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Best of Ken Adams

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Quicktakes: The month's trends at a glance - July 2005

12 September 2005

Casino revenues were up again in June (Nevada's results are for May) with a couple of exceptions, Detroit and Connecticut. The only rationalizations that I have heard are the price of gas, war and a bumpy economy. They hardly seem valid if they only apply in two places. In general, gaming is having a good year with solid if not spectacular growth.

Iowa June gaming revenue rose 6% to $89.8 million. Woinski's Gaming Industry Weekly Report, 7-18-05

Atlantic City June revenues rose 2.3% to $404.4 million. Woinski's Gaming Industry Weekly Report, 7-18-05

Missouri June gaming revenue rose 4.3% to $121.7 million. Woinski's Gaming Industry Weekly Report, 7-18-05

Illinois June gaming revenues rose 5.9% to $144.3 million. Woinski's Gaming Industry Weekly Report, 7-18-05

Nevada May casino revenues rose 12.5% topping the $1 billion mark. Woinski's Gaming Industry Weekly Report, 7-18-05

Detroit casino revenues dipped slightly in June to $92.6 million. That compares to $93.4 million in revenues for June 2004. Detroit Fee Press, 7-15-05

…Foxwoods' handle was $751.9 million, which was 2.9 percent less than June 2004…win$64.8…Mohegan Sun's handle fell 1.7 percent, year over year, to $822.6 million….held $70.3 million… Karen Florin, New London Day, 7-19-05

Colorado casino revenues rose about 2.9 percent last month to $62.3 million. Rocky Mountain News, 7-20-05

Indiana's 10 casinos reaped a 6.6 percent increase in June gross earnings to $189.5 million. Cincinnati Enquirer, 7-21-05

Unemployment is down, job creation is up, consumer confidence was up again in June after being down in May; the only dark cloud on the horizon (if we ignore war and terrorism) currently appears to be the price of gasoline. Almost every month one industry or major public company offers gas prices as a reason for declining revenues, but it has not affected the economy as a whole, yet. Crude oil prices are sometimes blamed for a day of declining prices on Wall Street, but in general the stock market is up for the month and at this point for the year. So, what is the impact of the steep increase in gas prices over the last year? "Nothing yet" would seem to be the answer, but I for one don't see how we could sustain another year with prices increasing another $1 a gallon without there being an impact on the entire economy and certainly on gaming that relies on disposable income.

If July did nothing else it moved poker up a few notches on the national stage. The granddaddy of all poker games was held in Las Vegas. A few thousand people gathered first at the Rio and then at the old Horseshoe downtown for the finals for a very high stakes poker game. The winner took home to Australia $7.5 million. The party drew national attention; television networks and press services gathered to watch and drool over the piles of money.

Richest Sporting Event on the Planet –

Thousands of poker enthusiasts from around the globe will begin descending on the Nevada desert today to compete for some $75 million in total prize money at the 36th annual World Series of Poker. The largest and most prestigious event of its kind, the World Series of Poker is expected to generate more than 15,000 player registrations by the time its main event begins July 7…The World Series of Poker is owned and operated by Harrah's Entertainment, Inc. ESPN, the tournament's official broadcast partner, will produce and air 26 hours of original programming based on the 36th annual World Series of Poker. The sports network will produce an additional six hours of original programming based on World Series of Poker Circuit events. Coverage is scheduled to begin airing on or about July 19. PRNewswire-FirstCall, 6-2-05

There were daily updates straight from tableside in Las Vegas that looked and sounded like Wimbledon, the Tour of France or a weekend with Tiger Woods. By the final round we knew all of the former winners and their fates; we followed women and ethnic minorities, and each community gave updates on the local favorite and how they were faring.

After three grueling days, the field of 5,619 entrants has been winnowed to 1,884, with many more expected to exit quickly as the second round kicked off Sunday at the Rio hotel-casino. …Eleven former WSOP winners have already succumbed to lackluster cards, including Chris Moneymaker (2003), Robert Varkonyi (2002), Bobby Baldwin (1978) and Dan Harrington (1995) …Lady Luck has also not been kind to the best women, either. Adam Goldman, Associated Press, 7-11-05

After day three of the $10,000 buy-in, no-limit Texas hold 'em tourney, Raymer sits in the same spot he did last year when the then-record $5 million first prize was won -- at the top. But Raymer, with 1,064,000 tournament chips after day three play ended, must outlast the other 184 remaining players…Among the well-known pros chasing…are Phil Ivey…and JC Tran of Sacramento are the leading women pros still in the hunt, with 448,500 and 259,500 chips respectively. 7-12-05

…Once in the lead, Raymer…reduced to…57 other gamblers and the fifth round that begins Wednesday…Tim Phan was first with $3.2 million, followed by …the 1994 champion, busted out…Tiffany Williamson of London was the lone woman left in the event. Adam Goldman, Associated Press, 7-13-05

…Matusow later ran his total to $5.1 million, giving him a tenuous hold on first place. Not far behind was Ivey, with $4.6 million…Williamson had been in seventh place with nearly $2 million when the round began, hoping to become the first woman to win the prestigious event. Adam Goldman, Associated Press, 7-14-05

Poker's top players and unknowns wrapped up a grueling high-stakes showdown, completing the nine-person final table…after a nearly 12-hour poker marathon, Aaron Kanter of Lodi, Calif., led with $10.7 million …Also making it to the final table were…. Adam Goldman, Associated Press, 7-15-05

And then there was just one, with $7.5 million Joseph Hachem, originally from Lebonon, headed home to Australia. His name and face were household standards instantly. Enough it would seem to interest the Australia authorities; he might it is said owe the Australian government half. Now, for those of you who like to think about these things, suppose the American government had withheld 40% as they do on some slot jackpots; the poor man could have come out with less money than the last place at the final table. Apparently that isn't the worse that can happen at a poker table; a man in San Francisco died as the result of a bad hand at poker.

Previously unknown Melburnian Joseph Hachem has rocketed to fame in the last week after winning the world's richest "sporting" event, the World Series of Poker. He beat a field of 5,619 participants who had all paid US$10,000 merely to enter the tournament. His prize for winning was a lazy US$7.5 million. Initially, news.com.au quoted Hachem's wife as saying he was a professional gambler, while Hachem himself said poker is "a real serious hobby of mine." But by the time Channel Nine news went to air, Hachem seemed persistent in saying poker was an occasional interest, and that he was just a mortgage broker who had got lucky. Why the change of heart? The answer is simple: what would the Australian Tax Office think? A professional "sportsman" wins US$7.5 million in a legitimately organised "sporting" contest. Is this taxable? If so, Hachem will have to pay a whopping $4.85 million to the ATO. The standard rule in business is that if you're doing any activity with sole intent to profit, then your net income is usually taxable. However, if the activity is a hobby, then the income is not taxable. The fact that the income was sourced overseas would not invalidate these rules. Jarrah O'Shea, Crikey Daily, 7-20-05

San Francisco man was shot and killed…after an argument broke out during a card game at his residence, police said…witnesses told investigators that five or six people had been playing cards at the victim's residence and that some of the players had begun arguing…a neighbor reported hearing a single gunshot…shot in the leg and died about an hour later at San Francisco General Hospital…No arrests have been made. San Francisco Chronicle, 7-21-05

Still, regardless of the fate of the winner or anyone else that played in the frantic tournament, Harrah's certainly booked a winner. The Rio was up and the image of Harrah's was certainly up even further. Harrah's may have difficulty following Jack Binion, a very hard act to follow, in operating the Horseshoe casinos, but they do have a winner with the World Series of Poker and very much appear to know how to manage it.

One Wall Street analyst has already dubbed it the "World Series of Poker Effect." Matthew Jacob of Majestic Research said this month's famed poker tournament, which left the Rio resort Thursday after beginning in early June, did much more than just attract hordes of poker fans to the Harrah's Entertainment Inc. property. The World Series of Poker "was a strong traffic generator for the entire casino," Jacob said in a research report released today. Harrah's spokesman David Strow said the tournament boosted the Rio's gaming and non-gaming business. Liz Benston, 7-19-05

Jeffrey Pollack, an Emmy Award-winning sports and media executive, will join Harrah's…as vice president of sports and entertainment marketing, effective upon receipt of required regulatory approvals. Pollack will be responsible for managing Harrah's sports ventures, including the World Series of Poker, boxing and motor sports. He will be based at Harrah's Las Vegas corporate headquarters starting August 1. Business Wire, Yahoo! Finance, 7-14-05

Harrah's will launch the second season of its popular World Series of Poker Circuit with an expanded schedule of 12 tournament stops that will bring high-stakes poker action and excitement to players in Harrah's casinos around the country. The 2005-06 Circuit begins August 11 at Grand Casino Tunica and includes events at 11 Harrah's casinos in venues such as Las Vegas, Atlantic City, New Orleans, Biloxi, Miss., and Lake Tahoe. Business Wire, Yahoo! Finance, 7-14-05

Playing poker at the table is not the only place skilled players are winning. Publishing poker magazines, at least for the moment, seems to be another good way to cash in on the poker-mania. July was a great month for poker enthusiasts, for those providing the game (or access to the game such as TV) and for those trying to profit from it.

Poker's exploding popularity, with televised Texas hold'em tournaments and illicit Internet games, has created an unprecedented opportunity for startup magazines…to get in on the action. In the last year, as many as 10 poker magazines have popped up in card rooms, newsstands and stores…What's happened is that the poker magazine industry is flush with new advertising dollars from other companies profiting from the poker craze, including poker Web sites, regular (and legal) casino cardrooms and other companies that sell poker-related products… Daniel Yee, Associated Press, 7-20-05

Sometimes one day in the world of gaming can tell a story, almost a history lesson, the state of the union and a prediction of the future all rolled into one day's news and series of stories from around the country. Wednesday, July 7 th, was such a day, giving a causal observer a very broad overview of the world of horse racing and racinos; or as is commonly said, "If you ain't got slot machines you ain't got s…." Some of the most famous names in racing are threatened (or threatening) extinction; some like out-moded casinos on the Strip may have a new destiny as theme parks, retail centers and the ubiquitous condominium developments. Track operators are constantly trying to convince legislators that slot machines are essential to their survival; sometimes the legislators listen and sometimes not. In California they have not (nor have the voters) listened. In Oregon they did listen, not quite as many slots as some may have wanted, but it is a start.

In a much-anticipated deal, Hollywood Park was sold Wednesday to a development company that quickly warned it might raze the venerable track — and another one in Northern California — unless state legislators take action to help the struggling sport compete with Indian casinos. Bay Meadows Land Co. has agreed to pay $260 million for the track and its surrounding 238 acres in a deal expected to be completed by late September. As part of the agreement, Hollywood Park will remain open for at least three years. But the new owners said they will begin discussions with the city of Inglewood to explore using the land for commercial or residential development. Without a change in state law that would allow tracks to offer other forms of gambling — namely, slot machines — "this will not be an economically viable track over the long run," said Terry Fancher, the Bay Meadows president. "We feel it is better to put that on the table and state that right away." The previous owner, Churchill Downs Inc., had been disappointed in Hollywood Park's profit margin and said it was pulling out because California had forsaken horse racing. "If [state legislators] do not provide racing with the competitive tools that it needs, the racing industry will not survive," said Thomas Meeker, the Churchill Downs president and chief executive. "It would be tragic to see racing fall off the landscape." David Wharton, Los Angeles Times, 7-7-05

Legislation that would triple the number of video lottery terminals at Portland Meadows easily passed the Oregon House Wednesday after the racetrack argued the expansion would help preserve horse racing in the state. The track would be allowed to increase the number of slot and video poker machines from 10 to 30 under the terms of the bill, which now goes to the Senate. Other lottery retailers are allowed no more than six machines. Portland Meadows is owned by Magna Entertainment Corp., which has sought to convert its racetracks in the United States and Canada into " racinos" that combine live racing and casino gambling. Jeff Mapes, Oregonian, 7-7-05

In Canada, Great Canadian Gaming is proving the theory that it takes slots to succeed by putting their money up for the right kind of opportunities, the locations that have or are eligible to get slot machines. The horse racing purists don't pretend that slot machines make horses run faster; but they do maintain that with the revenue from the slots they can offer better prices, get better horses and, yes, have the horses run faster. The realists just maintain that if you want to keep the horses running, the jockeys riding, the stable boys grooming and everyone else employed, you need more revenue than racing by itself produces. Again, like a worn out casino, the value of the real estate calls for a higher and better use of the land, much like the former casinos in Reno that are becoming condos.

British Columbia-based Great Canadian Gaming Corp. is adding to its bet on Eastern Canada with a deal worth $79 million to acquire the Flamboro Downs raceway in Ontario from Magna Entertainment Corp. The two companies announced Wednesday evening that they have reached an agreement in principle on the sale of Ontario Racing Inc., a wholly owned Magna Entertainment subsidiary which operates the standardbred track and slot machines in Flamborough, outside Hamilton. Great Canadian is to pay $50 million Cdn and $23.6 million US ($29.2 million Cdn) in cash and assumption of debt. For Great Canadian, the acquisition expands an eastward push which has included a $48-million deal in April to buy Georgian Downs, a standardbred complex north of Toronto, and the $73.7-million purchase in May of casinos in Halifax and Sydney, N.S. Canadian Press, Yahoo! Finance, 7-7-05

Pennsylvania, without being an exception, is proving the rule: "The value of the license is the privilege to have slot machines." The last track that sold with a slots license sold for nearly half a billion dollars; the current competitors for a license are not putting up nearly that amount, but secretly they too believe in time they will be allowed to operate slots.

Two Western Pennsylvania horse racing promoters are among three groups competing for the final thoroughbred racetrack license to be issued by the state. Appearing before the state Horse Racing Commission yesterday were officials from Pittsburgh Palisades Park …and 1935 Inc., which wants to build a racing facility in South Versailles…State officials said they will hold public hearings, probably in September, at or near both of those proposed sites and at the third site, on the other side of the state, in the Lehigh Valley of Northampton County...The racing commission is expected to make its decision on who gets the final license by the end of the year…under the state's slot machine law, the tracks cannot include slots casinos. Under that law, only three Pennsylvania thoroughbred racetracks can have a slots… Tom Barnes, Pittsburgh Post-Gazette, 7-7-05

Although it probably won't happen, there is a movement in Minnesota to put slot machines at that state's signature racetrack, Canterbury Park. Minnesota illustrates a part of the story. In Minnesota, the tribes are against any expansion of gaming that is outside current tribal influence, and Canterbury is just a few miles from Mystic Lake Casino and a few miles closer to Minneapolis St. Paul and the players. That is also the case in California; the tribes represent the core of the opposition. In other states, casinos are willing to let the tracks have slots, if it doesn't impact their revenues; so the opposition in New Jersey comes from the casinos. In other states the casinos simply try to control the revenue by buying the tracks; that certainly has been one of Harrah's strategies.

Gov. Tim Pawlenty late Wednesday offered to sign a stopgap spending bill to end the partial state government shutdown if DFLers [District Farm-Labor Party] agree to allow a vote on a racino at the Canterbury Park race track. Senate Majority Leader Dean Johnson, House Speaker Steve Sviggum and House Minority Leader Matt Entenza emerged together from the governor's office at about 1 a.m. today to tell reporters they needed more time to discuss their latest positions. Johnson said the latest offer of the governor and House Republicans on education funding seemed acceptable to Senate DFLers, and the two sides needed more time to analyze spending figures for health and human services. Pat Doyle/ Patricia Lopez, Minneapolis Star Tribune, 7-7-05

And, if the story needs an update, on July 26 th, Magna Entertainment announced a national strategy for holding and developing tracks with slots and selling tracks without and without a future possibility of slots.

Magna Entertainment Corp. has identified as key operations a handful of racetracks in California, Florida, Maryland and Texas, and two others that can add slot machines, and could sell the rest. … Additional tracks that can be licensed to add slot machines because of recent changes in state laws are…in Oklahoma…in Pennsylvania. Greg Keenan, The Globe and Mail, 7-26-05

That was the story on July 7 th, tracks without slots sold to developers, tracks with slots sold to operators or sold at premium prices. Oregon allowed the track to increase the number of slots, a solution that Rhode Island also used, but on another day. Racing may be slipping in popularity, but give each horse a slot machine and the future seems rosy indeed.

Smoking is another trend that anyone interested in gaming should be following as a side issue. The question of whether or not smoking bans destroy businesses or save workers' lives, I will leave to someone else; banning smoking in operating casinos will have an impact the severity of which only time will determine. It is almost certain that over time most states are going to ban smoking in all public places, including casinos. Laws banning smoking in casinos have even been proposed in Nevada and New Jersey; they didn't pass or even get a serious hearing, but in time even those states will have more serious debates on the subject. The debate is certainly heating up across the country.

Backers of a statewide ban on smoking in public places turned in an estimated 323,000 signatures to the state elections office Thursday, all but ensuring a place for it on the Nov. 8 ballot. Initiative 901 would expand the state's ban in public places to include bars, restaurants, and casinos -- but it would not touch tribal operations, which are federally regulated. The Secretary of State's Office now must validate the signatures to ensure at least 224,880 are valid. "This is a great day for the people of the state of Washington. We are one step closer to becoming smoke-free," said Mike O'Sullivan, government affairs director for the American Cancer Society in Seattle, whose organization has been a financial force in the campaign so far. Brad Shannon, Olympian, 7-8-05

Health Canada has lost a battle in its continuing war against cigarette smoking. Federal health officials have been in a legal tussle with two of Canada's largest casinos over a rewards program they use called Players Advantage Club. The program allows patrons to use points they've accumulated to buy a variety of goods, including cigarettes. Health officials said that amounted to giving away smokes, which is a violation of the Tobacco Act, which forbids retailers to furnish tobacco products "without monetary consideration." Last year, the department ordered the casinos -- Casino Niagara and Niagara Fallsview Casino Resort -- to change the points plan and exclude tobacco products...The case ended up at the Federal Court of Canada and in a decision released this week, the court sided with the casinos and threw out Health Canada's order. Paul Waldie, The Globe and Mail, 7-8-05

The trend to ban smoking is closely related to another phenomenon, healthcare. Smoking related problems have had huge impact on the cost of healthcare, and the increasing cost of healthcare is moving to the point of being a national crisis. Many smaller companies are finding it difficult to provide coverage, even larger companies, such as Ford and General Motors are being forced to make major changes. Auto manufacturers and airlines are struggling with healthcare costs and are reducing many categories of expenses, including healthcare, in an attempt to remain profitable. The decreasing company coverage coupled with increasing individual costs may be creating an opportunity.

The AFL-CIO appears to be breaking up. The break-up is, at least partially, being driven by a difference in philosophy: "Is the union money better spent on political contributions or on organizing new workers and industries?" Certainly the news is a warning for the casino industry that it can expect increased organizing pressures, and more coordinated efforts to bargain at a national level and not a local level. The increasing consolidation of gaming will make that easier, but so will the coming healthcare crisis. A push to organize more workers and more industries may find interested constituents as long as good healthcare is part of the package. Wages and vacation might be passé, but healthcare is not. Expect a labor organizer in your neighborhood soon, maybe even competing organizers.

Two of the nation's largest and most powerful unions resigned Monday from the AFL-CIO, fracturing the 50-year-old federation as the labor movement struggles to stem decades of decline and lost influence in both the workplace and the political arena…Hoffa, who was much more critical of the AFL-CIO than Stern, said: "We have been disappointed that over the last 10 years (the period of Sweeney's tenure) we have seen a decline in membership, a decline in density." …Hoffa, like other critics, said Sweeney is too focused on trying to influence political campaigns and not focused enough on long-term development of the labor movement. He said he pressed Sweeney and other leaders for dues rebates to fund membership drives and "they said 'no.' Their idea is to keep throwing money at politicians."…Another big unknown is whether organizing disputes, now mediated by the AFL-CIO, will become open, unregulated warfare between those unions that remain within the AFL-CIO and those that leave. SEIU and the pro-Sweeney AFSCME are already engaged in bitter fights over home health care workers in Iowa and California, just as UNITE HERE and the Communication Workers have fought over the right to organize workers in California's Indian casinos.Washington Post, 7-26-05

Watch out, here they come again! The National College Athletic Association wants to come to Vegas, not to make a bet mind you, but to track the bets to see if there is any skullduggery in the makings.

The NCAA plans to begin more closely monitoring betting lines on games and to start background checks on baseball and hockey officials as part of its antigambling efforts. The moves are being made after an NCAA study last year found that 35 percent of male athletes and 10 percent of female athletes had gambled on college sports during the previous year. …Rachel Newman-Baker, the NCAA's director of gambling activities, said Tuesday the group hoped to re-establish contact with the oddsmakers to watch for instances in which heavy wagering has caused significant changes in point spreads or for the casinos to pull games off the board. The steps were presented to the NCAA's management council during its meeting this week near Los Angeles…Such an exchange will be welcomed by many in the Las Vegas gambling industry, said Robert Walker, sports book director at the MGM Mirage casinos. While Walker said the casinos often have felt targeted by the NCAA in its battle against gambling, the oddsmakers share its concern for a fair game. Associated Press, MSNBC, 7-19-05

The NCAA along with the NFL have often made life difficult for gaming, especially for Vegas books. This last attempt at something (and I am not certain what the intent of hanging out in a Vegas book is) is more comical than threatening. Maybe they are going to use software like that of the defense department for tracking wagering as a way to predict terrorist activity.
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.