion, the good news outweighs the bad. 2006, from these early days of January, looks like it is going to be a good year for gaming - not a great year, just a good year.

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.