Despite negative projections from Wall Street, gambling stocks soar

Monday, Jan. 3, 2000 | 1:16 a.m.

A stock index for a dozen major casino companies jumped more than 50 percent in 1999, despite negative projections from Wall Street over concerns of overbuilding in Las Vegas.

The Chicago Board Options Exchange gaming index, known as the GAX, ended the year at 252.45, a 51.4 percent increase from 166.73 on Dec. 31, 1998.

Station Casinos shares rose 174 percent, MGM Grand Inc. was up 85.5 percent, Mandalay Resort Group up 78 percent and Harrah's Entertainment up 68.5 percent.

Wall Street's early 1999 fears of more supply than demand in Las Vegas proved largely unfounded as additional room inventory was easily absorbed by an 11 percent increase in visitors.

Station Casinos, which owns four hotel-casinos in Las Vegas, along with riverboat casinos in the Midwest, saw its stock climb to $22.44 from $8.18 at the beginning of last year.

"I think it's really a reflection of the market's appreciation of our strategy of catering to the locals market," said Glenn Christensen, chief financial officer of Station Casinos. "You should expect to see us continue to invest heavily in the Las Vegas market."

Mandalay Resort Group, formerly Circus Enterprises, closed at $20.13, up from $11.32 a year ago. It opened the $950 million, 3,700-room Mandalay Bay in March.

MGM Grand posted the largest dollar-to-dollar jump in 1999, going from $27.12 to $50.31. Harrah's Entertainment, which bought the Rio hotel for $880 million, climbed to $26.44 from $15.52.

Alton, Ill.-based Argosy Gaming Co., which operates five riverboats in the Midwest, led all companies on the GAX with a 479 percent increase in stock price to $15.56.

GAX members that lost ground during the year were Anchor Gaming, down 23 percent; International Game Technology, down 16.5 percent; Jackpot Entertainment, down 12 percent, and Trump Hotels, down 10 percent.