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

4 January 2006

Gaming results in September are still showing growth, (except Nevada, which is always a month behind the rest of the country in reporting), and if, of course, one excludes Mississippi and Louisiana. Neither of those states is likely to show year-on-year growth before next September. Given the ups and downs of Wall Street, the continued high cost of fuel, unemployment numbers (driven by the hurricanes), consumer confidence and increasing interest rates, the growth of gaming revenues makes gaming one of the strongest segments of the national economy.

Nevada August gaming win rose 9.3% to $989 million. Alan R. Woinski, Gaming Industry Weekly Report, 10-17-05

Atlantic City September gaming revenue rose 5% to $429.4 million. Alan R. Woinski, Gaming Industry Weekly Report, 10-17-05

Missouri September gaming revenue rose 2.5% to $123.5 million. Alan R. Woinski, Gaming Industry Weekly Report, 10-17-05

Iowa September gaming win rose 2.1% to $90 million. Alan R. Woinski, Gaming Industry Weekly Report, 10-17-05

Illinois September gaming revenue rose 5.8% to $147.7 million. Alan R. Woinski, Gaming Industry Weekly Report, 10-17-05

Detroit casino revenue rose nearly 3% to $94.6 million for September. Detroit Free Press, 10-14-05

Colorado September casino revenues rose 4.3% to $63.6 million… Alan R. Woinski, Gaming Industry Weekly Report, 10-24-05

Indiana September gaming revenues fell 0.3% to $194.1 million. Alan R. Woinski, Gaming Industry Weekly Report, 10-31-05

Connecticut September slot win declined 0.6% to $143.8 million. Alan R. Woinski, Gaming Industry Weekly Report, 10-31-05

Mississippi, River counties September gaming win fell 3.5% to $119.3 million. Alan R. Woinski, Gaming Industry Weekly Report, 10-31-05

Someone finally put some numbers to the speculation about the impact of higher gas prices. Up to this point, there have been a few times when a company, Wendy's, for example, has blamed lower earnings on gas prices; or the airlines have blamed fuel prices for increasing financial difficulties, but no one has yet quantified the impact on an industry or place or set the price point when the impact would begin. A survey in Vegas does just that, saying Vegas would lose 5 million visitors or 48 percent of the Southern California drive-up market, and the survey put the price point at $3.50 or $3.60 a gallon. I, for one, don't won't to see the theory tested and hope that gas prices will go back down under $3.00 and relieve the tension.

Wendy's International Inc. on Wednesday said third-quarter same-store sales -- or sales at stores open at least one year -- fell 5 percent at its flagship chain, as high gas prices curbed consumer spending and hurricanes shuttered restaurants. Business Week, 10-5-05

The Las Vegas gaming industry could be in for a rough ride this fall if gasoline prices pass $3 a gallon in Southern California, a recent survey suggests. The research by MRC Group, Nevada's largest market research firm, found Las Vegas is likely to lose 48 percent -- or about 5 million -- of its Southern California drive-in customers if gasoline prices get stuck above $3 per gallon. Roughly 10 million of Las Vegas' visitors in 2004 were drive-in customers from Southern California, or about 27 percent of the city's total 37.4 million visitors...MRC Group Chief Executive Officer Jim Medick said, while some people will continue to come even if gasoline reaches $10 a gallon, the survey suggests Las Vegas may soon feel some of the Californians' pain. "We're already seeing this happening in Reno out of the San Francisco market. For Las Vegas, the average visitor is going to stop coming at $3.50 or $3.60 a gallon. There's going to be a definite decline in seniors and people on fixed incomes first," he said. Rod Smith, Gaming Wire, Las Vegas Review-Journal, 10-4-05

Motorists will pay $4 on average nationally for a gallon of regular gasoline before the end of the year as hurricane-damaged refineries stay shut and imports from Europe wane, Luis Giusti of the Center for Global Energy Studies predicted Tuesday. Bloomberg, Seattle Post-Intelligencer, 10-5-05

Making a moral issue out of a disaster: Katrina and Rita were terrible events in the lives of all of the people of the Gulf Coast. They have and will continue to have a significant impact on the general economy. There is no easy way to protect us from natural phenomenon such as hurricanes; we can take more precautions, but there is no absolute protection. Because of the terrible impact on the lives of individual people, the huge impact on the economy and the difficulty in protecting ourselves from such events, there has been some blaming, finger pointing and moralizing. The Republicans blamed the Democrats and the Democrats blamed the Republicans. The mayor (of New Orleans) blamed the governor and the governor blamed the administration. And the administration blamed the mayor and governor. Enough, there is no one else to blame, or is there? How about blaming the casinos, the Sodom and Gomorra of the 21st century? Biloxi and New Orleans destroyed by an angry god. All we are missing are Lot's wife and a pillar of salt. No one would really say that, right? Oh, yes, they would.

Hurricane Katrina and other storms that battered the Gulf Coast were God's judgment of sin, according to state Sen. Hank Erwin, R-Montevallo. "New Orleans and the Mississippi Gulf Coast have always been known for gambling, sin and wickedness," Erwin wrote this week in a column he distributes to news outlets. "It is the kind of behavior that ultimately brings the judgment of God." After touring Gulfport and Biloxi, Miss., and Bayou La Batre, Erwin said he was awed and humbled by the power of the storm. But he wasn't surprised. Thomas Spencer, Birmingham News, 9-28-05

Rep. Jim Simpson of Pass Christian couldn't believe the e-mails he received from some self-proclaimed Christians this week attempting to lobby against casinos rebuilding after Hurricane Katrina. "I've gotten more than half a dozen from people who said, 'I prayed for the destruction of Katrina. This is God's wrath,'" said Simpson..."I'm going to get together a list of all the obituaries," Simpson said, "and send them in my response to them. I'm going to send that list and ask, 'OK, was this part of your prayers? Did you want this to happen?' Geoff Pender, Biloxi Sun Herald, 9-30-05

Some people are just waiting for a pulpit, an opportunity, and a stage upon which they can repeat the single theme of their lives. The hurricanes apparently gave more one elected official a chance to attack gaming and casinos as the primary evil in our society that will lead to our undoing. Besides the retribution of the angry god, we have the retribution from the angry congressmen; obviously the casinos deserve the punishment and should not be granted any tax breaks. What planet do these people come from?

Virginia congressman and longtime casino foe Frank Wolf sent a letter to President Bush criticizing the administration's plan to offer tax incentives to casino operators on the Gulf Coast. …This special interest incentive would be a disgrace,"

Wolf (R-Va.) said in his letter. "With budget deficits growing to historic levels, we need to make sure tax dollars are going to those who truly need the government's help ... We trust you will do the right thing and make sure federal resources go to the poor, the needy and the vulnerable and not the gambling interests who already have insurance to cover catastrophic events like hurricanes."… Wolf's letter was co-signed by Reps. Christopher Shays (R-Conn.), Lucille Roybal-Allard (D-Calif.), Joseph Pitts (R-Pa.), Walter Jones (R-N.C.), Lee Terry (R-Neb.), Tom Osborne (R-Neb.), Bob Inglis (R-S.C.), John Hostettler (R-Ind.) and Dave Weldon (R-Fla.). Wolf, who is morally opposed to gambling, has led congressional opposition to casino expansion for at least the past decade. Liz Benston, Las Vegas Sun, 9-29-05

There is another side to moral debate on gaming, the idea that gaming is harmless and just good, clean fun. There have been many studies and surveys focusing on the damage of gambling, but very few about the benefits. Yale University released a study that actually says that gambling is good for your health. At the same time that the Yale study was released, Newsweek did a series on health, and while it did not mention gambling directly, indirectly supported the Yale conclusions. People are happier and healthier when they are around other people. And what better place to be around people than a casino? Not only are there people, but also in most casinos, there are people who know each other and are known by the staff. Thanks to players' clubs people are not only recognized but treated as individuals and as important people. So the next time you are walking through a casino think of the players as improving their health and state of mind.

According to a surprising Yale University study, older recreational gamblers seem to be healthier than non-gamblers. The findings are not rock-solid. They're based only on telephone interviews, but the results are the opposite of what researchers expected. The survey showed that recreational gamblers 65 and older reported being in better health than their peers who don't gamble. The older gamblers also reported less alcoholism, depression, bankruptcy and imprisonment than younger recreational gamblers, Yale epidemiologist Rani Desai said. Desai cautioned that more study is needed to conclude that gambling can be a healthy venture, and those who help gambling addicts are skeptical. But the social aspects of gambling - whether it's slot machines at a casino, poker games with friends or bingo at a church hall - may be an explanation for how the study turned out, Desai said. "There's this whole concept of healthy aging - that folks who continue to remain engaged in activity, especially in the community and in social activities, stay healthier longer, so I think this is a reflection of that. It's not that gambling makes you healthy, it's that gamblers are healthier," Desai said. Diane Scarponi, Associated Press, 10-7-05

We've had enough of good advice. The real secret to fitness is to live in an environment that encourages it. …Other risk factors aside, people in densely populated places graced with sidewalks and shops had the lowest rates of diabetes, hypertension, heart disease and stroke. Geoffrey Cowley / Karen Springen, Newsweek, 10-5-05

Loneliness fosters cardiovascular disease. Fortunately, there's an antidote… Connections with other people affect not only the quality of our lives but also our survival. Study after study find that people who feel lonely are many times more likely to get cardiovascular disease than those who have a strong sense of connection and community. I'm not aware of any other factor in medicine-not diet, not smoking, not exercise, not genetics, not drugs, not surgery-that has a greater impact on our quality of life, incidence of illness and premature death. Dean Ornish, M.D., Newsweek, 10-5-05

And for those for whom gambling is a problem and addicting there is a pill. Just announced is a clinical study using a pill to treat problem gambling.

When something gets skewed in the brain's pleasure pathways, an ordinary person can turn into a compulsive drinker, drug-user or gambler. The patterns in all three appear to be the same, and the cure might be as simple as a pill and some therapy, said Sandra Lapham, a doctor at the Behavioral Health Research Center of the Southwest in Albuquerque, N.M. "The brain works in such a way that we get in these ruts in our neuro-chemical pathways, and that makes us fall into patterns of behavior," Lapham said. "For some people, if you take away that underlying craving, change that pathway, then you take away the enjoyment of that behavior and can stop it." Lapham this month is starting a clinical trial to treat compulsive gambling with a pill that blocks the brain's pleasure pathways and keeps the person from enjoying a gambling high. The name of the pill is confidential as part of the study, she said. The pill has worked successfully treating alcoholics but has never been tried on compulsive gamblers before, she added. Sue Vorenberg, Scripps Howard News Service, Rocklin & Roseville (CA) Today, 10-17-05

What is the "big" number this week? How many "big" companies are there in gaming as of October 2005? We could certainly say there is the top ten, the ten largest of the gaming companies. But at some point the companies that are outside $5 or $10 or $15 billion are just not important enough to be called "the big." Remember when the accounting industry underwent its consolidation the general term "the big…" changed on what seemed a weekly basis? There was the big 15 and then 10 and then 8 and then 7 and so on until we reached the big 3, and then the theme changed from consolidation to scandal, and we were treated to the big scandals. Well, gaming seems to be entering a comparable era. The biggest companies are truly big and getting bigger; the smaller ones are either targets for some getting bigger or simply insignificant. That does not mean the others will go out of business, just that the big ones will control all of the important markets, determine new trends, control the price of slot machines and other important products. Regardless of the number that should be on the list today, it is certain that the list is getting shorter as the ones at the top get bigger.

Penn National closes on Argosy acquisition -
Penn National Gaming Inc. closed yesterday on its $2.7 billion acquisition of Argosy Gaming . . .will make Penn National, Wyomissing, the third largest gambling company in the world…It will own and operate casino and horse-racing facilities, many with slot machines, in 13 jurisdictions, including Pennsylvania, New Jersey and Ontario…secured the approval of the Illinois Gaming Board, after agreeing to divest two of Argosy's casinos..It agreed to sell Alton Belle Casino and Empress Casino Joliet within 15 months… Suzette Parmley, Philadelphia Inquirer, 10-4-05

What is happening in Pennsylvania? The legislation to allow for slot machines, some 61,000 by some estimates, was passed a year ago and still no casinos, no racinos, no slots. So what is the story? The story is politics and bureaucratic process. Take October for example. The police union is suing over who gets to do what. The cities are setting up commissions, setting regulations and, in general, confusing the process. The gaming commission is ruling on some issues, but still trying to work out the distributor issue; the governor wants them to get a move on and the state legislature thinks it needs to pass some new regulations to govern, among other things, the ethics of the gaming commission. In the meantime, the rest of the country watches and waits; waiting, in no particular order, Wall Street, slot machine manufacturers, the casino bidders and the border states (think New Jersey, where over 50 percent of the customers come from Pennsylvania). But to put it in perspective, Joe Weinert, of the Gaming Observer and former Atlantic City Gaming Report, says it always takes this long. According to Weinert, we have just forgotten how long it took in Michigan or New Jersey. So, what if takes a few more months, you didn't have anything bet on the exact date, did you?

The Rendell administration is confident that a lawsuit filed earlier this week by the state police union over gambling-related background checks won't derail the startup of Pennsylvania's slot machine industry. Mark Belko, Pittsburgh Post-Gazette, 9-29-05

The city planning commission Tuesday approved a zoning map that outlines where a slots casino would be permitted in Pittsburgh. The measure also sets standards and regulations for construction…will go to Pittsburgh City Council for public hearings and final consideration… Tony LaRussa, Pittsburgh Tribune-Review, 10-26-05

Gambling power Harrah's Entertainment Inc. could be aced out of the license for a proposed casino at Station Square because of a decision by the state Gaming Control Board…board adopted final regulations that bar anyone seeking a slots license for a racetrack from also applying for a license for a stand-alone slot machine casino, one of which will be in Pittsburgh. Harrah's has 50 percent ownership in the Chester Downs Casino and Racetrack near Philadelphia. It is one of seven racetracks in the state eligible to apply for a license to add slot machines, and it is expected to do so. Mark Belko, Pittsburgh Post-Gazette, 10-3-05

The Meadows harness racing track and five other existing or proposed racetracks in the state now have until Dec. 28 to submit an application to the state for a slot machine license. The Pennsylvania Gaming Control Board today pushed back its previous deadline of Oct. 31 by two months to give the tracks more time to apply. Tom Barnes, Pittsburgh Post-Gazette, 10-3-05

The board tried twice yesterday, but failed both times, to resolve an ongoing dispute over procedures to create slot distribution companies. These firms, which don't yet exist, are supposed to supply and service all the slot machines at the 14 Pennsylvania casinos. The board had hoped to issue slots licenses for the first group of casinos -- those at seven racetracks -- by March or April. Now it looks like it will be late June at the earliest, and that date could be pushed back even further. The gaming board has been unable to decide whether the distribution firms, which were mandated under the legislation that legalized slots, will be limited to operations in certain regions or will be allowed to operate statewide. That has proven to be a major stumbling block. Tom Barnes, Pittsburgh Post-Gazette, 10-3-05

Gov. Ed Rendell warned state Gaming Control Board members yesterday that if they don't act to resolve a dispute delaying the arrival of slot machine gambling to Pennsylvania, he and the Legislature are prepared to resolve… Mark Belko, Pittsburgh Post-Gazette, 10-22-05

Two local hockey fans hope to fashion a power play of their own to help the Pittsburgh Penguins secure the license for the city's slot machine casino so the team can use the revenue to build a new arena and stay in Pittsburgh. Tomorrow night, Mike Mooney and Sam Menchyk, founders of the Slots for Mario Web site, plan to take their campaign to the Pittsburgh Gaming Task Force. The task force will hold its third public meeting, starting at 6:30 p.m., at the Regional Enterprise Tower, Downtown. They will present the advisory board with a petition signed by more than 25,000 people who have the same interest as they do -- getting the team the license so it can build a new arena. They also are urging supporters to attend that meeting, or one of three remaining meetings planned for the North Side, South Side and Downtown, to champion the idea. Mark Belko, Pittsburgh Post-Gazette, 10-18-05

Politics, lawsuits and red tape have forced the chairman of the state gambling regulatory board to keep extending his projection of how soon Pennsylvania can license its first slot-machine parlor...But Pennsylvania's road to slots may be comparatively short, despite a slew of hurdles remaining for the board …Michigan, New Mexico and New York each spent more than two years readying slot machines or full-blown casinos, according to an analysis by the Atlantic City, N.J.-based publication, the Gaming Industry Observer. Before that, 11 other states that legalized casino-style gambling between 1976 and 1995 took an average of 17 months, the Observer said. Marc Levy, Associated Press, Philadelphia Inquirer, 10-22-05

South Carolina has been a leader in gaming for 50 years, hadn't you heard? Okay, most of the time they weren't legal, but then they were never quite illegal either. Operators in South Carolina have tried to walk a very narrow line since the 1950s, always pushing the law, while still trying to stay just inside of it. What about Internet gaming cafes? I had never heard of them, had you? They are creative in South Carolina.

Police seized what they described as illegal gambling machines in a raid of two Gaffney businesses Tuesday…confiscated 70 computers and related hardware. The raid came after undercover agents played games on machines and were paid for their winnings…charged…operator of Gameland Bingo Internet Cafe, and…operator of the Possum Corner Internet Cafe, with running illegal gaming devices. Associated Press, Myrtle Beach Sun, 10-6-05

Hurricane Katrina brought more than wind and rain to the Gulf Coast. It helped to surface problems: systems that didn't seem to work, economies vulnerable to natural disasters and the moral debate that underlies gaming. Fanatics blamed gaming, but more reasonable people are trying to find a way to use gaming to help the communities hurt by the storm. While around the country, the process of introducing slot machines into some new states continues, even if at a slow pace. And with an election coming in November, there will be some new locations that will join the list working their way toward the addition of casinos, racinos or just slot machines to the local landscape. In each of those communities we can expect to hear from both sides of the political and moral aisle the benefits and the dangers of gaming. Never a dull moment it seems.

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.