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Best of Ken Adams

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

11 August 2006

The stock market raced toward record highs, but then got dizzy at the heights and fell back - way back. Gaming stocks did very much the same thing - and, as they say on the Street, the investors took their profits and sold their holdings.

Most of the major gaming companies tracked by Applied Analysis saw their average daily stock prices decrease during May, victims of profit-taking by investors worried that rising fuel costs might impact the spending habits of some casino patrons. The index closed up almost seven points, but without Las Vegas Sands, the index would have posted a 10-point decline…According to the index, the only other casino operator to post a gain in its average daily stock price during May was Harrah's Entertainment, at $79.60, up 0.7 percent. The other operators had percent decreases ranging from 1.3 percent (MGM Mirage) to 6.7 percent (Boyd Gaming Corp.). Local gaming giant Station Casinos saw its average daily stock price fall 3.7 percent from April. Howard Stutz, Gaming Wire, Las Vegas Review-Journal, 6-1-06

Meanwhile, gaming revenues continued to grow for the most part, even if at a somewhat slower pace; surprisingly, Foxwoods and Mohegan Sun are even beginning to show signs of maturing as the win dropped slightly. Other than that, Indiana decreased very slightly and Mississippi is still showing the effects of Katrina, with only three casinos operating in Biloxi. Atlantic City is doing well and probably has a year before it begins to show the effects of slot machines in Pennsylvania as that process drags along, mired in politics and bureaucracy.

Atlantic City: April gaming revenue rose 4% to $440.2 million. Alan R. Woinski, Gaming Industry Weekly Report, 5-15-06

Colorado: April casino revenue increased to $65.8 million, up 5.8 percent from 2005. Andy Voung, Denver Post, 5-18-06

Detroit: April revenues rose 2.1% to $106 million. Alan R. Woinski, Gaming Industry Weekly Report, 5-22-06

Connecticut: April slot win fell 2.2% to $144 million. Alan R. Woinski, Gaming Industry Weekly Report, 5-22-06

Illinois: April Gaming revenues rose 5.7% to $160.6 million in March. Alan R. Woinski, Gaming Industry Weekly Report, 5-15-06

Indiana: April gaming revenues were down 0.6% to $210.9 million. Alan R. Woinski, Gaming Industry Weekly Report, 5-15-06

Iowa: April gaming revenues were up 9.3% to $102.6 million. Racetrack revenues were up 21.9%. Alan R. Woinski, Gaming Industry Weekly Report, 5-15-06

Louisiana's casinos won $213.9 million compared with $189.3 million in April 2005. Associated Press, New Orleans Times-Picayune, 5-16-06

Mississippi: April gaming revenues decreased 11.6% to $196 million. Alan R. Woinski, Gaming Industry Weekly Report, 5-29-06

Missouri's April revenues were up 0.3% to $130.7 million. Alan R. Woinski, Gaming Industry Weekly Report, 5-15-06

Nevada's March casino win rose 3.3% to $1.03 billion. Howard Stutz, Gaming Wire, Las Vegas Review-Journal, 5-11-06

If the rest of the industry's stocks were taking a hit, the Las Vegas Sands was not. The company got some very good news during May; it was chosen for the first of only two licenses for Singapore. Within two days, nine different lenders expressed interest in financing the deal. The Sands was pleased. COO Bill Weidner said they had the cash, but the equity was simply too valuable. And then a day later, the Sands announced financing for Macau - said to be the largest non-governmental financial backing in China. And finally, as further illustration of my penetrating analytical ability, a personal announcement: I sold my Sands stock two weeks earlier at $53 dollars, just $20 less than what it hit after the announcement.

Las Vegas Sands Corp., owner of The Venetian in Nevada, won a hotly contested license Friday to build Singapore's first casino, which could be the world's costliest casino resort project by the time it opens in 2009. Shares of Las Vegas Sands climbed $5.96, or 9.4 percent, to close at $69.63 on the New York Stock Exchange, near its 52-week high of $73.14. Gillian Wong, Associated Press, 5-26-06

Las Vegas Sands Corp. received proposals from at least nine banks to provide a US$1bil, one-year loan as the company plans financing to fund the development of Singapore's first casino-resort. "We will pick one of those banks to provide the loan in order to bridge ourselves and give ourselves time to figure out exactly which market is the most efficient to tap for the funding,' Bill Weidner, chief operating officer at Las Vegas Sands, said here yesterday. "We could use our own cash. We don't necessarily want to sell shares because we think our equity is too valuable.' Asian Star, 6-1-06

Las Vegas Sands Corp. has secured a $2.5 billion financing package to fund its gaming projects in Macau. Analysts consider the loan, which comes from six different banks, to be the largest single credit facility ever given to a non-government entity in China. The loaned money will be used to fund an expansion of the casino at the existing Sands Macau and for construction of the $3 billion Venetian Macau, now under construction on Cotai, which is just minutes south of Macau by car. The Sands expansion is expected to finish this year; the Venetian Macau is scheduled to open in 2007. Howard Stutz, Gaming Wire, Las Vegas Review-Journal, 6-2-06

The success of the Sands in Asia has excited the envy of more than one gaming operator. Harrah's is doing whatever it can to get into the game, but this has proven more difficult than in American jurisdictions. Steve Wynn is supposed to open in September and that too will excite the industry. A small, if there is such a thing in regulation, side effect surfaced this month. Regulators from New Jersey want to spend lots of time traveling around the MGM empire and traveling to China to assure themselves that MGM is not being infected by the father of their Macau partner, Pansy Ho. It is possible, not probable, but possible, that MGM would have to choose between Macau and Atlantic City. And then if the choice were Macau, Nevada might force the same choice, as might other jurisdictions. As good as Macau appears, it isn't likely that it is worth more than all of the American jurisdictions combined. This investigation probably won't turn out to be that important, but it certainly has the potential.

New Jersey investigators are preparing to take sworn statements from MGM Mirage executives about their $1 billion casino project in Macau, following two trips there to meet with American, Chinese and local gaming regulators about the deal…New Jersey regulators launched a probe into the partnership last year because MGM Mirage is part owner of Borgata casino in Atlantic City. Depending on the outcome, the New Jersey Casino Control Commission could force the company to sever ties with Pansy Ho. As part of the probe, New Jersey Gaming Enforcement Director Thomas Auriemma and two others traveled to Macau in March, when they met with U.S., Chinese and local regulators to smooth the way for a team of investigators that followed a month later. New Jersey investigators have also traveled to Nevada several times since last year to meet with MGM executives and gather documents related to the deal, according to two officials with knowledge of the probe. They also seized a computer from the company's Nevada office so forensic specialists could search its hard drive and retrieve any e-mails related to Macau. Rick Hepp And Joe Donohue, Star-Ledger, 5-26-06

Two states have provided more entertainment in the last two years than all of the rest of the gaming states combined; Illinois and Pennsylvania have been good enough to merit a Broadway musical. Illinois' songs are very different from Pennsylvania's. In Illinois the story is sometimes the highest taxes in the nation and sometimes the first casino owned by a city as the mayor of Chicago argued for keeping all of the revenue - far exceeding the governor's greed in wanting over 70 percent of the revenue in taxes. There has also been the license farce (okay, that qualifies as a mixed metaphor, a farce may be theatre, but it wasn't musical), the license that never was; though issued, it was withdrawn, bid out, but never awarded, all the while mired in litigation and criminal investigation.

The latest song as introduced by the Illinois governor is privatizing the lottery by selling it to the highest bidder or maybe selling shares on Wall Street just like one of the gaming companies. I wonder if the Governor was drooling over the Las Vegas Sands stock the way I was? When pressed for the details of his plan, he said sharing his plan with his political opposition would be like a football coach sharing his game plan with the opposing team. Anyway, casting for the production may begin soon; I can't wait to see if Al Capone comes back from the dead to play one of the leading characters.

Illinois aims to raise around $10bn from a lease or initial public offering of its state-run lottery in what would be the first complete privatization of a public gaming license in the US. The plan outlined on Tuesday by Governor Rod Blagojevich would see the funds ring-fenced to boost education spending, and underpin the Democratic incumbent's pledge not to raise taxes as he faces a tough re-election battle in November. The IPO is one of three options proposed for the lottery, which was set up in 1975 to fund education programmes, and is expected to yield $650m for schools in the current state budget. The plan could also see a long-term lease of the licence, or a hybrid lease and share-sale to retail and institutional investors. Financial Times, 5-23-06

The next time you read that a new idea is the way of the future think of this story, as today's enthusiasm often becomes tomorrow's boredom. Atlantic City has never been known for much creativity; regulation is so restrictive that all of the casinos are pretty much the same, at least until Borgota. Bally's tried to break out of the mode and created a "themed" casino. It wasn't exactly a Mirage or New York New York, or Paris, but for Atlantic City it was adventurous: the Wild Wild West. The theme has run its course, and it didn't change Atlantic City; it didn't change anything. A shame they didn't ask some Nevada operators who tried the theme and knew its limitations and its life cycle.

The Wild Wild West represented the future of the gaming scene when it debuted as the town's first Las Vegas-style themed casino. Its whimsical surroundings were a welcome diversion from the drab casino floors prevalent in those days. Now, nine years later, the cowboy concept has grown a bit stale - a fatal flaw in the fast-changing casino industry. Gamblers flocked to the Wild Wild West Casino like prospectors rushing to the gold hills of California in 1849. They sought riches at them thar slot machines and poker tables, but were also attracted by an extravagant re-creation of the Old West in what was billed as Atlantic City's first "themed" casino. That was 1997, when the $110 million Bonanza-like expansion of Bally's Atlantic City opened to rave reviews. But now, the Wild Wild West theme seems as tired as the mechanical old pack mule that greets visitors arriving at the casino's Boardwalk entrance. Like the real-life Old West before it, the Wild Wild West Casino could fade into history. Harrah's Entertainment Inc., which inherited the sprawling Bally's casino complex when it acquired Caesars Entertainment Inc. last year, may redevelop the Wild Wild West for a new hotel tower or other attractions. Donald Wittkowski, Atlantic City Press, 5-30-06

Most things are dependent on perspective, and that is as true in gaming as in any other business or activity. In Las Vegas an announcement of a new casino is hardly worth noticing unless it costs at least a billion dollars, covers hundreds of acres and employs thousands of workers. In Mississippi they expect you to spend at least $200 or $300 million to build a casino, onew which should employ hundreds of people and have nearly 2000 slot machines.

To be important in Iowa, however, you don't have to do quite as much to be worthy of note; spend a few million, hire a couple of hundred people, and if a new gas station, McDonald's and a Super 8 motel come to town, everyone is both happy and excited about the economic boom. The Wild Rose blooms in Iowa, and the casino officials proudly proclaim a premier gaming facility. It doesn't matter what it would be called in Nevada, Atlantic City or Mississippi; in Emmetsburg the Wild Rose is a big deal.

Along with the 340 employees that the casino brought in, there is a Super 8 being built, a new gas station and a McDonald's coming to Emmetsburg in response to the new gaming facility. Wild Rose Casino and Resort opened its doors for the first time Sunday to friends and family of the owners and their employees…Friends and family anxiously waited to enter the casino to be among the first to try out the slot machines and game tables. Casino supporters anticipated seeing growth in their community. "We hope it to be a good economic boost to Emmetsburg and Palo Alto County," said Kathy Fahy, marketing manager. "We also would like to bring more employment and to be a good community partner."… Wild Rose Casino and Resort is one of the premier gaming facilities in the Midwest, according to casino officials. The casino features 28,000 square feet of gambling luxuries that include 550 slot machines, 16 game tables, an Irish Pub, a full buffet, a 71-room hotel, a 68-spot RV park and a convention center. Ashley Van Alstine, Fort Dodge Messenger, 5-30-06

Do you ever play "what if"? A fun little game - not often productive if you look back at your life and imagine a more glorious one if you had just had John Kennedy's parents or Michael Jordan's genes - but a lot of fun when looking at history. For example, if it were not for a governor of Wyoming in 1935 who vetoed legislation to legalize casino gambling, Casper might be Las Vegas; and if Nevada had had a vetoing governor instead, Las Vegas might be Casper. Summers gambling in the world's capital of gambling would be more pleasant, but I can't imagine strolling along the strip in December. It didn't happen, but after 71 years Wyoming does have a black jack game, and the first night there were five players.

Gambling has had a checkered past in Wyoming dating back to the earliest parts of the 20th century. In 1935, the Legislature voted to legalize casino gambling, only to be rebuffed by Gov. Leslie Miller, who vetoed the measure. At about 10:30 Saturday morning, Wind River Casino table games manager Peggy Black and several security guards unhooked the chain encircling four tables that have become the center of attention here. With them were two fellow employees, wearing glistening tuxedo vests and carrying two white boxes -- each holding eight fresh decks of Gemaco playing cards. The tuxedoed dealers counted, shuffled and sorted the decks, and when the clock struck 11, five people filled all but one seat at Wyoming's only legal, blackjack table…Not since 1901, when gambling was prohibited in Wyoming were people allowed to double down on a game of blackjack. The Northern Arapaho tribe were granted the right to do so in part by a 1988 law that governs gaming on Indian lands. Cory Matteson, Casper Star-Tribune, 5-30-06

The stock market correction is most likely just a natural part of the dynamics of the market. The casino industry stock will have strong growth times again and even though continual revenue growth is not possible in every jurisdiction - in fact, some jurisdictions will experience the kind of decline that Reno has seen as new competition comes online (pun intended) - still the industry is healthy and growing. Two trends are unsettling. The first is the continued instability as represented this month by Illinois and the second is the New Jersey investigation into MGM Mirage. Gaming seems to be the only industry in which one state believes it can and should control the activities in another state through its regulatory control.

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.