AGEM Index

The AGEM Index declined 10.9 percent, or 12.61 points, to close the month of May 2010 at 103.58. The latest movement represented the largest monthly decline during the past year and offset the gains reported during the preceding two months. Concerns among foreign financial markets, particularly in the European Union, continued to develop throughout the month, creating sharp losses amidst intermittent gains in the broader U.S. equities markets. Only during the last week of May did the markets post any meaningful improvements, particularly with the Dow Jones Industrial Average climbing back above 10,000 before month-end and lessening its loss to only 7.9 percent in May.

While markets, domestic and foreign, continue to influence one another, global gaming suppliers remain more focused on expanding their reach into new markets as International Game Technology (IGT) in their latest 10-Q filing noted, “We are dependent, in part, on new market openings to generate growth.” In other SEC filings, Bally Technologies (BYI) suggested they were engaged in expanding their business in Mexico, Italy, Australia and potentially Brazil. In addition to these jurisdictions, Singapore, Spain and Taiwan are also on the radar of WMS Industries (WMS), according to its latest quarterly financial report.

The only positive contributor to the index during the month was Multimedia Games (MGAM) posting 0.01 points to the index sourced to a 1.32-percent increase in its stock valuation.

Selected negative contributors to the index included:

• Lottomatica (LTO) witnessing its stock price fall 10.76 percent, contributing -2.65 points to the index.
• International Game Technology (IGT) posting -2.50 points to the index with a 7.16-percent decline in its stock valuation.
• Konami (KNM) reporting a 17.57-percent decline in its stock price, contributing -2.31 points to the index.

As New Hampshire finalizes its state budget to be submitted to the governor this month, it is likely that video slots will not be legalized in the state. To help narrow a $300-million budget shortfall, video slots were proposed by the Senate but not by the House, making it unlikely to be part of the final budget. Nevertheless, amid state budget crises, gaming continues to expand as a potential means to fill gaps in reduced tax revenue across the United States.

In Delaware, table games entered the market, first being installed at Harrington Raceway and Casino. Delaware Park and Dover Downs are also expected to install table games later this month, including baccarat, blackjack, craps, poker and roulette. In nearby Massachusetts, debate heated up regarding the legalization of full-blown gaming to provide economic stimulus to the state. Additionally, local tribal councils are proposing several different casino sites. Legislation will likely be proposed in June in the New England state.

Across the border from Sioux Falls, S.D., a Lyon County, Iowa, casino will begin construction this month. In addition to the 100-room hotel, a full-service spa, 1,200-seat events center and three restaurants, the casino will operate 900 slot machines and 24 table games. Three other proposed casino licenses were denied in Iowa during the month of May. Farther south in Missouri, the state’s gaming commission set its timetable for a casino license to become available after the President Casino in St. Louis voluntarily closes its doors no later than July 1. The last of the 13 gaming licenses available in the state have spurred interest from more than a dozen developers and gaming operators. While several key deadlines are approaching, formal applications are due Sept. 1.

In Ohio, lawmakers are still reconciling bills from the House and Senate to pass regulations for the state’s four future casinos. Racetracks still do not have the authority to install slots but at an auction in New York, Harrah’s purchased the Thistledown racetrack, located in North Randall, Ohio, for $43 million.

In gaming development abroad, Las Vegas Sands finished raising $1.75 billion to assist in financing the next two phases of its development in Macau. The phases will include additional casino and retail space, as well as 6,000 hotel rooms. The first phase is expected to be completed in the third quarter of 2011, and the announcement comes at a time when gaming revenue in Macau is pushing record highs. Gaming revenue in April reached 14.1 billion Macau Pataca (MOP) or nearly $1.8 billion, representing a 68-percent increase over the previous year.

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