A Sinking Feeling That Slump May Last

Global Betting & Gaming Consultants Chief Executive Officer Warwick Bartlett said a negative sentiment building toward gambling might keep a financial turnaround from taking place until 2011.

“Consumers have become overwhelmed by uncertainty about their jobs,” Bartlett said. “They are putting money aside for what is an uncertain future. Going forward, energy costs will inevitably rise again. The key for any destination resort is how the visitor can get there as cheaply as possible.”

Bartlett said the rise in oil prices started the downfall. However, even as oil prices fell, gaming didn’t recover.

The GBGB 50 Index of gaming shares was released last week. The leading decliners were Las Vegas Sands Corp., which had its stock value fall 93 percent, and MGM Mirage, which had its stock value drop 88 percent.

As for market capitalization, Las Vegas Sands fell from $31.9 billion on Jan. 8, 2008, to $2.12 billion on Jan. 26, 2009. MGM Mirage’s market cap dropped from $21.9 billion to $2.6 billion over the same period.

So who is the industry’s current market-cap leader?

OPAP, a Greek sports wagering and lottery provider, has a current market cap of $8.8 billion in U.S. dollars.

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Pinnacle Entertainment received two pieces of good news last week in Louisiana.

Two casinos operated by the Las Vegas-based company fueled the state’s $222 million in gaming revenues during January, a jump of 11 percent compared with a year ago.

In Lake Charles, Pinnacle’s L’Auberge du Lac reported $28 million in gaming revenues, a jump of 31 percent and the largest gain of any casino in the state. Pinnacle’s Boomtown in Bossier City reported $8 million in gaming revenues, an 11 percent increase.

Macquarie Securities gaming analyst Joel Simkins had said Pinnacle and Louisiana were bright spots in the gaming sector.

“Pinnacle may be able to exceed current (Wall) Street expectations as well as generally low investor sentiment if trends continue throughout the year,” Simkins said. “One month does not make a trend; however, the last few months of data in Louisiana have continued to be better than we expected.”

Also, Louisiana gaming regulators gave Pinnacle 90-day extensions for the company to open new casinos in Lake Charles and Baton Rouge. The state-mandated completion date for the $350 million Sugarcane Bay casino next to L’Auberge has been pushed to July 30, 2010.

Extra time in Baton Rouge allows Pinnacle to secure additional approval for the $250 million project.

Howard Stutz’s Inside Gaming column appears Sundays. E-mail him at hstutz@reviewjournal.com or call 702-477-3871. He blogs at lvrj.com/blogs/stutz.