Casino News Today

THERE are tough times ahead for the casino sector, where former media mogul James Packer now has the bulk of his investments.

Crown Ltd has lost $6 billion in value since last December and problems with new Chinese government restrictions on visitors to Macau.

While there have been solid results so far this year for Crown’s Australian operations, the group’s offshore expansion plans appear less certain of delivering much growth.

But analysts saw the results as better than rival Tabcorp’s and a solid foundation for the next year.

Crown chief executive Rowen Craigie said yesterday at the group’s annual shareholder meeting — from which media were barred — that there would be “some dislocation” over the next 18 months. “Crown’s operations are diversified and located across different markets. This diversification assists in the mitigation of some of the risks associated with economic downturns in particular regions,” he said.

“While some of the markets in which those businesses are located may see some dislocation in the next 12 to 18 months, taking a two to three year view we believe they are likely to return to steady growth trends.”

But Crown’s Australian operations continue to be its best business.

“Recent trading at our Australian casinos, Crown Melbourne and Burswood, continues to be solid. Combined revenue from table games (excluding VIP commission program play) and gaming machines from July 1 to October 21, 2008, is up 4 per cent on the previous corresponding period last year,” Mr Craigie said.

“Year-on-year growth in international VIP commission program play has been very strong over the same period.”

But he added there had been some “softness” in a few areas such as low-end slots, corporate functions and hotel bookings.

Crown’s earnings before interest, tax, depreciation and amortisation grew by 8.2 per cent in 2007-08 and the group said it expected solid EBITDA growth this financial year despite expecting a more difficult trading environment and ongoing renovations.

“For 2008-09, we forecast 5.3 per cent EBITDA growth on 4 per cent revenue growth for the two domestic casinos,” said Citi analyst Jenny Owen.

Mr Craigie noted new measures by the Chinese Government to slow down growth in Macau, where Crown was building its second casino, due to open next year. “The Chinese Government has also been making changes which impose some restrictions on the ability of some Chinese citizens to obtain visas to travel to Macau,” Mr Craigie said. “These changes are targeted at moderating the extraordinary growth in Chinese visitor numbers. We have seen the impacts of the latest restrictions in September with year-on-year gaming revenue growth for the month declining by about 3 per cent.” Still, the news and continuing stock market slump sent Crown shares continuing their downward spiral, off 18c to close at $6.30. The stock has fallen from $14.27 since it was split from Mr Packer’s media investment group Consolidated Media Holdings last December, wiping about $6 billion in value off the group.

While a raft of US-based casino stocks have fallen, many analysts believe Crown is undervalued. “Given weakness among peers, Crown were questioned on acquisition intentions,” said Ms Owen, who had a price target of $11.

“Crown highlighted strength of their balance sheet relative to peers but the most important projects are the completion of domestic casino upgrades, and integration of Cannery.”

The comments on the gaming business came only a day after Mr Packer cut ties with his family’s 90-year-old media empire.

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BLOOMINGTON, Ind. — Indiana’s typically resilient gambling industry is taking a beating from the nation’s economic downturn.

The gambling industry has been considered somewhat recession-proof, but the state’s wagering tax and admission tax revenues declined in fiscal year 2008 compared with the previous year, according to the Indiana Gaming Commission.

Mike Smith, president of the Casino Association of Indiana, said economic problems are difficult to fight, but he hopes the worst is already behind the gambling industry.

“If you look at the numbers (of the casinos in Indiana), we’ve managed to stabilize,” he said.

At French Lick Casino, the amount made by the casino this year through September is down $2.7 million from what the casino brought in during the same time in 2007. On slots and table games, French Lick has made $76.2 million this year compared with last year’s $78.9 million by this time.

Economist Michael Hicks, executive director for the Center for Business and Economic Research at Ball State University, said he doubts the recent economic downturn will last long enough to put any of Indiana’s casinos out of business.

“I don’t expect any of them are going to close,” Hicks said. “What they are more likely to do is cut back on staff and hours of operation.”

Indiana now has 13 gambling sites, including slot machines at the state’s two pari-mutuel horse racing tracks — Hoosier Park in Anderson and at Indiana Downs Shelbyville. That competition may make it more difficult for casinos to target customers.

“The problem today is there is no shortage of gambling,” Hicks said.

Gamblers may also be less likely to risk large amounts of money on slot machines or table games if they have lost a lot of money in the stock market or in retirement funds, he said.

“A big loss in wealth may be something that the gaming industry is finding tougher to deal with,” Hicks said.

Casinos are working to attract visitors with more than just gambling. The French Lick Resort Casino, for example, offers golf courses and spa services, in addition to gas rebates for people spending several nights there.

“One of the key things is we develop more and more into a total entertainment package (at the casinos) throughout the state,” Smith said. “And I think French Lick is a good example of that, with things like the golf courses.”

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ATLANTIC CITY (AP) — Smoking will be permitted again in the city’s 11 casinos for at least the next year, as the City Council voted Monday night to overturn a temporary smoking ban that took effect 12 days ago.

Mayor Scott K. Evans signed the measure minutes after the vote. It will take effect Nov. 16, when the casinos will revert to a previous arrangement permitting smoking on no more than 25 percent of a casino floor.

Casino workers were divided over the smoking ban. Some at Monday’s meeting chanted, “Save our lives!” while others shouted, “Save our jobs!”

The Council acted after casinos cited the worsening economy and revenue that had already been declining because of stiff competition from slot machine parlors in neighboring states.

Liz String, a dealer at Harrah’s Resort Atlantic City, was one of those angered by the vote rescinding the ban.

“We finally have clean air, which is our right, and they’re taking it away from us,” Ms. String said. “I think we were betrayed.”

Not all dealers favor the smoking ban. A few dozen workers wearing red T-shirts that read “I Want to Work” were among an overflow crowd that started arriving more than two hours before the meeting started.

Robert McDevitt, president of Unite Here! Local 54, which represents casino hotel, food and beverage workers, pushed for the ban to be delayed, fearing that it could cost hundreds of union jobs.

In the seven days that ended last Friday, at a time when the stock market was seeing major losses, casino winnings fell by 19.5 percent, Mr. McDevitt said. That figure was confirmed by the state’s Casino Control Commission.

Under the smoking ban that was approved by the Council in April, the casinos could set up enclosed, ventilated smoking lounges where gamblers could light up away from the slot machines and gambling tables.

Eight of the 11 casinos have done that. Of the others, the Borgata Hotel Casino and Spa has climate-controlled outdoor lounges. The Atlantic City Hilton Casino Resort and its sister property, Resorts Atlantic City, made no provision for their smokers, who have to go outside to light up.

Ms. String said she dreaded going back to work at smoke-filled gambling tables.

“You can’t back away from the table because you’re responsible for all those chips in front of you,” she said. “There’s no way to escape. It’s torture.”

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Players Are Encouraged to Sign Up on the New Red Hawk Casino Web Site Prior to Grand Opening

PLACERVILLE, CA, Oct 23, 2008  — Red Hawk Casino announced today details for its Red Hawk Rewards Club, a free, incentive-based program rewarding its most loyal customers with exclusive jackpots, discounts, invitations to special events and thrilling promotions. Players can sign up for a Red Hawk Rewards Club card before the casino opens on the newly enhanced Red Hawk Casino Web site, which contains exciting details on the casino’s restaurants, games and amenities.

“Although Red Hawk Casino will not open until later this year, we are encouraging everyone to go to our Web site at www.redhawkcasino.com/club to register for a free Red Hawk Rewards Club card,” said Peter Fordham, general manager of Red Hawk Casino. “Red Hawk Rewards is the ultimate player loyalty program, offering access to exclusive members-only jackpots up to $100,000 and the ability to earn points redeemable for a variety of exciting offers.”

Players can sign up online by filling out basic contact information at http://redhawkcasino.com/club/. Players who register in advance of the casino’s opening will receive their Red Hawk Rewards Club card and bonus free slot play in their mailbox prior to grand opening.

The Red Hawk Rewards Club offers members the opportunity to earn points every time they play slot machines. To accommodate all levels of play, the Club will open with Gold, Platinum and Elite membership tiers. Accumulated points can be redeemed for free slot play, merchandise in the gift shop, Kids Quest hourly child care, and any of the casino’s six restaurants. Players will automatically achieve Gold status when they enroll in the Red Hawk Rewards Club. To achieve Platinum status, players must accumulate 60,000 points. For Elite status, which also provides access to express line passes, local hotel discounts and a VIP phone line, players must accumulate 150,000 points. Additional details on how points can be earned will be released prior to opening.

An additional benefit for Club members is the opportunity to win exclusive Red Hawk Rewards Jackpots, which are randomly awarded to individuals playing with their Red Hawk Rewards Club card.

“Red Hawk Rewards Jackpots will add an entirely new level of excitement to the gaming experience at Red Hawk Casino,” added Peter Fordham. “We encourage all players to check the Red Hawk Casino Web site regularly for updates on special promotions and information on the grand opening.”

About Red Hawk Casino

The Red Hawk Casino is owned by the Shingle Springs Tribal Gaming Authority, an instrumentality of the Shingle Springs Band of Miwok Indians. It is scheduled to open in December 2008 near Placerville, Calif., located off of Highway 50, just 30 minutes east of Sacramento. The project is being managed by Lakes Entertainment, Inc. and will blend a full complement of gaming excitement with the natural beauty of Northern California. Once complete, Red Hawk Casino will feature 2,000 slot machines, 75 table games, six restaurants, four bars, and lighted, covered parking. More information can be found at www.redhawkcasino.com.

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