Issue 293
April 24 - April 30, 2006
Volume 6
page 1
 

This Issue

Gaming News

Casino City's April Sweepstakes

Gaming Company Revenue: Record profits for 'Big Six'

Web Gambling Ads in Vegas Make Sense to a Gaming Site

Rules may bring slots by August

Singapore Could Name Winning Casino Bid By End Of May 

Show Time Wynonna performs at Harrah's Atlantic City Concert Venue.

Column Selective Memory at Video Poker By John Grochowski

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Starting With A Sting
As Reported by Las Vegas Review-Journal

LAS VEGAS — Growing up in Las Vegas, the Fertitta brothers remember casino openings as grandiose events.

Last Tuesday night, when Station Casinos unveiled its $925 million Red Rock Resort, the Fertittas didn't want to disappoint their 3,800 special guests.

Highlighted by a six-minute fireworks display above the hotel tower and an hour-long poolside concert by Grammy Award-winning rock star Sting, Red Rock Resort let Summerlin know it was in the neighborhood.

"We wanted something memorable, and I think Sting helps give us a memorable opening night," said Lorenzo Fertitta, Station Casino's president.

Before Red Rock Resort opened to customers just before midnight, invited guests sampled fare from the casino's nine sit-down restaurants and separate food court outlets. Also, the 25 open bars around the casino poured free glasses of Dom Perignon champagne and wine from the Ferrari-Carano winery, which is owned by Northern Nevada's Carano family.

"There is no better way to show our guests a memorable night than to pull out all the stops," said Station Casinos Chairman Frank Fertitta III.

Lorenzo Fertitta said a mutual friend knew Sting and the brother approached him with the idea of opening the resort with an outdoor concert. The secret remained hidden until mid-afternoon when the brothers told a CNBC interviewer about the performance. By midday, security personnel, employees and star-struck VIP guests were buzzing about Sting's appearance. Station Casinos Director of Corporate Communications Lori Nelson rode up the elevator with Sting.

Sting, former front man for The Police in the 1980s, performed some of his award-winning solo songs from his albums Dream of Blue Turtles and Brand New Day, as well as a few of his Police numbers for the appreciative crowd.

The VIP guests crowded into the three-acre pool area for the Sting concert. Frank Fertitta introduced Sting after thanking all those who took part in the development, construction and opening of Red Rock Resort.

Lifeguards surrounded the pool to make sure partying guests didn't take an impromptu swim.

Many guests grabbed the coveted circular and canopied chaise lounges for the performance.

Sting opened with the Police staple "Message in a Bottle," and performed other favorites, such as "King of Pain" and "Synchronicity II."

He also performed the Beatle's song, "A Day in The Life."

Officials from many rival casino companies attended the opening, as did executives from many of the Station Casino resorts.

Joe Hasson, general manager of Green Valley Ranch Resort, said his new sister property has set the bar for the rest of the market.

"This is a spectacular and stunning property, and Red Rock Resort marks the next generation for the gaming industry," Hasson said.

The VIP party sparked comments by both invited guests and Red Rock Resort employees.

"We're ready. We've been training for weeks and we're ready to have fun," said Jenn Potter, a bartender in the race and sports book lounge. "We've had some play days but I'm looking forward to seeing all our customers."

Jeremy Crouse, a food server in T-bones Chophouse, planned to see some of Sting's performance from the restaurant's outdoor patio area.

"This is classy," he said of the Dom Perignon champagne. "That stuff is $75 a glass. I don't know of any other casino openings doing this. What a great night."

Casino floor supervisor Pete Eghoian was ready for the midnight opening. Having spent 21 years with Harrah's Lake Tahoe, he was often called upon to help out with casino openings for the company's Midwest riverboats. Red Rock Resort, he said, tops them all.

"I really believe this is the nicest hotel-casino around, and I've seen a lot of them," he said.

Inside the Salt Lick barbecue restaurant, food servers, managers and staff posed for a group photo before the influx of customers.

General Manager Alan Badis said the staff had been together since March 20 readying for opening night.

In the lobby lounge, former U.S. Sen. Richard Bryan was greeting friends. As governor in mid-1980s, he took part in the unveiling of Summerlin by the Howard Hughes Corp. He remembers when the Summerlin acreage was referred to as the "Husite."

"We never knew what would be found out here," Bryan said. "Sixty years ago, this was the end of the world."

As a Boy Scout, Bryan recalled that his troop used to camp out overnight near the Red Rock Recreation Area. He said the 70-acre location for Red Rock Resort in Summerlin's 1,300-acre master-planned Summerlin Centre near I-215 Beltway and Charleston Boulevard was probably one of the troop's overnight hangouts.

"This really is spectacular," Bryan said, gazing at the nearly $1 billion locals property.

In addition to its restaurants, Red Rock Resort opened with 415 hotel rooms -- another 435 are expected to open by December -- and an 87,000-square-foot casino with 3,000 slot machines, 62 gaming tables, a poker room, a race and sports book, and a bingo room.


Gaming Company Revenue: Record profits for 'Big Six'
As Reported by Las Vegas Review-Journal

LAS VEGAS — Analysts are predicting a 44.8 percent increase for Nevada's biggest gaming companies.

The "Big Six" gaming operators are starting 2006 with record-breaking profits, up nearly 45 percent from the first quarter 2005, thanks to surging demand for Las Vegas as a destination, strong table play in casinos and the two biggest mergers in industry history, analysts said this week.

With the major casino companies set to begin reporting first-quarter earnings next week, analysts are predicting that the combined net income for the six largest Nevada-based gaming companies will have surged to $572 million, up 44.8 percent from $395 million in the 2005 first quarter.

Deutsche Bank analyst Marc Falcone said the earnings forecasts for the first quarter, as well as the remainder of the year, are on the conservative side because economic fundamentals are proving to be stronger than expected.

"Growth (in the first quarter) was substantial, with regional markets benefiting from the mild winter and Las Vegas getting a boost from increased high-end play," he said.

The Big Six gaming companies are Boyd Gaming Corp., Harrah's Entertainment, Las Vegas Sands Corp., MGM Mirage, Station Casinos and Wynn Resorts Ltd.

Penn National, a major gaming company not based in Las Vegas, also enjoyed substantial growth, with first-quarter net income of $46.7 million, up 77.4 percent from $26.3 million a year earlier, analysts said.

The Las Vegas-based Big Six are expected to report combined revenue of $5.9 billion in the first quarter, up 55.7 percent from $3.8 billion a year earlier.

And cash flow -- earnings before interest, depreciation, taxes and amortization -- should have increased to $1.9 billion, up 58.3 percent from $1.2 billion in the first quarter of 2005.

Brian Gordon, a partner in Las Vegas-based financial consultants Applied Analysis, said each operator has benefited over the past three months from decent increases in visitor volume, shifts in convention business out of the Gulf Coast area and increased spending by individual visitors.

"In aggregate, we're seeing growth rates in the teens across the board. We're expecting to see that level of growth in the gaming sector in the first quarter as well," he said. "The growth demonstrates healthy fundamentals in the economy, but we don't expect to see growth in the 20-plus percents any more. That kind of growth can't sustain itself. At the same time, we have yet to see any material declines for gaming operators."

Increased spending at the higher end of the gaming market has been particularly important for sustaining growth, he said, citing both heavy baccarat volumes and robust room rates.

Susquehanna Financial Group analyst Brian McGill said casino operators have been doing a good job of getting players who will spend more, even if increases in the number of visitors have moderated.

"There are not huge increases in the numbers (of visitors), but you're seeing more profitable guests," McGill said.

That's the reason for the emphasis operators are placing on overall spending rather than just revenue per available room in their hotels, he said. McGill also said the market is still feeling an effect from the opening of Wynn Las Vegas less than a year ago.

Partially as a result, there has been a hefty increase in baccarat play and the volume wagered on higher-end table games, he said.

Standard and Poor's, the national credit rating service, last week predicted continued growth through 2006, driven mainly by strong consumer spending, despite downward pressure from higher interest rates and energy costs.

However, it said the rate of revenue growth in gaming will moderate, given a likely slowdown in the U.S. economy.

As a result, S&P expects that gaming companies on average will generate mid-single digit gaming revenue growth the rest of of the year.

Falcone said that national, macroeconomic trends -- high oil and gasoline prices and higher interest rates -- could take a toll on the gaming industry later in the year.

"Historically, there has been no correlation between national (economic) trends and gaming, but we're going to have to be cognizant they could affect gaming revenue growth in Las Vegas," he said, predicting high-single digit growth starting in May.

McGill was more optimistic, predicting double-digit growth for the remainder of 2006, even with a slowdown that is expected to start during the slower summer months.

Goldman Sachs analyst Steve Kent was especially bullish on Las Vegas operators, as opposed to manufacturers, particularly Las Vegas Sands and Station Casinos, based on their growth plans, return-oriented management teams and unique positioning in their respective markets.

He stressed the strong gaming trends in Las Vegas, Atlantic City and Macau, plus expansion plans now in the works or expected to be announced later in the year.

Kent said slot manufacturers should report a fairly benign quarter since the market for replacement machines and new slot additions continues to be relatively soft.

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