|Post September 11, casino companies saw their stocks dip sharply then recover, partly on the expectation that several US states would legalize gambling. However, with many bills stalled in state legislatures, industry analysts are predicting a long wait for further casino expansion.|
According to a story on iwon.com, initiatives in states such as Kentucky, Kansas, Pennsylvania and Rhode Island spurred investor confidence in casino stocks in recent months, offsetting the post- 9/11 losses as shares in major casinos almost doubled.
The fear of recession looked to have persuaded state legislatures that allowing casino gambling would be a good way to boost revenues and offset budget shortfalls. With many economists suggesting the recession may indeed be short-lived, attempts at legalizing or expanding casino gambling have fallen off many states’ radar. Add to that the fact that revenues from legal gambling can take as long as two years to filter to state treasuries, and the picture doesn’t look good for casino openings.
The Kentucky legislature adjourned last week without passage of a bill to legalize slot machines at racetracks in the state, while a Kansas bill calling for legalized slot machines in racetracks also failed recently in the state legislature.
Meanwhile, a bill that would have permitted Native American casinos failed to advance from a second-round debate in the Nebraska state Senate, while the Rhode Island House last week postponed a vote on a proposed study on tribal casinos.
'Nothing's happening this year,' said Bear Stearns financial analyst Jason Ader.
'If the economy gets better, nothing's happening next year either. Gaming expands when states are in crisis. With the economy's prospects getting better, I'm not optimistic that 2003 is going to bring a lot of new results for gaming initiatives,' he said.
The share prices of the big players of the casino industry has reached a plateau since March, with shares in MGM Mirage surging from a post 9-11 low of $18 to a recent peak of almost $37 per share in early March, and remaining stable in the $35-36 range since then. Harrah’s Entertainment Inc. and Mandalay Resort Group shares have gone the same way, plateauing in the $44 and $30 ranges respectively, since early last month.