Inside Asian Gaming

INSIDE ASIAN GAMING | November 2009 50 Briefs International Briefs More states bet on gambling The Las Vegas Gaming Wire reported on the increasing trend during the current economic downturn for cash-strapped state governments across the US to consider legalised gaming revenues as a means to meet their budgetary shortfalls. Nearly a dozen states are considering proposals to add casinos or expand their current gaming structures. The situation is fluid in many statehouses where legislation, amendments and support change quickly. There is often a long lag time between approval and implementation, however. But with unemployment rising and tax revenues shrinking, even states that have traditionally shunned gaming expansion in the past are now in play. State proposals include expanding or building regional casinos, adding slot machines to racetracks and other locations, and adding table games to markets once limited by law to offer only slot machines. The gaming initiatives range from ballot referendums to governor-enacted legislation. Gaming expansion coinciding with a recession is not new. The recession of the 1990s gave birth to the nation’s riverboat gaming industry, which expanded rapidly in the Midwest and South when states saw gaming taxes as a fix for budget concerns. Since the late 1990s, 10 states joinedNevada andNew Jersey by adding commercial or riverboat casinos. Twelve others added casinos at racetracks. American Indian casinos, another offshoot of recessionary times, are in 29 states. Commercial casinos accounted for US$32.5 billion in gaming revenues in 2008, which returned US$5.7 billion in taxes to state and local governments. As a comparison, commercial casinos brought in gaming revenues of US$19.7 billion in 1998, which translated into US$2.5 billion in gaming taxes. Ohio voters reversed their two-decade old opposition to gambling and voted on November 3rd to support casinos. Issue 3, which would allow one Las Vegas-style casino to be built in each of Ohio’s four largest cities, passed with 53% of the vote. Pennsylvania lawmakers may allow casinos to add table games. In 2005, the state approved seven slot machine-only casinos with 61,000 games. Massachusetts legislative leaders, in response to Connecticut Indian gambling halls, may push to legalize two regional casinos and allow racetracks to add slot machines to help keep tax dollars within the state. Lately, the challenge is not passing the legislation, but finding casino operators with the capital needed to make a serious investment. The credit-market crisis caused several of the top gaming operators to pull out of bids for casino expansion opportunities in Kansas. The credit crunch, along with a high tax rate, caused many potential bidders to shun chances to operate slot machine casinos in Maryland. Harrah’s 3Q loss tops US$1 billion The weak economy and a massive impairment charge drove Harrah’s Entertainment to report a net loss of more than US$1 billion in the third quarter. Las Vegas-based Harrah’s, which was taken private last year by private-equity firms TPG Inc and Apollo Management LP, said its net loss from operations was US$1.05 billion for the quarter ended September 30th, compared with net income of US$349.6 in the same quarter a year ago. The company posted a US$1.33 billion charge against earnings to write down the value of certain assets around the country. Without the impairment charge, Harrah’s would have reported net income of US$278.4 million from operations. The overall third-quarter net loss from continuing operations after taxes was US$1.62 billion. “The third quarter was challenging from an operations standpoint, as lower spending by consumers affected by the global recession continued to impact revenues,” Harrah’s Chairman and Chief Executive Officer Gary Loveman said in a statement. “During the third quarter, we continued our focus on aligning expenses with revenues and addressing our capital structure to cope with the protracted economic slump.” Harrah’s companywide revenues were US$2.28 billion, a decline of 13.7% compared with US$2.64 billion in the same quarter a year ago. On the Strip, where Harrah’s operates eight properties including Caesars Palace, Rio, Bally’s and Harrah’s Las Vegas, the company reported a net loss of US$778.8 million in the quarter, compared with net income of US$155.4 million in the same quarter a year ago. Revenues in Las Vegas were US$657.2 million, a decline of 17.5% compared with US$796.8 million in the 2008 third quarter. Harrah’s said thenet losswasdue to lower spendingbyvisitors and impairment charges of US$875.8 million in the third quarter surrounding several of the company’s Strip properties. Harrah’s raised US$1.7 billion in capital during the quarter with much of the proceeds being used to pay down the company’s multibillion-dollar debt load. Bally’s upward trend Bally Technologies, Inc, a leading global gaming technology supplier, has announced record diluted earnings per share of US$0.53 on revenue of US$196 million for the three months ended Rio Las Vegas