Gaming stocks fall again

Thursday, Oct. 10, 2002 | 11:08 a.m.

Gaming stocks fell for the second consecutive session this morning, as a big company was downgraded and a report from regulators showed the Nevada slot machine business and casino action remained soft in August -- except for the unpredictable high-roller baccarat game.

Harrah's Entertainment Inc. shares led this morning's decline, falling 8 percent after analyst Michael Reitbrock of Salomon Smith Barney downgraded the stock to "in-line" from "outperform." He also lowered his 12-month price target of Harrah's stock to $52 a share from $58.

Reitbrock said his downgrade reflected concerns about consumer spending. He also cited very high investor expectations for Harrah's stock and growing competition.

Big Las Vegas competitors to Harrah's also fell this morning, with Park Place Entertainment Corp. off 3 percent, MGM MIRAGE down .76 percent, Station Casinos Inc. down 3.58 percent and Mandalay Resort Group down 4.79 percent.

Stocks of all the big Las Vegas-based casino operators fell Wednesday on concerns about Las Vegas room rates and tougher competition among riverboat casino operators.

The state Gaming Control Board, in the meantime, said high-end baccarat players lost big in August in Nevada, helping the state reverse a three-month stretch of declines in casinos winnings.

The state Control Board reported today Nevada casinos won $839.5 million, up 1.8 percent for August 2001 and representing only the third increase this year. Casinos statewide won $74.6 million on baccarat, up 138 percent from a year ago. The clubs held 29.6 percent of the money wagered compared to the average 19 percent.

Despite the positive report, Gov. Kenny Guinn issued a warning that taxes from the casinos through the first three months of the fiscal year are $21 million below projections. "I still maintain some optimism that this shortfall will stabilize during the coming months."

Guinn has already ordered $38 million in cuts in state budgets and he intends to tap the $136 million "rainy day" fund to get the state through this fiscal year.

Frank Streshley, senior research analyst for the Gaming Board, said if baccarat was excluded from the state win, the gross revenue would have been down 3.5 percent, instead of increasing by 1.8 percent.

The board said winnings statewide in blackjack fell by 2.5 percent; gross revenue in craps was up 16.6 percent and roulette was down 17.3 percent. Slot win across the state fell by 6.1 percent. Casinos along the Las Vegas Strip won $448 million, up 9 percent. It was their strongest performance since February and ended three months of decline in revenue.

Baccarat also carried the day for the Strip with winnings of $73.7 million, up 141.3 percent.

Streshley said he had no explanation for the high-end play in Southern Nevada. There were no special events or title fights. But he said there was one extra Saturday in the month that rolled into the Labor Day weekend.

Play on blackjack on the Strip fell by 6.5 percent; craps was up 29.3 percent; roulette fell 20 percent and slot machines gross win dropped 4.3 percent.

If baccarat was excluded from the gross win on the Strip, revenues would have been down 1.6 percent from a year ago.

The board said downtown Las Vegas registered $52.2 million in gross revenue, down 7.5 percent, the third straight month of decline. This compares with a year ago when the win was up 5.7 percent. Slot machine revenue dropped 8 percent and games were down 5.6 percent.

Casinos in North Las Vegas reported $13.6 million in win, down 15.5 percent and the third straight month of decline. Slot revenue was off 16 percent and table win fell 12.4 percent.

Laughlin clubs posted $42.9 million in revenue, up 1.2 percent from a year ago. Slot win rose .3 percent and table revenues climbed 6.6 percent.

For only the second time this year, clubs on the Boulder Strip reported a decline in revenues compared to the prior year. The board said they won $41.8 million, down 16.3 percent. Slot win fell 22.7 percent but game and table win rose 27.6 percent.

Mesquite casinos posted $8 million in win, up 6.9 percent. Slot win was up 6.5 percent and game and table win rose 10.4 percent.

The balance of Clark County reported $58 million in winnings, a 12 percent decline from a year ago. Slot win fell 12.8 percent and game and table play was down 7.2 percent.

Washoe County casinos posted their first percentage increase in the last six months. Gross win rose 2.2 percent to $101.4 million. Slot win fell .6 percent but game and table revenues rose 11.7 percent.

South Shore Lake Tahoe reported a win of $34 million, down 5.6 percent. The board said slot revenue fell 4.9 percent and game win was off 7.4 percent.

Carson Valley casinos bounced back from their first decline in July to post a 3.2 percent increase in revenues to $9 million. Slot win rose 3.3 percent and game revenues were up 2.1 percent. In July gaming revenue fell 5.2 percent in the Carson Valley, the first decline this year.

Elko County casinos recorded their first decline in six months. The board said revenues reached $19.9 million, down 2.8 percent. Slot win was off 4.6 percent and game and table revenues rose 5.9 percent.

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