Steve Ruggiero

NEVADA ECONOMY: Gaming Win Rises In August

Streshley said the continuing record-setting pace is a continuation of a trend that started with the April 28 opening of Wynn Las Vegas and the Augustus Tower at Caesars Palace earlier this year. "Overall, we remain impressed with results from the high-end business and expect that the addition of Wynn Las Vegas will help maintain the strong momentum," Falcone said.

Bear Stearns gaming analyst Joe Greff agreed with Falcone. He said the results appear to support continued strength in the high-end, international table games segment. On the Strip, the gaming win increased to $486.6 million in August, up 13.3 percent from $429.6 million a year earlier. Greff called the Strip growth impressive. He added that August marked the fourth consecutive month of double-digit gains.

However, Steve Ruggiero, gaming analyst with Stamford, Conn.-based CRT Capital Group, sounded a word of warning about the data. "On the surface of it, the 13.3 percent increase appears healthy," Ruggiero said, "but it's a notable slowdown as compared to the 22 percent growth on the Las Vegas Strip in July.

Harrah's considers $15B. offer for buyout

The buyout offer comes as Harrah's is preparing to announce plans to expand and refurbish Bally's and Caesars in a multibillion-dollar redevelopment of the aging Boardwalk casinos. Analysts said those plans could be slightly delayed by the proposed buyout, but ultimately the projects will be built because of Atlantic City's importance to Harrah's.

“I don't think the scope in Atlantic City will change. Regardless of the outcome, the timing could change but not the scope,” said Steve Ruggiero, gaming analyst for CRT Capital Group. “I think they will go full force with what they planned.”

L'Auberge du Lac's Opening Is a Milestone for Pinnacle; The Cost of the Hotel/Casino is Louisians's Second-most Expensive

Lee believes the sprawling complex, which includes a 26-story, 750-room hotel; a 30,000-square-foot floating casino (riverboat casinos in Louisiana are anchored dockside); restaurants; a spa; and an 18-hole country club-style golf course, raises Pinnacle into a new echelon of casino operators.

Wall Street gaming analysts and Louisiana casino authorities share Lee's assessment. "Without exception, this will be nicest riverboat casino in the Louisiana market," CRT Capital Group gaming analyst Steve Ruggiero said. "This will be a property that is much more than the typical riverboat property. L'Auberge du Lac is truly a vacation retreat, and it's going to move Pinnacle to another level."

Pinnacle, which doesn't operate a casino in Las Vegas, has six regional properties, including two other riverboats in Louisiana and the Boomtown Casino in Reno. The company's stock has traded between $10 and $20 for much of the past year. Pinnacle shares fell 12 cents, or 0.7 percent, Wednesday to close at $17.07. Ruggiero said he plans to initiate coverage on Pinnacle with a "buy" recommendation and a target price of $26 a share, based on L'Auberge du Lac's opening. Deutsche Bank gaming analyst Marc Falcone was as upbeat as Ruggiero about Pinnacle and its newest property.

Movers: A 4th rival antes up in high-stakes casino battle

The four bidders - the others are Pinnacle Entertainment, Colony Capital and Ameristar Casinos - want Aztar for the 34-acre, or 14-hectare, site its owns on the Strip in Las Vegas. The property, home to the Tropicana, is considered a prime redevelopment opportunity in the biggest U.S. gambling market. "It's just a wild race," said James McBride, a money manager at Trendstar Advisors. "There's a point where I don't see who else can afford this thing." Shares of Aztar jumped $1.56 to finish at $46.36 in New York. Pinnacle shares rose $1.65 to $30.75. Ameristar shares gained 88 cents to $24.71.

Based in Fort Mitchell, Kentucky, the closely held Columbia also operates riverboat casinos. Last month, Aztar accepted a $38-a- share proposal from Pinnacle Entertainment. That valued Aztar at $1.45 billion, not including the assumption of $723 million in debt.

Two weeks later, Colony Capital made an unsolicited bid of $41 a share, or $1.5 billion. Ameristar Casinos followed this month with a $42 offer, or $1.51 billion. Aztar said its board would open talks with Columbia. Columbia is "assigning a huge value to what is the single greatest site left in Las Vegas," said Steve Ruggiero of CRT Capital Group in Stamford, Connecticut. "Here is a stock that was trading at $30 not too long ago and now someone values it at $47 a share.

Pinnacle's Quarterly Earnings Soar

Gaming analysts said Pinnacle, which operates casinos in Louisiana, Indiana, Argentina, the Bahamas and the Boomtown outside Reno, is a company that investors focus more of their attention on cash flow, described as earnings before interest, taxes, depreciation and amortization.

For the quarter, Pinnacle Entertainment had adjusted cash flow of $54.5 million, an increase of 80 percent compared with $30.2 million for the same period last year, which included just five weeks of results from L'Auberge du Lac, the company's Lake Charles casino.

"Pinnacle's EBITDA was kind of on the low end of what analysts thought they would do," CRT Capital Group gaming analyst Steve Ruggiero said. "And in this market, if something like that happens, the company gets taken out to the woodshed. I really don't think Pinnacle deserved the reaction it received."

Pinnacle Buys, Will Close Sands Atlantic City

"Pinnacle views Atlantic City as the next major market to expand their business, and with 30 million people within a three-hour driving range, we believe the market has considerable depth and potential despite new competition in the northeast," Deutsche Bank gaming analyst Elizabeth McNellis said.

She said Pinnacle could create a powerful Northeast gaming network if the company wins the license for one to two slot machine casinos planned for Philadelphia.

"Boyd Gaming's Borgata has proven that new investment in Atlantic City can be a success," McNellis said.

Borgata is a joint venture of Boyd Gaming Corp. and MGM Mirage.

CRT Capital Group gaming analyst Steve Ruggiero said displaced Sands customers will find their way into other Atlantic City properties.

Cost of Aliante Station Jumps to $600 Million

Gaming analysts said the cost of construction is rising nationwide so it wasn't a surprise Station Casinos' next project would be affected. "The cost of steel, specifically, has become a consideration," CRT Capital Group gaming analyst Steve Ruggiero said Wednesday. "Obviously, the cost of the project going up will impact returns on investment. But we still believe the company will get a good return on that project."

Station Casinos has many development opportunities throughout the Las Vegas Valley and two potential projects in Reno. In recent quarterly conference calls, company executives have said they are weighing the different Las Vegas projects to develop, but determined that Aliante would be the company's next project. Construction is scheduled to begin in early 2007.