AGEM Index

Pushing upward, the AGEM Index closed the month of April 2010 at 116.19, an increase of 8.1 percent from the 107.45 posted in March. The latest report places the AGEM Index with an annual gain of 54.5 percent, well above the broader United States equities markets including: NASDAQ Composite (+45.3 percent); S&P 500 Index (+37.0 percent); and the Dow Jones Industrial Average (+36.3 percent), which broke the 11,000 mark during the month of April.

As first quarter earnings season began in April, global gaming suppliers have gained insight from gaming operators’ financial performances and potential demand for replacement equipment and new technologies. While the equity markets continue to rally, operators remain somewhat challenged by what Harrah’s CEO Gary Loveman recently described as the gaming industry’s version of a hangover, for which it now finds itself “searching for a new equilibrium in a more demanding period.” The effects of operators’ long-term debt and a reduction in the demand for gaming will continue to impact AGEM members, and Loveman added that there would be more of an investment on software rather than hardware to spur customer demand and loyalty. Selected positive contributors to the index during the month included:

• International Game Technology (IGT) posting 4.37 points to the index with a 14.25-percent increase in its stock valuation.
• WMS Industries (WMS) reporting a 19.27-percent gain in its stock price, contributing 2.76 points to the index.

Selected negative contributors to the index included:

• Lottomatica (LTO) witnessing its stock price fall 3.26 percent, contributing -0.73 points to the index.
• Aristocrat Technologies (ALL) contributing -0.47 points to the index with a 5.30-percent decline in its stock valuation.

The gaming industry witnessed new properties open during the month of April. Nearly four years after approval, Las Vegas Sands Corp. opened the first phase of its $5.7-billion Marina Bay Sands along the waterfront in Singapore. By the official grand opening in June, the resort will host 2,560 hotel rooms, more than 30 private gaming rooms, 500 table games and 1,600 slot machines. Marina Bay Sands and Malaysia’s Genting Group, which opened Resorts World on Feb. 14, 2010, will be the only two government-permitted casinos in the region.

Wynn Resorts expanded its Macau footprint, opening Encore during the month of April. The expansion includes 410 suites and four villas to complement additional restaurants, retail and gaming, bringing the total slot count to 1,224 with more than 450 tables. While it is no surprise that gaming operators and subsequently equipment manufacturers have been surveying emerging markets, particularly in Asia, Chairman and CEO Steve Wynn indicated on several occasions that he was considering moving his company’s headquarters to Macau. The comments may be more of a promotion of rhetoric than action, but it further solidifies the importance of gaming operators to focus on advancing their brand globally, a trend that provides some upside for equipment manufacturers. Likewise, MGM Mirage asked its shareholders to approve a name change to MGM Resorts International. Additionally, MGM Mirage will operate the first of two casinos along the beachfront Ho Tram Strip, less than 100 miles south of Ho Chi Minh City, Vietnam. When finished in 2013, the MGM Grand Ho Tram will operate 90 table games and 1,000 slot machines.

In the United States, competition continues for Pinnacle Entertainment’s Class B gaming license that it agreed to surrender when it closes the President Casino in downtown St. Louis in July. Pinnacle confirmed that it is moving forward on its Baton Rouge project, where it’s planning approximately 1,300 slot machines and 50 table games.

Select developments in gaming across the United States also include the groundbreaking of the $386-million Hollywood Casino at the Kansas Speedway in Kansas City, Mo., and the approval of Las Vegas Sands’ table games application for 89 table games to be installed at Sands Bethlehem in Pennsylvania. Finally, commentary from ROTH Capital Partners, LLC suggested 2010 slot machine demand could reach 73,000 units, estimated at a 6 percent rise from 2009.

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