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Quick-takes: The month's trends in a glance - October 2004

30 November 2004

October gave us the annual gaming trade show - the Global Gaming Expo 2004, and an intense, expensive and often contentious month of political campaigning. Gaming was on the ballot in six states, as a local option or advisory vote in several more, and was part of the platform and debate in many more states. The stock market seemed to be holding its breath waiting to see who would be President. September was the end of a quarter and many gaming companies reported results in October. It was a good quarter for the industry in general and for the major companies in particular.

Gaming stocks had a banner month in September, recovering from their summer doldrums with a surge of 12 percent in the Dow Jones Casino Index and 6 percent in the Applied Analysis Gaming Index, a weighted average of local gaming stocks. The Applied Analysis index increased 15.5 points in September to close at 246.72, after dropping 28.42 points, or 11 percent, in July and August combined. Rod Smith, Gaming Wire, 10-1-04

Major Las Vegas gaming operators finished the third quarter with record earnings unseen since the terrorist attacks of Sept. 11, 2001, thanks to a surge in leisure and business travel fueled by the economic recovery, analysts said Wednesday. Deutsche Bank analyst Marc Falcone said that Las Vegas in particular, because of the strong demand it enjoys as a unique travel destination, has experienced a remarkable rebound in gaming and nongaming operations that is lifting profits both for individual companies and the industry as a whole. …Overall, however, combined net income increased 45 percent from $267 million a year ago to an estimated $388 million in the third quarter this year for Boyd Gaming Corp., Harrah's Entertainment, Mandalay Resort Group, MGM Mirage, Station Casinos and Caesars Entertainment (previously Park Place Entertainment). Combined cash flow for the Las Vegas "Big Six" increased to $1.4 billion in the third quarter, up 21 percent from $1.2 billion a year earlier, according to data from Fulcrum Global Partners, an independent Wall Street investment research firm. …Revenues for the six gaming industry giants combined increased 12 percent to $5.1 billion in the third quarter from $4.6 billion a year ago. Rod Smith, Gaming Wire, Las Vegas Review-Journal, 10-14-04

Most jurisdictions reported increased revenues; Nevada and New Jersey set all time records. The one major exception to the growth was Mississippi, suffering from the affects of Hurricane Ivan, Mississippi had less casino revenues in September 2004 than in 2003.

Fueled by strong play in the slot machines, Nevada casinos bounced back in August, winning $905.1 million, up 11.2 percent from a year ago. The state Gaming Control Board reported today the $905.1 million was a record win for the month of August, surpassing the $839.5 million in August 2003. Cy Ryan, Las Vegas Sun, 10-12-04

Detroit casinos reported revenue of nearly $91.9 million for September, up more than $2 million from the previous September. Robert Ankeny, Crain's Detroit Business, 10-12-04

For September, Kansas City's (Missouri) casinos grossed a combined $54.39 million, up 10.6 percent over September 2003. …lagged behind stronger statewide growth of 12.4 percent in September. Rick Alm, Kansas City Star, 10-13-04

Elsewhere, analysts reported that September casino revenues in Iowa and Illinois were up 9.9 percent. Rick Alm, Kansas City Star, 10-13-04

Altogether, Atlantic City's 12 casinos raked in $408.9 million in revenue in September, a 10.8 percent increase over the same period last year. It was the best September since legalized gambling began here in 1978…For the first nine months of the year, casinos have won $3.7 billion from gamblers, an increase of 8.1 percent over the same period in 2003. Donald Wittkowski, Press of Atlantic City, 10-13-04

September…boosting overall revenue by 12 percent over a year ago. According to reports filed with the Connecticut Division of Special Revenue, gamblers lost $144.6 million in September [at Foxwoods and Mohegan Sun]…$1.75 billion in…"handle." Rick Green, Hartford Courant, 10-19-04

Louisiana's state-licensed casinos won $166.9 million from gamblers in September, up from $150.3 million in September 2003, state police reported Tuesday. Alan Sayre, Associated Press, New Orleans Times-Picayune, 10-19-04

Mississippi's 29 state-regulated casinos collectively recorded $211 million in gross revenue in September…Last year, casinos recorded $217.8 million in revenue for September and almost $2.7 billion for the entire year. Through September of this year, casinos have brought in $2.15 billion. Holbrook Mohr, Associated Press, Biloxi Sun-Herald, 10-20-04

The 45 casinos in Colorado reported $61 million in adjusted gross proceeds …up 4.5 percent from September 2003. Denver Post, 10-20-04

Video slot machines at Lincoln Park and Newport Grand dropped $65.5 million into state coffers for the first quarter of the current fiscal year, which ended Sept. 30, the two venues announced in a joint press release Tuesday. That represents a 17.4 percent increase over the same period last year, when Lincoln and Newport turned over $55.8 million to Rhode Island. Jim Baron, Pawtucket Times, 10-20-04

Gaming seems to be on a roll, enough for Forbes to publish an article calling the United States "Casino Nation." Gary Loveman of Harrah's takes the idea one step further and now says, "Gambling is a fundamental right that should be spread across the country and everybody should have access to it."

But across the nation, gambling remains on the march. …All told gambling is the second-most popular topic for political referendums this year, according to the Initiative & Referendum Institute at The University of Southern California. Six states are deciding 13 measures. (The one more popular initiative topic is gay marriage.) It's nothing new. At this point, 46 states have some form of legalized gambling, according to Casinocity.com. There are 35 states with some form of legalized electronic gaming device, mostly slot machines, at Indian casinos, commercial casinos, racetrack casinos, bars, restaurants or other licensed establishments, according to the American Gaming Association, a lobbying group. The AGA says legalized gambling is a $73 billion industry as measured by gross gambling revenue (the amount wagered minus the winnings returned to gamblers, as of 2003.) The largest component of the industry remains "commercial casinos," which account for $29 billion. State lotteries take in $20 billion and Indian Casinos add $17 billion to the total, according to the AGA. … If Nebraska allows its own casinos, they will "keep the money at home." It's a popular refrain. In Florida, a Sun Sentinel columnist explains his support for putting slots at racetracks: "Between [untaxed] Indian casinos, cruises-to-nowhere, the lottery, racetracks and the Internet, practically everyone can gamble in every conceivable way...So isn't it time the state smartens up, grabs a bigger cut and puts the money to good use for education?" Taxing ignorance to support education? "This should be a no-brainer," Mayo says. Dan Ackman, Forbes.Com, 10-11-04

Gary Loveman, president of Harrah's Entertainment, which operates two casinos in nearby Atlantic City, said racinos in Pennsylvania will have no noticeable negative effect in New Jersey. "Gambling is a fundamental right that should be spread across the country and everybody should have access to it," Loveman said. Rod Smith, Gaming Wire, Las Vegas Review-Journal, 10-7-04

The casino nation voted on just that right in California, Florida, Iowa, Michigan, Nebraska, Oklahoma, Washington and Wisconsin. Hundreds of millions of dollars were spent on the campaigns, over 100 million dollars in California; one company, Magna Entertainment, spent $10 million by itself in four separate states.

Oklahoma citizens will decide whether to legalize the lottery and also whether to expand gambling in the state. State Questions 705 and 706 pertain to the lottery. State Question 712 expands gambling on Indian reservations and allows slot machines at racetracks; Californians will vote on two gambling initiatives -- Propositions 68 and 70. Proposition 68 would expand gambling at race tracks and card rooms, while Proposition 70 would expand gambling by Indian tribes; Floridians will vote on Amendment 4, authorizing Miami-Dade and Broward Counties to approve slot machines in existing gaming facilities; Michigan citizens will vote on Proposition 1, which if passed would require voter approval before gambling is expanded in the state; Nebraskans will decide whether to legalize two casinos at locations to be determined. Initiatives 417, 418, 419 and 420 and Amendment 3 deal with the casino issue; Washington state citizens will vote on Initiative 892, which would legalize electronic slot machines at non-reservation sites such as restaurants and bowling alleys. Baptist Press, 11-2-04

The racetrack and gambling company, Magna Entertainment, spent $10-million (U.S.) on advertising and other activities in support of propositions in Florida, Oklahoma, California, and on opposing a fourth resolution in Michigan. The Globe and Mail, 11-3-04

Gaming, same sex marriages and a hotly contested presidential race brought out voters in record numbers.

Driven by an intense race for the presidency, a greater percentage of Americans voted Tuesday than at any time in more than three decades. More than 114 million voters crowded U.S. voting precincts, including some in the District of Columbia. Figures tabulated Wednesday by The Associated Press showed that 114.3 million people had voted with 99% of precincts reporting. However, about 120 million people cast ballots, including 5.5 million to 6 million absentee and provisional ballots yet to be counted, said Curtis Gans, director of the nonpartisan Committee for the Study of the American Electorate. The 120 million figure represents just under 60% of eligible voters - the highest percentage turnout since 1968, Gans said. …In California, the estimated voter turnout was 12 million, a record for the state. Associated Press, USA Today, 11-3-04

Gambling might be a right, and this might be a casino nation, but the results of the 2004 election do not confirm either to be true. Oklahoma was the only state to approve a gaming initiative outright; Florida will probably have to await the result of a recount, and in Wisconsin one community passed an advisory referendum. All of the others failed to pass. Oh, and George Bush was reelected without a recount in Florida.

Approximately 59% of voters in Oklahoma cast ballots Tuesday in favor of the "State-Tribal Gaming Act" that authorizes electronic gaming operations at the three privately-owned Oklahoma racetracks and directs a share of gaming revenues from Tulsa area tribes to the publicly-owned fourth track. Blood Horse News, 11-3-04

Floridians said "yes" to seven out of eight amendments, and one issue may be heading to a recount. With 98 percent of the vote in, the slot machines measure was locked in a 50 percent to 50 percent tie. …If the margin of victory is one-half of 1 percent or less, local elections officials automatically must order a machine recount. Internet Broadcasting System, Wesh.com, 11-3-04

Wisconsin voters appeared ready to approve early Wednesday an advisory referendum to allow the construction of a huge tribal casino on the site of the Dairyland Greyhound Park near I-94. With about two-thirds of the vote counted, the referendum proposal had a roughly 6,000-vote lead. …The advisory referendum was a key step in the lengthy process of converting Dairyland Greyhound Park's 223 acres on I-94 into federal trust land for a casino. State and federal approval must be obtained as well. Milwaukee Journal Sentinel, 11-3-04

California voters overwhelmingly rejected dueling propositions Tuesday that would have grandly altered the state's approach to casino gambling…the vote was 76.8 percent no to 23.2 percent yes on Proposition 70, and 83.8 percent no to 16.2 percent yes on Proposition 68. John M. Hubbell, San Francisco Chronicle, 11-3-04

Michiganians bolstered the state's existing casino gambling establishments Tuesday, approving a plan that will make it considerably more difficult to build new gaming houses in the state. Proposal 1, the measure to limit casino gambling, was winning 58-42, with 87 percent of the precincts reporting. Mark Hornbeck, Detroit News, 11-3-04

Voters in two of three central Iowa counties torpedoed plans for rverboat-style gambling and the measure was failing in the third county late Tuesday night. Warren County voters rejected a casino referendum 54 to 46 percent. The measure failed in Madison County 57 to 43 percent. The proposal was also failing in Dallas County with a majority of the vote counted. A simple majority of voters was needed to approve the proposal before developers can submit a request for a state casino license. William Petroski, Des Moines Register, 11-3-04

…Legislature's plan to allow two casinos in Nebraska was being soundly defeated with 65 percent of voters opposed. Initiative 420, which would legalize two casinos in Omaha and 4,900 slot and video poker machines across the state, was losing with 53 percent opposed; and 417, a constitutional change to legalize casinos, was opposed by 51 percent of the voters. Tim Johnson, Daily Nonpareil, 11-3-04

Voters have decided not to place their bets on slot machines, rejecting an initiative that promised to lower property taxes by expanding gambling in Washington State. …The measure failed Tuesday as 61 percent of voters opposed it with 98 percent of precincts reporting. Rebecca Cook, Associated Press, Seattle Post Intelligencer, 11-3-04

The election is over, we have a new president - actually the old one renewed, but with a new and much stronger mandate - and Wall Street seems very pleased.

Wall Street bounded higher for the second straight day Thursday as investors reveled in sharply falling oil prices and the pro-business agenda of the second Bush administration. The Dow Jones industrials gained more than 177 points for its best day of 2004, while the S&P 500 closed at its highest level since early 2002. Associated Press, 11-4-04

The election did not provide a great deal of opportunity or promise for the expansion of gaming in the near-term. In fact there seems to be sufficient reason to think the next round of significant expansion - except of course Pennsylvania, Oklahoma and possibly Florida - will have to wait until the next downturn in the economy. The greatest catalyst to gaming growth has traditionally been the need of individual states to raise revenues and that pressing need has lessened in the last twelve months; the economy is just too healthy. Neither voters nor legislators see the need to support any expansion now. That leaves mergers and acquisitions as the most practical vehicle for expansion and revenue growth for gaming companies. Harrah's, MGM Mirage and Boyd have given us a glimpse of the next phase of expansion in gaming, acquisitions not jurisdictions. In November of 2003 we seemed to be on the edge of a major expansion, but November 2004 is more than just another year, it is another time.

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.