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Quicktakes - The month's trends in a glance - April 2004

15 June 2004

The economy continued to improve in April, but that did not mean that the stock market went up. In fact, the Dow and S & P indexes are down about 2 ½ percent since the beginning of the year and the NADAQ is down 7 ½ percent. It is not easy to understand, the first quarter earning results were generally very strong, especially in gaming (if one ignores the Donald); the usual economic measures, such as consumer spending, consumer confidence, job growth and personal income were up; only the threat of an increase in interest rates, energy prices and the continuing international tension offer any explanation.

U.S. shoppers turned out in force in March…Separate private-sector reports on weekly chain store sales showed that this momentum -- fueled by tax rebates and possibly renewed confidence in the economy and jobs…The Commerce Department said retail sales rose an unexpectedly sharp 1.8 percent in March to a seasonally adjusted $333.01 billion, the biggest gain since March 2003. Excluding cars and trucks, sales gained 1.7 percent, that category's best performance since March 2000. Jonathan Nicholson, Reuters, Yahoo! Business, 4-13-04

Americans were more upbeat in April about finding a job than they have been in almost 18 months, causing markets to quickly shift focus to next week's influential report on the U.S. employment situation. Also consumers bought a near-record number of homes last month, adding to views the U.S. economy now might finally be in a bonafide expansion since it began its choppy recovery from recession in 2001. Amanda Cooper, Reuters, Yahoo! Business, 4-27-04

Optimism among manufacturers about the economy and the business outlook is also near record levels another report from the Institute for Supply Management (ISM) showed on Tuesday. The positive news about jobs seemed to more than offset economists' concerns that soaring gasoline prices, bloodshed in Iraq and a recent pull-back in share prices might dent consumer confidence. Amanda Cooper, Reuters, Yahoo! Business, 4-27-04

The Conference Board, a business group based in New York, said on Tuesday its index of consumer confidence rose to 92.9 in April from 88.3 in March, its highest since January. More to the point, the jobs-hard-to-get index within the group's survey fell to 27.6 in April from 29.9 in the month before, its lowest since November 2002. Amanda Cooper, Reuters, Yahoo! Business, 4-27-04

Consumers, an important force shaping the economic recovery, spent modestly in March, helping the economy log solid growth in the last quarter. The Commerce Department reported Friday that consumers boosted their spending by 0.4 percent last month. That followed another 0.4 percent increase in February, according to revised figures. February's increase was double the 0.2 percent advance reported a month ago. Jeannine Aversa, Associated Press, Yahoo! Business, 5-1-04

Americans' incomes, meanwhile, also rose solidly in March, increasing by 0.4 percent. That came on top of a 0.5 percent gain in February. The increase was encouraging because income growth is a main factor in people's willingness to spend in the future, economists said. Jeannine Aversa, Associated Press, Yahoo! Business, 5-1-04

Gaming stocks suffered the same fate as the overall market in April, except the Vegas gaming index used by the Las Vegas Review-Journal. The Review-Journal opines profit-taking as the reason; an early month drop of IGT and Alliance stock had a more logical explanation: the prospect of a more limited than originally thought British gaming market. The explanation is certainly logical, but by month's-end IGT had lost 16 percent and Alliance 23 percent. British gaming regulations aside, both companies reported earnings up by about the percentage as the stock prices dropped; go figure.

Profit-taking and investor doubts that Las Vegas can sustain its ongoing business boom shot a hole in ballooning gaming stocks, which dropped in price as a group in April for the first time since January 2002. The Dow Jones gaming index of casino stocks fell to 423.24 in April, down nearly 6.5 percent from March and twice the drop in broad market indicators. By comparison, the Standard and Poor's 500 Index ended the month at 1,107.30 Friday, down 3 percent compared with March. However, the Applied Analysis Gaming Index, a weighted average of local gaming stocks, closed at 268.49, up nearly 6 percent in April compared with March and 81 percent higher than its value a year earlier. Rod Smith, Gaming Wire, Las Vegas Review-Journal, 5-1-04

British parliamentarians called on the government on Wednesday to put tighter controls on casinos and slots…recommended an amendment that would put a cap on the number of Las Vegas-style slot machines a casino can install and proposed restricting larger "resort" casinos to areas where they can bring regeneration, such as ailing seaside towns. Katherine Baldwin, Reuters, 4-7-04

Shares of two major U.S. slot and video poker machine makers fell this morning as British legislators issued an interim report …shares of International Game Technology of Reno fell $1.11 per share to $45.36, while Las Vegas-based Alliance Gaming Corp.'s stock fell $1.26 per share to $32.73. Liz Benston, Las Vegas Sun, 4-7-04

New British regulations are on the way, and there will be some opportunity, although it would be impossible for me to guess the details from this vantage point. The United Kingdom is not the only jurisdiction grappling with new or expanded gaming. First those, who like the English are not certain what if any additional gaming should exist in their jurisdiction: Kansas and Maryland opted out, at least for the time being.

Hours before the end of the 2004 legislative session Monday, lawmakers killed Gov. Robert Ehrlich's slot machines proposal for the second consecutive year. Ehrlich's sophomore bid to legalize slot machines died just as his freshman proposal did: in the House Ways and Means Committee, which kept the legislation from reaching a full vote in the House of Delegates chamber. Associated Press, Blood Horse news, 4-29-04

The result was expected. The margin was a shocker. The Senate on Thursday rejected legislation to expand gambling in Kansas, sending the issue to an apparent death for the current session. Senators defeated the measure 26-14 - after giving the bill tentative approval earlier in the day to send it to a final vote. …Majority Leader Lana Oleen said she does not anticipate the issue coming up again this year. Pittsburg (KS) Morning Sun, 4-30-04

On the other side of ledger, four states passed or advanced some form of legislation, Iowa, Maine, Michigan and Nebraska advanced gaming expansion; Iowa still requires regulatory approval before any new licenses are granted and Nebraska needs voter approval, in Michigan a full house is necessary. Four steps forward against the two steps backward in Kansas and Maryland, four steps that should mean more slot machines sales of IGT and Alliance.

Iowa Senate approved major gambling legislation…Senators punctuated the legislative gambling saga with a 37-11 vote after just 45 minutes of debate. …The legislation also leaves the door open to the possibility of new gaming licenses after voters in six counties gave a green light to riverboat casinos. …leaving the final say on new licenses with the Racing and Gaming Commission. Todd Dorman, Quad-City Times, 4-20-04

The state of Maine is moving forward to set up a Gambling Board to oversee slots in that state. …Governor Baldacci is expected to sign a bill this week that modifies the original referendum allowing slots passed by the voters last fall. …The revised bill, which will go in to effect 90 days after the Legislature adjourns, also calls for a five member board to oversee the slots operation. Jeremy Rangiawha, Harness Link, 4-30-04

The state Senate narrowly passed legislation that would allow expanded gambling at Michigan's seven horse race tracks. The tracks would be able to add video lottery terminals and slots -- games similar to those included at the state's 20 casinos -- if the legislation becomes law. Associated Press, Detroit Free Press, 4-29-04

The Nebraska Legislature approved a measure to put casino gambling on the November 2 ballot as a constitutional amendment in a 31-16 vote on Wednesday.
Only two casino operations would be allowed under the amendment with their location to be determined by local voter approval, the Lincoln Journal Star reports. Slot machines would not be allowed outside the casinos. Thoroughbred Times, 4-14-04

A couple of states are still in the debate stage of the process; in Pennsylvania, once thought to be the most likely to pass a slot bill, the legislature is still trying to find compromises that satisfy everyone; and in Illinois, the attorney general recommends to the legislature just adding more licenses instead of waiting for the Isle of Capri/Rosemont operation to begin paying taxes.

The state Senate continues its seemingly endless discussions over whether to allow slot machines at horse race tracks and to use the $1 billion in expected revenue to lower local property taxes. But no vote is expected anytime soon…There are at least 10 applications for horse racing licenses in Pennsylvania, including two in the Lehigh Valley. John M.R. Bull/ Joe McDermott, Allen Town Morning Call, 4-12-04

Illinois Attorney General Lisa Madigan has some advice for the governor and state lawmakers about the new casino deal. She says if the state wants to earn any new revenue from casino gambling, the general assembly had better approve more gaming licenses. …"If they want the revenue sooner, they could pass another license. That's up to them to decide. But yes, it is a recommendation that I have made if they are looking to have a license up and running sooner rather than later. Potentially that would allow another casino to be up and running without the more as of litigation and bankruptcy and investigation we currently have surrounding the 10th license," said Madigan. Andy Shaw, ABC 7 Chicago, 4-29-04

There are also the long shots, states where a dreamer, casino owner or other hopelessly unrealistic person proposes legislation, a referendum or just a franchise granted by the state to bring the excitement and wonderful takes to your state. Larry Flynt, Caesars, Don Laughlin, Michael Gaughan and Sheldon Adleson are among the operators trying to convince someone to let them come to town to open a game and book a bet. There are others with names less well known in Alaska, Colorado Ohio and Texas who see a very bright future decorated with spinning reels and wheels. There are legislators in Pennsylvania and Rhode Island who watched the license bidding wars in Illinois and are anxious to bring that process into their state. Also, there are other states where constituents have watched Indian gaming and want a piece of the action for themselves, such as the tracks and card rooms in California and Washington. Oh, and in New Jersey it would help if sports betting could be added.

The House Finance Committee on Wednesday passed a bill that could allow a gambling casino to open in Anchorage. House Bill 552, which the committee sponsored, would set up a state gambling commission with the power to allow a single casino in Anchorage. The bill was the idea of Perry Green, a well-known Anchorage furrier and poker player, who proposes to turn the failed state-owned Anchorage Seafood International plant into a casino. Sean Cockerham, Anchorage Daily News 4-22-04

Not to be deterred by democracy, the horse and dog racing industry's two best friends, Rep. Al White and Sen. Ken Chlouber, have struck back with a vengeance by repackaging last year's failed initiative as House Bill 1437. The bill's modus operandi is a computer game whose makers and promoters insist meets the requirement for pari-mutuel wagering. "Instant Racing" machines have a video screen that plays reruns from a library of more than 50,000 races. Program numbers spin on a video display like cherries spin on a video-lottery terminal. The machines accept cash or vouchers, but pay only in vouchers. The money wagered through the machines goes into a pool and is paid out according to pari-mutuel standards. Rocky Mountain News, 4-21-04

Polls that looked at Ohioans' willingness to support slot machines at racetracks found strong support for using profits to fund college scholarships, guarantee increases in school funding and provide money for preschool programs, slots proponents say. There was no support for a plan to let cities vote on bringing in casinos, an idea that racetracks are convinced would kill the proposal. Andrew Welsh-Huggins, Associated Press, Las Vegas Sun, 4-29-04

Allowing video slots gambling at horse and dog racing tracks would create rural jobs and boost Texas' position in the national horse racing scene, Texas Agriculture Commissioner Susan Combs testified Monday. Both Rep. Ron Wilson, D-Houston, and Rep. Jim Pitts, R-Waxahachie, laid out separate proposals to a House education committee that would allow the state to tax video gambling at horse and dog tracks to help pay for public education. April Castro, Associated Press, Las Vegas Sun, 4-27-04

Tim Eyman's initiative to use video gambling machines to cut state property taxes could wind up cutting the income of Washington's Indian tribes as well, tribal spokesmen say. The revenue at the state's tribal casinos has risen sharply since they began using the video machines in 1999 as part of a negotiated deal with the state. As gamblers flocked to the new machines, which remain illegal off-reservation, revenue at non-Indian gambling establishments sagged, according to data compiled by the Washington State Gambling Commission. John Stark, Bellingham Herald, 4-15-04

Assembly Budget Committee Chairman Louis Greenwald (D-Camden) and assemblyman Jeff Van Drew (D-Cape May) are planning to challenge a federal law that could allow sports wagering at Atlantic City casinos on the grounds that it could raise millions of dollars for the state. The drive for sports betting comes just after an agreement between the state's racetracks and casinos, announced by Governor James McGreevey on April 6, that would give the tracks $86-million in purse subsidies… Thoroughbred Times, 4-24-04

Political strategy can be very confusing for those of us who sit on the sidelines, listen to the candidates' sound bit comments trying to decide who is the best to represent our point of view; and no office gets more high level strategic planning than the presidency. Presidential candidates travel the country speaking to special interest groups and giving interviews always conscious of the biases of each separate group or place. One simply does not talk about the same things to Detroit autoworkers and one does with California environmentalists. We have all heard how Ralph Nader tipped the scales toward the Republicans by pulling some Democrats to vote for him and not Al Gore. Still, who would have guessed that putting slot machines on the ballot in Ohio would bring out more Bush voters and cost Kerry the state? I wonder if that means that the Bush campaign is really behind the initiatives in California and Washington?

Backers of Democratic presidential candidate John Kerry are expressing concern about a proposal on the Nov. 2 ballot to allow video-gambling machines at Ohio's seven horse-racing tracks, including Toledo's Raceway Park. Jim Ruvolo, chairman of Mr. Kerry's campaign in Ohio, said he opposes putting the issue on the Nov. 2 ballot because it could energize "evangelical Christians" who would help President George W. Bush carry Ohio. Mr. Ruvolo said he has informed aides to Mr. Kerry, the presumptive Democratic nominee, about his opposition and they share his concern. "Democrats will turn out for the presidential election. I don't think there is a core constituency in the Democratic Party for slot machines. I know there is a constituency among the religious right against gambling," said Mr. Ruvolo, a Toledo-area resident and former chairman of the Ohio Democratic Party. James Drew, Toledo Blade, 4-30-04

Though the British have not yet finalized the new regulations, the interest in the United Kingdom has hardly diminished, unless you count Steve Wynn "dissing" the whole thing as a waste of time and effort; for Wynn Macau is clearly a better play.

Gambling giant MGM Mirage and a British developer announced plans today to build casinos in three cities and an entertainment complex in a fourth. Las Vegas-based MGM Mirage and Manchester-based Peel Holdings put the value of the developments in Manchester, Salford, Glasgow and Liverpool at £600 million. …"All of the projects that we have announced today, and others that we are still exploring, have the potential to result in unprecedented levels of inward investment, jobs and tourism for each of the locations we have chosen," Lloyd Nathan, MGM Mirage managing director for Europe, said in a statement. The Scotsman, 4-19-04

Steve Wynn isn't a believer in the supposed untapped power of the United Kingdom gaming market. While Las Vegas-based competitors MGM MIRAGE, Harrah's Entertainment Inc. and The Venetian owner Las Vegas Sands Inc. have scrambled to line up deals to tap into what they see as the U.K. market's incredible upside, Wynn has waited on the sidelines. …"When people say the U.K. is the market with the biggest upside, it's simply not true," Wynn said. "I've always been a little skeptical about the U.K., and I've always thought casino prospects in London were a bit murky." Jeff Simpson, Las Vegas Sun, 4-13-04

Wynn believes Macau and other Asian markets have the biggest casino-market upsides. His Wynn Resorts Ltd. won one of Macau's three government-approved casino concessions, and Wynn hopes to break ground on the company's planned $500 million-plus Wynn Macau hotel-casino within a couple of months, he said. Jeff Simpson, Las Vegas Sun, 4-13-04

Rank Group Plc and London Clubs International Plc, owners of casinos in the U.K., said their expansion would benefit from proposals by British lawmakers today to further deregulate the country's $3.8 billion gambling industry. Rank, based in London, welcomed recommendations by the Joint Committee on the Draft Gambling Bill to overhaul 35-year-old legislation by, for instance, allowing all casinos to offer bingo and betting and permitting operators to install larger numbers of gaming machines. Rank and London Clubs are expanding their U.K. casino operations… Las Vegas Sun, 4-7-04

Whatever the new regulation turnsout to be and regardless of the kind of operations that result, gaming in the UK is more widespread and often more entertaining than it is in the United States. Take for example the following three stories: the Mafia continues to attempt to extort a fair share for their protection services from online gambling sites in Britain; where was the protection for the casino that was robbed by thugs with samurai swords and baseball bats; but by far the most entertaining story, certainly for April, was the man who sold everything and went to Vegas to play roulette. He doubled his money. Now, why didn't I think of that? I wonder if the new regulations would have allowed him to go to Edinburgh, Blackpool or London instead?

A UK-based on-line gambling exchange, Sporting Options, was hit by a denial of service attack at the weekend in the latest on-line extortionist assault against on-line bookies. The company's site was rendered inaccessible for 40 hours in an attack timed to coincide with Britain's biggest betting race -- the Grand National -- and the FA Cup semi-final…flood of spurious traffic swamped the site with more than 2 million connections per second, locking out legitimate users from 8pm on Friday night…until Sunday…incident followed threats from extortionists that the site would be brought to its knees unless EUR40,000 was sent via Western Union. Irish Electronic News, 4-6-04

These were the shocking scenes as thugs brandished a 3ft samurai sword and baseball bats in a raid on a casino. …They finally fled in a car after taking thousands of pounds in notes from cash machines in the hold-up in Manchester. Online Sun, 4-2-04

. . .Revell put up his life's worth of $135,300 and bet on red at the roulette table as a British film crew recorded the event. Liz Benston and Jeff Simpson, Las Vegas Sun, 4-19-04

He may have wanted the publicity more than the money, as he brought a television crew with him; not everyone in Vegas, they say, wanted to book the bet however; it is not politically correct to portray gambling as a way to get rich or pay your bills. That is, unless a state lottery wishes to advertise buying a lottery ticket as a ticket to wealth and happiness.

…Revell had approached Caesars Entertainment Inc. with the idea of making the bet at one of its properties but the company rejected it, company spokesman Robert Stewart said. "That was a bet that we decided we did not want to take," he said. Liz Benston and Jeff Simpson, Las Vegas Sun, 4-19-04

Harrah's Entertainment Inc. wasn't approached with the proposal but "had (Revell) done so we would not even have come close to participating in this," spokesman Gary Thompson said. "Gambling is not a way to solve financial problems. It never has been and never will be. It should be entertainment and nothing more than that." Liz Benston and Jeff Simpson, Las Vegas Sun, 4-19-04

In the terrorist world of 2004, one should never be surprised by political demands, especially demands for national autonomy and independence. However, it still caught me completely off guard when the unions involved in the Casino Windsor strike made national autonomy a central issue. Three weeks after the strike began the casino is still closed, giving Detroit casinos a substantial boost. One might think a casino labor strike would be about wages and benefits. Not this one, it is about political parties and American invaders. The call is: Drive the Americans out, keep Canadian dollars and profits at home: Yankee Go Home! The union has also managed to turn the sitting government into a critical issue to be resolved, or at least debated, as part of the strike.

A labor rally for workers at Casino Windsor has demanded more respect from management, an end to Ontario's Liberal government and for the casino's American managers to leave. …About 3,500 casino workers have been on strike since April 3. …Casino workers were joined by union colleagues representing French and English teachers, University of Windsor faculty, the public sector and Canadian Auto Workers locals from Ontario communities of Windsor, Chatham and Tilbury. … Gary Parent, president of the Windsor and District Labor Council and negotiator in the casino talks, expressed concern that none of the area's three provincial Liberals showed up for the rally. He welcomed the attendance of several city councilmen and the city's two New Democrat Members of Parliament, one of whom called the Liberals cowards. "When I see the provincial government hiding behind the casino door, saying, `Hands off, we're not getting involved,' I say that is cowardice on their part," said Joe Comartin. Buzz Hargrove, national president of the CAW, said he wanted Ontario casinos to be run by Canadians. Associated Press, The (South Carolina) State, 4-26-04

The economy is still growing, though war, fuel and interest rates are worrisome. Gaming stocks are okay, but suffering a bit from too much good news, not so good news from England and uncertainty over slow moving legislation. The strike at Casino Windsor is still there, no revenue costing the province millions every day; it may not be a trend, no strike in United States has had quite that degree of an impact, but it certainly shows that the gaming industry is vulnerable to more than terrorists or economic downturns.

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.