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ADAMS REPORT Powered By Docstoc
					                            ADAMS REPORT
                               A Review of Current Gaming Literature
                                        Volume VII, Issue 6
                                             June 2003

Quick-takes: The month’s trends in a glance.
The future is looking a bit brighter. The war and the tax cut have both passed. The economy,
measured in terms of gross domestic product, grew in the first quarter. Since January 1, 2003, the
stock market is up nearly 1,000 points and closing on 9,000, after dropping to 7,500 in March.
Gaming stocks faired at least as well as the market in May, a not-so-common event.
        The House passed a $330 billion tax cut early Friday that will deliver rebate checks to parents and
        larger paychecks to workers this summer. Mary Dalrymple, Associated Press, Yahoo Finance,

        The Commerce Department said gross domestic product, the broadest measure of economic output
        within U.S. borders, grew at a revised 1.9 percent annual rate in the January-March quarter, better
        than the 1.6 percent estimated a month ago. Glenn Somerville, Reuters, Yahoo Finance, 5-29-03

        Easing war fears, respite from tax boosts, help raise issues in month, analysts say.
        Local gaming stocks surged almost 20 percent in May, largely on the back of a broad market
        rally. …Despite early second-quarter warnings from a few of the major Strip operators, Gordon
        said expectations that the leisure market would improve contributed to the price increases. The
        monthly average price of Harrah's Entertainment shares increased 10.1 percent, though MGM
        Mirage's stock price declined 2.9 percent, the only decline in the group. Also, International Game
        Technology posted a 7 percent (Ken, loss or gain?) compared with April and a 40.9 percent gain
        for the year. Rod Smith, Gaming Wire, Las Vegas Review-Journal, 6-3-02

There are some dark clouds on the horizon for gaming, however. Illinois, New Jersey and
Nevada are still working on taxation legislation that, if passed, will impact gaming. Atlantic City
is also bracing for the opening of Borgata. Nevada is bracing for the opening and expanding of
Indian casinos in California; most important will be the June opening of Thunder Valley, near
Sacramento, and its impact on Northern Nevada. A sampling of headlines from around the
country indicates that gaming is flat at best, making increased competition and additional taxation
even more significant. A couple of states did report higher gaming revenues; those were less than
4 percent, unless, of course, you count Connecticut.
        Combined revenues at Detroit's three casinos were $92.5 million in April, down 5 percent from the
        same period last year. Detroit News, 5-15-03

        Louisiana March Gaming Revenue Fell 4.3%. Gaming Industry Weekly Report, 5-2-03

        Blizzard Slows AGP Growth. …Casinos statewide reported $57.0 million in March…down 10.3
        percent form $63.5 million in March 2002. Gaming Update: Colorado Division of Gaming,
        Vol. XII, Issue 5, May 2003

        Indiana's riverboat casino revenues dipped slightly in April, dropping nearly $17 million
        statewide. Kristina Buchthal, Indianapolis Star, 5-21-03

        For the second consecutive month, Kansas City's four riverboat casinos in April failed to match
        gross revenues from a year ago. Rick Alm, Kansas City Star, 5-15-03
        War, a bad economy and Easter doldrums led to a third straight month of declines in gambling
        revenue for the casino industry. Joe Weinert, The Press of Atlantic City, 5-5-03

        Las Vegas visitor volume fell in March from last year's levels, primarily due to the outbreak of the
        Iraq war and the city hosting a major convention in 2002 that wasn't here this year. Las Vegas Sun, 5-

        Casinos show 6.9 percent decline in April - the result of a tourism slump caused in part by the
        Iraq war. Brendan Riley, Associated Press, Las Vegas Sun, 6-6-03

Expansion has not gone away, but it is certainly making less noise than it was in November
around election time. In New York, Illinois, Ohio, Maryland, Maine, Pennsylvania and
Washington, expansion is still on the radar screen, even though, with the exception of
Pennsylvania, the picture is pretty blurred and still mired in party politics.
        The measure headed to the House floor would allow hundreds more slot machines at riverboat
        casinos and put thousands of slots at horse tracks for the first time. Two other measures sponsored
        by Lang -- giving Chicago its own casino and legalizing video poker machines at restaurants and
        bars -- will be brought up for consideration soon, he said. Las Vegas Sun, 5-9-03

        …18,000 slot machines in bars, bowling alleys and bingo halls across the state…the Entertainment
        Industry Coalition, the group of nontribal businesses and charities that pushed the plan, went back
        to the drawing board, reloaded and will launch a new campaign today. Kenneth P. Vogel; The News
        Tribune, 5-14-03

The casino-in-the-city issue continues to generate publicity, regardless of the ―real‖ possibilities
for success: New York, Pittsburgh and Chicago are the big city stories this month.
        New York City off-track betting centers would get thousands of lottery-controlled slot machines
        under a last-ditch city bailout plan proposed by Gov. George Pataki yesterday… John Milgrim,
        Ottaway News Service, Times Herald-Record, 5-14-03

        State Sen. Jim Ferlo introduced a bill Tuesday that would allow either a land-based casino or a
        riverboat casino to open in downtown Pittsburgh. Ferlo, a Democrat from Highland Park, said a
        casino would be an attraction for tourists and out-of-towners attending conventions.
        The Pittsburgh Channel, 5-16-03

        Mayor Daley doesn't just want a casino in Chicago. He wants a piece of the action.
        Since floating the idea of a city gambling palace last year, the mayor has been touting Ontario,
        Canada, as a model for the way the state could own casinos and make more money from them.
        Now, Gov. Blagojevich is talking about Ontario, too, much to the gambling industry's chagrin.
        Chris Fusco, Chicago Sun Times, 5-11-03

Gaming does not need any new issues, but one is developing, nonetheless -- smoking. It has been
a national trend for years to ban smoking in public places. Most states opted for prohibiting
smoking in retail outlets and restaurants. California took the next step and banned smoking in
bars. In Australia the idea of prohibiting smoking in casinos and ―pokie‖ clubs has gained favor
with the anti-gambling lobby. In Delaware and Australia it has impacted gaming revenues. Now
the non-smoking movement seems more clearly headed toward casinos and slot parlors. New
Jersey is the first ―gaming‖ state to consider banning smoking; Connecticut is not really a gaming
state and cannot force the tribes to enforce a ban in Indian casinos. In Maine, the tribal bingo
games exception is being written into the law. And in New York, bars and restaurants with lottery
terminals are planning a protest to show the state that banning smoking hurts business, including
the state‘s take from the lottery terminals.
        A [New Jersey] Senate committee took testimony Monday on a bill that would ban smoking in
        nearly every indoor space that is accessible to the public -- restaurants, bars, taverns, casinos,
        racetracks, and shopping malls. There are some important exemptions, but the "Clean Indoor Air
        Act" would be the most sweeping anti-smoking measure in state history. The Record, Hackensack,
        Knight Ridder/Tribune Business News, Hotel Online, 5-20-03

        A day that began with poll numbers showing that most state voters want smoke-free restaurants
        and bars ended with the approval Wednesday of a smoking ban by the state Senate. The bill now
        goes to the House. … One issue that is unresolved is whether such a ban would apply to the state's
        two casino operations, which are located on sovereign, tribal lands. Although smokers may light
        up in most areas of both Foxwoods and Mohegan Sun, both casinos have smoke-free gambling
        and dining areas and sophisticated smoke-removal systems. Garret Condon, Hartford Courant, 5-1-03

        Smoking would be banned in Indian casinos under a bill two state lawmakers from Central New
        York plan to introduce. The bill would add "any Indian nation with a current or pending compact
        with the state that operates a casino" to the lengthy list of establishments where smoking will be
        prohibited when a new state ban takes effect July 24. But even one of the bill's sponsors said he's
        doubtful the provisions would be enforced. Erik Kriss, The Syracuse Post-Standard, 6-3-03

        The Maine Senate reversed its stance Wednesday and agreed to exempt the Penobscot Indian
        Nation's high-stakes bingo games from a statewide ban on smoking at beano events. …While
        majorities in both chambers favored banning smoking at all other bingo games, the bill was in
        danger of dying altogether for lack of agreement between the House and Senate over the
        exemption for Penobscot games.
        Bangor News, 5-16-03

        Some upstate bar and restaurant owners plan to turn off Quick Draw lottery game machines
        Monday to protest the passage of a law that virtually bans smoking in any place of business in
        New York. Those participating in the protest said that, by depriving the state of revenue from the
        Quick Draw game, they hoped to publicize concerns that the smoking ban will hurt business at
        bars and restaurants. The state legislation, signed into law by Gov. George Pataki in March and
        scheduled to go into effect in July, would end smoking in many places where it is allowed despite
        the state's 1989 Clean Indoor Air Act. Associated Press, News Day, 5-19-03

Jupiters, from Australia, is still blaming smoking for its problems. The revenues from gaming are
down, a would-be suitor may not be and the stock price is down all due to, if you believe the
press releases, the impact of banning smoking.
        Tabcorp's share price dropped yesterday from an opening of $10.52 to as low as $10.15 before
        recovering to close at $10.35, after the company announced late on Thursday night that smoking
        bans were hurting gaming revenue. Andrew Fraser,, 5-17-03

It isn‘t completely clear to me what the long-term impact of non-smoking legislation would be on
the casino industry. In the beginning, it would impact revenues, but one could argue that over
time players would simply accept the situation and return to their pre-ban patterns. It is another
issue completely if Indian casinos allow smoking while others cannot, or if casinos in one state
ban smoking while those just a few miles away in another state allow it. It may be too early to
develop specific statrategies, but it is not too early to watch your state legislation for non-smoking
legislation. Nor is it too early to watch for signs that the anti-gambling lobby is using smoking as
a Trojan horse to get inside the casino city.

Regulation in the gaming industry is complex; it is specific and unique to each jurisdiction.
However with the spread of gaming to nearly every state, the federal interest in money
laundering, Indian gaming, the Internet and federal political interest in sports betting, it is
increasingly interrelated.
Take the case of Nevada. Nevada has always resisted federal regulation, beginning in the 1950s
and 1960s, and because of the activities of Estes Kefauver and Bobby Kennedy, Nevada tried to
craft regulation that answered federal concerns without federal oversight. But as Nevada
companies moved to other jurisdictions, Nevada wanted to retain some control over those

Nevada requires companies with operations in Nevada to meet Nevada standards wherever they
operate. The two seemingly opposite positions have been highlighted lately. Several major
casino companies have been fined for violating Nevada money laundering regulations and
therefore, federal standards. The violations were significant enough to attract federal attention.
Secondly, Station Casinos is opening an Indian casino in California. Nevada is not exactly
        Casino industry sources are increasingly wary that recent disclosures of anti-money laundering
        procedures being breached could trigger federal intervention in Nevada gaming regulations.
        MGM Mirage and Station Casinos have both admitted to failing to file volumes of currency
        transactions reports….Park Place Entertainment Corp. also has entered a stipulated agreement
        with state regulators admitting employees falsely completed two such reports…Even before these
        recent disclosures, however, authorities in Washington were discussing revoking Nevada's
        exemption from federal control over the currency transaction reports….the Financial Crimes
        Enforcement Network, which receives the currency reports from Nevada casinos, ―is coming to
        the conclusion the feds will eliminate any and all exemptions.‖ Rod Smith, Gaming Wire, Las Vegas
        Review-Journal, 5-5-03

        Federal gaming regulators said Tuesday they were placated by the civil agreement between MGM
        Mirage and the Nevada Gaming Control Board, staving off for now moves to revoke Nevada's
        exemption from federal anti-money laundering regulations. Rod Smith, Las Vegas Review-Journal, 5-28-03

        "If we thought (Nevada) wasn't complying (with anti-money laundering regulations) or enforcing
        them, we could pull the exemption," said Alma Angotti, senior enforcement counsel for the federal
        Financial Crime Network. Rod Smith, Las Vegas Review-Journal, 5-28-03

On the one hand Nevada is doing everything possible to stave off federal oversight; and on the
other hand, the Nevada Gaming Control Board was very specific with Stations about the state‘s
authority, saying: ―if you have trouble there [California], you‘ll have trouble here [Nevada].‖
        "It would appear that without written policies, you'd be setting yourself up for legal challenges,"
        Siller said. "It seems like it is an accident waiting to happen. With all due respect to Indian
        gaming, they own the casino, regulate it and run their own courts. You're operating in the blind.
        And if you have trouble there, you'll have trouble here." Jeff Simpson, Gaming Wire, Las Vegas Review-
        Journal, 5-8-03

Gaming regulation is not simple and is becoming more complex. Meanwhile back in Washington
D. C., Congress is looking at Internet gaming, and once again sports betting. Hold on to your
parlay card, McCain is back.
        Sen. John McCain is taking another swing at banning Nevada casinos from taking bets on college
        sports. The Arizona Republican reintroduced a bill Tuesday that would strip Nevada casinos of
        their legal right to take bets on college games. McCain has tried twice before, but his legislation
        has never made it to the Senate floor. ―By allowing betting in any state, we send a confusing
        message to our youth as to whether gambling on amateur sports is, in fact, legal or illegal,‖
        McCain said. Doug Abrahms, Reno Gazette-Journal, 5-7-03

On the lighter side, new ideas are the life-blood of any industry and gaming is no exception.
Particularly in times as trying as these, it will take new ideas and appealing to a broader audience
for gaming to continue to grow. However, not all ideas are equal, nor are all new ideas good
ideas. This idea from down under is a little startling and just may not be the best one to have
surfaced this year. Las Vegas has an international reputation as ―Sin City,‖ but this takes the
concept to a new level.
        The world's first listed brothel, The Daily Planet Ltd., wants to open a "sex theme park" in the
        international home of gambling, Las Vegas. The Daily Planet Chief Executive Andrew Harris said
        the group would have expanded regardless of last week's successful listing on the Australian Stock
        Exchange… "A number of things have changed as far as funding perception, people's willingness
        to deal with us and these opportunities have come forward and presented themselves very quickly
        to us," Mr. Harris told AAP. …He said that with around 35 million visitors a year, Las Vegas
        was the "ideal place to put this sex theme park". Jonathon Moran, The Courier Mail, 5-9-03

Publicly traded sex parks on the Strip, now why didn‘t I think of that?

Corporate Giant Watch: Harrah’s
The world of casino gaming is not any simpler than the regulatory environment, in fact, it is the
multiple and complex regulatory structures that create the differences in operating environments.
One way to make sense of the often-confusing national gaming scene is to watch one company in
different environments. There are only a few truly national companies, the major slot
manufacturers and a couple of operating companies. In following the Harrah‘s story this month
you get a glance at financing, the impact of competition, the costs of regulation, the uses of
technology, the spread of racinos, Indian gaming expansion, employee relations issues and novel
marketing ideas.
        Harrah's Entertainment Inc. said it has entered into an agreement for new credit facilities for up to
        $1.96 billion in borrowings. …The new credit facilities consist of a five-year revolving credit
        facility for up to $1.06 billion and a five-year term facility for up to $900 million.
        Dow Jones, Yahoo Finance, 5-2-03

        Dave Jonas is crossing his fingers that Atlantic City casinos snap out of their three-month revenue
        decline before the $1.1 billion Borgata Hotel Casino & Spa opens in June or July. "If we don't see
        growth in May we're going to be in a heap of trouble," said Jonas, senior vice president of Atlantic
        City operations for Harrah's Entertainment. He fears that casinos would be forced into a market-
        share war if there aren't enough gambling dollars to go around when Borgata opens. Joe Weinert, The
        Press of Atlantic City, 5-5-03

        The Missouri Gaming Commission has recommended a $100,000 fine against Harrah's St. Louis
        Casino in Maryland Heights, Mo., for mailing promotional materials to a woman on a state list of
        problem gamblers. St. Louis Business Journal, 5-1-03

        Harrah's Entertainment Inc. has signed an agreement to introduce ―cashless‖ slot machines using
        technology from Alliance Gaming Corp. …Bally's systems will also enhance the company's
        gambler tracking system by ‗extending these systems‘ capabilities directly into our slot machines,"
        Boushy said. Bally's system is compatible with slot machines from all manufacturers, allowing
        Harrah's to install cashless technology in older machines, Boushy said. Las Vegas Sun, 5-6-03

        ...We believe the slot floor of the future should be more system-centric than game-centric,‖ Bruce
        Rowe, VP Harrah‘s noted. He noted that server-based gaming – in which game outcomes are
        determined by random number generators located on a central server – is already in use in video
        lottery operations, some Indian gaming facilities and racinos. International Gaming and Wagering
        Business, Vol. 24, No. 5, May 2003
        Harrah's Entertainment, Inc. today opened its first casino located at a thoroughbred racetrack.
        Harrah's Louisiana Downs, located in Bossier City, is the first facility in northern Louisiana to
        offer the combination of live thoroughbred racing and slots. …The first phase expansion that
        opened today features a 905-slot machine casino that operates 24 hours per day, seven days per
        week. PRNewswire-FirstCall, Yahoo Finance, 5-22-03

        Narragansett Indian tribal leaders -- and their Las Vegas backers -- went to the State House
        yesterday armed with argument after argument for the casino they want to build in West Warwick.
        Top executives from Harrah's Entertainment flew in from around the country. They joined Ronald
        Coia, president of the Rhode Island Building Trades Council, in announcing an "agreement in
        principle" to hire unionized labor. Katherine Gregg,
        Providence Journal, 5-9-03

        Harrah‘s Entertainment Inc. has won a 2003 ―Employer of Choice‖ Award from the National
        Restaurant Association Educational Foundation and Coca-Cola North America. …Harrah‘s was
        honored in the category of Specialty Food Service. …―We are honored to publicly recognize
        Harrah‘s for its innovative programs; its efforts further enhance our industry‘s position as a
        cornerstone of career and employment opportunities,‖a NRAED spokesman said. Reno Gazette-
        Journal, 5-15-03

        Harrah‘s was ranked No. 1 for hotel operations by a gaming company in the first quarter 2003
        Market Metrix Hospitality Index, which is comprised of 135 hotel brands, 25 airlines and 11 car
        rental companies. Reno Gazette-Journal, 5-15-03

        The newest addition to Harrah‘s outdoor Plaza, the Xtreme Park is open seven days a week from
        noon to 9 p.m. and features a variety of thrill ride attractions. ―The Xtreme Machine is the most
        exhilarating vertical attraction currently available in the world,‖ said John Moriarty, co-owner of
        the Xtreme Park. Reno Gazette-Journal, 5-8-03

Before June had a chance to really get going, Illinois passed a gaming tax increase. Harrah‘s,
along with every operator, will be impacted. The Wall Street pundits speculate that all of the
operators will try to reduce expenses, possibly even try to reduce revenues to stay within the
lower tax bracket. Reducing expenses may mean laying-off employees. It may mean cutting
down on participation games and it may mean reducing marketing efforts. Reducing revenue is
more intriguing; the operators can reduce hours, lower limits, and reduce complimentaries. But
there may be one more unusal way to reduce revenue, send the players to another casino, in
another state. It will be interesting to see if Harrah‘s tries to move some of their customers to the
lower-tax-land of Indiana or even Nevada, New Jersey or Mississippi. The ability to move
players from one jurisdiction to another has always been one of the goals of the ―Total Rewards‖
program. This will be an excellent and financially advantageous time to test the system. As a
national company, Harrah‘s illustrates better than any other company that operating margins or
the value of an individual player will differ radically from one jurisdiction to another.

Internet and Interactive Gaming
The Internet gaming picture does not look much brighter than the Illinois tax picture. Congress is
still working on finding politically acceptable ways to ban it, including requiring ISPs to refuse to
connect the ―illegal‖ gaming sites. And, as if Congress needed more, there were two incidents
where school administrators were gambling online at work while they were charged with
protecting and educating children.
        US lawmakers are attempting to prevent Americans from gambling online by blocking their access
        to overseas gambling sites - such as those registered in the UK. … A bill approved by a House
        panel yesterday takes a two-pronged approach toward curbing Internet wagers. It could require
        ISPs to delete hyperlinks to offshore gambling sites and would order credit cards and online
        payment systems such as PayPal to identify unlawful transactions that might be related to
        gambling. Declan McCullagh, Silicon News, 5-7-03

        After one House panel put the brakes on an Internet gambling ban last week, the chairman of
        another committee on Tuesday put it back on track. Rep. Mike Oxley, R-Ohio, the chairman of
        the House Financial Services Committee, rammed a scaled down version of the ban through his
        committee in less than three minutes with no debate and no amendments. …the ban preserves
        exemptions for the horse racing industry and other factions whose support is considered vital to
        move the ban through the House and Senate.
        Tony Batt, Stephens Washington Bureau, Las Vegas Review-Journal, 5-22-03

        A Pennsylvania principal has resigned over accusations she used her school computer to gamble
        on the Internet. Rosa Calvet, the principal at Lehman Intermediate School in Bushkill, gave up
        her $79,000 post this week after district officials confronted her with details of an investigation
        into her computer records. Associated Press, WPVI, Philadelphia, 5-16-03

Regardless of the debates in Washington, the Internet is becoming increasingly more important
and at least for some, profitable. Marriott booked 20,000 rooms in one day, $5 million in sales;
and Youbet continues to grow with revenues increasing over 300 percent in one quarter.
        "It's the first time we've broken through 20,000," in hotel rooms booked online in a single day,
        said Marriott International spokesman John Wolf. The rooms represent about $5 million in gross
        sales, up from the record of about $4.8 million when just under 19,000 room-nights were booked
        one day earlier in the month. Marriott International's online sales topped $1 billion last year,
        a nearly seven-fold increase in two years.
        Jerry W. Jackson, Orlando Sentinel, Knight Ridder/Tribune Business News, Hotel Online, 5-21-03, Inc., the leading online live event and wagering company, today announced that First
        Quarter 2003 marked the company's fourth consecutive quarter of record growth. The gross
        handle for the first quarter set a new record at $61.0 million, up substantially from $27.1 million in
        the first quarter 2002, and includes a record-breaking gross handle of $21.1 million for the month
        of March, 2003. Gross revenues increased 323% to $11.0 million for the quarter ended
        March 31, 2003 as compared to $2.6 million in the first quarter of 2002. Net revenues, after
        payments to our track partners and licensing fees, were $3.8 million for the first quarter 2003
        compared to $1.7 million in the first quarter of 2002.
        Business Wire, Yahoo Business, 5-16-03

The growth rates are stunning in both cases and both have implications for all of the gaming
industry. There are some in the industry that think it makes sense to try and stop the growth of
Internet gaming, but for the rest of the industry it makes more sense to try and understand it and
find ways to integrate the Internet into the business and operations.

Bits and Pieces from Indian Country
Not all is peaches and cream in Indian gaming. Most of the month of May the federal
government and a portion of the Meskwaki tribe have debated the rules of government. The
Meskwaki tribe, officially known as the Sac and Fox Tribe of Mississippi in Iowa, is the only
federally recognized Indian tribe in Iowa; there are 1,293 enrolled members. In March after the
tribal council failed to acknowledge a recall petition, the traditional tribal leader appointed a new
council. The newly appointed council took possession of tribal headquarters and the casino
The casino issue is simple: who has a right to operate an Indian casino? The easy answer is a
federally recognized tribe with a tribal/state gaming compact. So what happens if another
government replaces the elected government with a separate claim to rule? The National Indian
Gaming Commission says the casino has to close, or can only be operated by the duly elected
tribal government. That is where it stands; the casino is closed, as the case begins to meander
through the federal courts.
        Under a judge‘s order, U.S. Marshal and deputies, assisted by local law enforcement, closed the
        Meskwaki casino shortly before 6 a.m. on May 23. The move put more than 1,000 people out of
        work, and will cost the Sac and Fox Tribe of the Mississippi in Iowa an estimated $3 million a
        week in revenue. The casino will remain closed until the National Indian Gaming Commission
        decides whether to permanently close the casino, one of Iowa‘s largest gaming businesses. Jennifer
        Hemmingsen, Indian Country Today, 5-30-03

The stakes are high: 1,000 jobs and $3 million a week in revenue. The high stakes often make
for high emotions as factions compete for control. In Connecticut the rewards are the legends of
the industry, the largest and most profitable casinos in the world. The rewards only fuel the
emotions of the opponents, who have not tired nor become discouraged with the fight. The
attorney general and the state‘s congressional delegation have continually fought to limit and
withdraw federal recognition and thereby the right to operate a casino in the state.
        Foxwoods Resort Casino and Mohegan Sun both won more than $63 million from their customers
        in April, a month casino operators characterized as iffy in terms of weather and continued worries
        about the economy and world events. …Mohegan Sun's win was $63,787,752, its handle $768.8
        million and its hold percentage 8.3 percent. Foxwoods‘ win was $63,134,149, its handle $781.5
        million and its hold 8.08 percent. Mohegan Sun had 6,101 slot machines on its gaming floor,
        which is 494 fewer than Foxwoods' 6,595 units.
        Karen Florin, The Day, 5-16-03

        Blumenthal: State to fight against casinos. That's how Attorney General Richard Blumenthal
        described the status of tribal recognition in eastern Connecticut Wednesday to Windham County
        business and civic leaders. Blumenthal was a guest speaker at the Northeastern Chamber of
        Commerce luncheon at The Harvest restaurant. He said tribal recognition has caused a great divide
        between the state and federal government. As the state‘s chief prosecutor, Blumenthal is involved
        in an appeal of the federal recognition granted to the Historic Eastern Pequot tribe of North
        Stonington, which combined the Eastern Pequot and Paucatuck Eastern Pequot tribes. He said a
        final decision is expected by the end of the year. Blumenthal called the recognition process a
        ―scandal.‖ ―It's broken and it needs to be fixed,‖ Blumenthal said. ―It is so infected by money and
        Douglas P. Guarino, Norwich Bulletin, 5-9-03

Connecticut is not the only state where the opponents of Indian gaming are increasing their
efforts. In the other states with the significant tribal presence and the growth of Indian gaming,
the opposition is mounting. In Wisconsin the governor and the republicans in the state legislation
are at war over the compacts; in New York the governor is also in a battle over his authority to
negotiate Indian gaming compacts; while in California the opposition at this point is mainly local
communities fighting to gain control over activities on tribal land. And one should not forget the
Donald who is suing an Indian tribe and a developer in Connecticut because they cut him out of
the picture. Trump promises to ―tell all‖ and in typical Donald Trump fashion make Indian
gaming about him.
        New York State Gov. George Pataki on Monday said the accord with the St. Regis Mohawks tribe
        he will unveil this afternoon will let them build a new casino about 90 miles from Manhattan and
        give the tribe cash to buy back land they say was taken from them. Park Place Entertainment
        Corp.has been selected to run the $500 million new casino the St. Regis Mohawks plan to build in
        the Catskills. Located only about 90 miles from New York City, the new resort will compete with
        tribal casinos in Connecticut and resorts in Atlantic City, New Jersey. But the plan for the casino,
        which a draft news release says would give cash-starved New York State a share in slot machine
        revenues, must be approved by the Legislature.
        Joan Gralla, Reuters, Yahoo Business, 5-12-03

        The Coast Miwok Indians are offering Sonoma County payments that could exceed $100 million
        to sweeten reaction to the tribe's plans for a casino in the undeveloped bay lands near Sears Point.
        In a 10-point pledge of cooperation distributed to local officials, the Miwoks promise to fund
        social services, pay the full cost of law enforcement and improve roads related to the proposed
        casino on traditional tribal lands. Guy Kovner, Press Democrat, 5-12-03

        Petaluma Joins Casino Opposition. A much smaller crowd than the 400 that gathered in Sonoma
        last month met Thursday night in Petaluma to learn more about the Graton Rancheria tribe's
        proposed resort casino at Highway 37 and Lakeville Road. …Cheryl Schmit, director of Stand Up
        for California, a gaming watchdog group, explained that an Indian resort casino would not be
        required to pay taxes - including property or hotel. "As tribal gaming continues to grow, it is
        anticipated to be a $10 billion industry in the next 10 years," Schmit said. ―Additional allowable
        slot machines that may be approved by Gov. Gray Davis means this number could be reached
        sooner.‖ Gaming is fast becoming a large industry in California, which primarily benefits
        36,600 enrolled tribal members, Schmit added. “This is a black hole in your community
        which will not be putting back what it's taking out,” Schmit said. Tami Casias, Sonoma Index-
        Tribune, 6-3-03

        Donald Trump's lawyers promised Wednesday to knock the lid off the secretive world of casino
        investors and Indian tribes, with a multimillion-dollar lawsuit pitting high-society millionaires
        against each other. For the first time in Connecticut, Trump's suit will reveal the money backers
        have spread around as they try to become the developers of the state's next mega-casino. In the
        process, the case could also provide a welcome assist to the state, which is fighting the recognition
        of the Eastern Pequots because it doesn't want another casino here. Trump, though, has a more
        basic beef: He wants the $10.1 million he gave the Paucatuck Eastern Pequots, plus additional
        damages. ―I‘ve been treated very unfairly. I was the one that put the Indians in the position they
        are in by spending millions and millions of dollars. What they did to me they should not be
        allowed to do to anyone," Trump said in a telephone interview Wednesday. "I am so angry that a
        thing like this could happen to anyone," Trump said. "It's shocking." Rick Green, Hartford
        Courant, 5-29-03

Casinos are not the only place that conflict is found in Indian country. There is an ongoing debate
about taxation. Similar to operating casinos, tribes claim that state tax laws don‘t apply on tribal
land. In Washington, the Tulalip tribe wants to collect its own, but not local, sales tax. In several
states, tribes want to tax gasoline, but not collect state gasoline taxes; and cigarettes have been a
major issue. A few years ago in New York, the governor called out the state militia and the tribes
closed some state highways running across tribal land. That one ended in a stalemate, but the
New York legislation is bringing back new taxes meant to be collected on tribal land. This month
in Washington and Idaho the feds got into the cigarette business. Cigarette sales and taxes are a
separate issue from gaming, but they have implications for gaming. Both cigarettes and casinos
are issues of sovereignty. Both question the state‘s authority on tribal land and both can be very
        Feds Seize Smokes at Tribal Shops. Federal agents raided tribal smoke shops across Washington
        and Idaho yesterday, reopening a lingering dispute over the taxation of cigarettes sold on Indian
        reservations. Jonathan Martin, Seattle Times, 5-21-03

And finally, a study from Oregon that says a great deal about the state of gaming in general. In
the study fewer people in Oregon gambled, but spent more. The economy and war caused people
to be more cautious. Travel was reduced, so that local Indian casinos benefited and Reno casinos
felt the pinch.
         A new study says fewer Oregonians gambled at the state's eight tribal casinos last year, but that
         those who did spent more per capita than in 2001. Oregonians last year spent $357 million
         gambling at tribal casinos in the state, up almost 15 percent from the $310.7 million in 2001,
         according to a study by Bob Whelan, an economist with ECONorthwest, a Eugene-based
         economic consulting firm. Whelan, who has studied gambling in Oregon for more than a decade,
         directed similar studies in 1998 and 2000. Despite the spending increase, Whelan found the
         number of Oregonians going to casinos is falling. In a survey of 800 residents, only 17.4 percent
         said they gambled at a casino in Oregon, down from the 24.5 percent reported in 1998. ―The
         tribal casinos aren't new anymore,‖ Whelan said. Whelan found that the casinos last year were
         helped by the weak state and national economies. ―When the Oregon economy weakens,
         consumers opt to spend more of the leisure time dollars locally,‖ he said. ―This came at the
         expense of Las Vegas and Reno.‖ KVAL 13 News (Eugene, Oregon), 5-22-03

That is a snap shot of the gaming industry today. The economy has kept people closer to home.
There are less people going to casinos, though they may be spending slightly more. Casinos that
have cropped up closer to home have cut into the business of the traditional destinations or put
another way, the market area of every casino is shrinking. The situation might change, but with
the likelihood of increased taxes and competition and fewer people willing to take a risk, the near-
term prospects for gaming operators are not as bright as they were five or 10 years ago. Gaming
has matured; it is now a very competitive industry, where the largest, best-capitalized and best-
managed companies have a significant advantage over the rest of the field.

But that is just my opinion.

Each of the following articles is a direct quote from the publication as cited. The articles in the
original publications vary in length and detail, but are always more detailed than as presented in
this report. The original article should be consulted any time the issue is of importance to you.

American Indian Report
Squaw Peak in Arizona has been fittingly renamed Piestewa Peak as a tribute to the first female
soldier – a Native American – who was killed in combat in the war in Iraq. Army Pfc. Lori Ann
Piestewa, a Hopi from Tuba City, was slain in a firefight…March 23… …―The main issues for
the governor were she wanted to find a suitable way to honor Lori Piestewa and everything she
means to Arizona. She is the first Native American woman to die in combat in a U. S. military
capacity,‖ said Kris Mayes, a spokeswoman for the state‘s chief executive. Vol. XIX, No. 5, May 2003
Shoshone-Bannock Member Gains Key Post at Seattle Post-Intelligencer. Mark Trahant, a
Shoshone-Bannock tribal member who gained his initial journalism training for his tribe‘s weekly
newspaper, has been named editorial page editor of the Seattle Post-Intelligencer. …Being part
of American Indian communities has given Trahant a perspective on world events that non-
Natives might not have. For example, the Post-Intelligencer has recently taken an editorial stand
in favor of the United States acting in line with United Nations regulations, rulings and findings
in dealing with Iraq, a stand he believes stems from the Native tradition of honoring treaties. Vol.
XIX, No. 5, May 2003

Amusement Business
Disney Banking on the Future. The announcement of a new million-dollar themed roller coaster
and the news that the new $100 million-plus Mission: Space attraction would open in mid-August
shows a strong commitment to the future, the top Walt Disney World official claims. Vol. 115, No. 18,

Disney‘s New ‗Expedition Everest‘ Brings Yeti Myth to Animal Kingdom. The folklore of the
mysterious yeti, the abominable snowman, will come alive in early 2006 inside Florida‘s newest
and tallest ―mountain.‖ Expedition Everest, the new $100 million-plus attraction, combines an
indoor/outdoor Vekoma roller coaster with a highly themed environment. …―This attraction has
a seamless integration between the ride experience and the storyline,‖ said Joe Rohde, executive
designer at Walt Disney Imagineering and lead designer of the Animal Kingdom Theme Park. Vol.
115, No. 18, 5-5-03

Biloxi Sun Herald
Land Casinos Next? After a decade of dockside gambling, it's time for Mississippi casinos to
evolve and move onto land, the chairman of the Mississippi Gaming Commission said during the
first day of the Southern Gaming Summit on Wednesday. "It's time to become amphibious," said
Leonard "Len" Blackwell III of Gulfport. "There are definite safety drawbacks to the requirement
that casino vessels float. Barges are also becoming obsolete. The life span of a barge is 15 years
and we're into our second decade." The gaming commission is studying how to move barges on
land and should complete its report by the end of the year. Blackwell wants to see casinos move
onto land, within their present sites. Timothy Boone, 5-8-03

Casino Crime
Casino Must Pay Couple for Mugging Injuries. A Camden County Superior Court jury ordered
the Trump Marina Hotel Casino pay a New Jersey man and his wife $4.8 million for extensive
injuries he received when he was mugged near the casino. …Jurors said that the hotel-casino
should have had better parking lot security. Vol. 9, No. 5, May 2003

Chicago Sun Times
Daley 'Reviewing' Idea Of City-Owned Casino. Mayor Daley is finally showing his hand in his
bid for a Chicago casino. Daley was grinning like a Cheshire cat Tuesday as he publicly
acknowledged what City Hall insiders have known all along: He's ―researching‖ the possibility of
a government-owned, land-based casino because of the pot of gold at the end of the rainbow.
―You need revenue for infrastructure. Whether it's schools or sewers and everything else. You
need money for local government and that is one avenue we're looking at. You need it,‖ he said.
―We are reviewing all proposals. Do you take an existing building? Do you build something new?
What is the cost of it? That's what you have to look at--the cost of it and how quickly you can get
it back to the taxpayers.‖ The mayor said he continues to favor a city-state ownership
arrangement modeled after Ontario, Canada, with a professional gaming operator hired to run the
casino in exchange for a fixed management fee. Fran Spielman and Dave McKinney, 5-7-05

Gov. Backs Plan That Could Let State Own 10th Casino License. Gov. Blagojevich endorsed
a possible legislative coup Wednesday that would revoke the state's disputed 10th casino
license and create a new license that state government might eventually own and operate.
… Legislation under consideration would authorize the Illinois Gaming Board to
continue with a court-style hearing to revoke Emerald's license, ending the board's quest
to reach a legal settlement. The Emerald license then immediately would be replaced with
another license, and the state would be allowed to enter the bidding war for it if it deemed
gambling companies weren't ponying up enough cash. Dave McKinney and Chris Fusco, 5-29-03

Denver Post
A new name. New slot machines. A new vibe. That's the plan for the biggest casino in Colorado,
which is shedding its original management and striking out with a strategy to pull itself out of
bankruptcy. The Black Hawk Casino by Hyatt will become the Mountain High Casino on
Wednesday, signaling Hyatt's departure from the Black Hawk market. …That test will determine
if Windsor Woodmont can pull the casino out of its financial hole on its own, without Hyatt.
Windsor is betting on a new manager with a history for turning around struggling casinos, a corral
of new slot machines and a sweeping adjustment of the return on most of its slots. Jason Blevins, 5-13-

Detroit News
Casino's Video Poker Ban Holds. Skilled video poker players banned from Greektown Casino
last year did nothing illegal that would have warranted their removal, but the gambling hall still
has the right to bar anyone it wants, Detroit's casino regulator says. The Michigan Gaming
Control Board recently completed an investigation after the casino removed video poker players
who, because of their winnings and mounting cash-back incentives and freebies, made them
unprofitable for the privately-owned casino to host. In November 2002, nine players were
escorted out by security guards; but as many as 30 had been identified as ―advantaged‖ players.
Most of (them) filed complaints against Greektown with the board. "Our investigation of the
circumstances surrounding your exclusion found no evidence of any illegal activity on your part,"
the board states in a letter. "We were unable to determine how your play of video poker was in
any way outside the normal conduct of play." Nonetheless, Michigan law "gives the casino the
right to exclude a person for reasons deemed necessary by the casino," the board wrote. Becky
Yerak, 5-1-03

New Casino Tax Would Drive Away Michigan's Gambling Tourists. Grabbing a bigger share of
travelers' winnings would send gamblers to casinos elsewhere. Detroit's MGM Grand Casino
would be affected by a proposed state tax on out-of state gamblers.
Each of Detroit's three casinos is being required to build a 400-room hotel as part of their
agreements with the city. Those rooms, presumably, are meant to be filled with gamblers who are
visiting Detroit from out of state. But a vote by the Michigan House of Representatives last week
would make it a lot tougher for Detroit's casinos to attract that market if it becomes law. The
House bill taxes the winnings of non-Michigan residents starting Oct. 1. It also applies to horse
racing and most Indian casinos. …The bill sailed through the House on a 97-8 vote. And why
not? It wouldn‘t be the people who voted for these lawmakers who would pay the tax. Taxing
tourists has become the easy answer for legislative bodies. That's why occupancy taxes on hotel
rooms and taxes on rental cars have become so popular. They are the perfect answer for
lawmakers who don't like making tough decisions. But there is a stiff local cost to this tax. The
continued success of the Windsor Casino indicates that tax policies do influence where people
choose to gamble. 5-11-03
Detroit Casino Revenues Off 5 Percent in April. Combined revenues at Detroit's three casinos
were $92.5 million in April, down 5 percent from the same period last year. Revenues are what
the casinos keep from gamblers, but before paying various taxes and expenses, including labor.
MGM Grand Detroit Casino's $33 million edged out MotorCity Casino's $32.8 million.
Greektown Casino posted revenues of $26.8 million. MGM, MotorCity and Greektown were
down 6 percent, 3 percent and 5 percent, respectively, from April 2002. It was the sixth time in
the past seven months that revenues have fallen from their year-ago periods. Nonetheless, the
$92.5 million still surpasses the $78.1 million generated in April 2001. Year to date, MotorCity is
the market-share leader. 5-15-03

Gaming Industry Observer: Michael Pollock’s
‗Cashless‘ Summer Set to Debut in Atlantic City. Seizing the EZ-Pay initiative more than a year
ahead of its competitors, Park Place enjoys a captive audience of premium players. More than
6,000 of its machines should be hooked up by the end of the summer, when others intend to crash
the party. Harrah‘s and Resorts Atlantic City pace through their final pre-implementation stages
and the Borgata will open with cashless technology, but Park Place Entertainment hopes to
cement its first-mover status into a permanent lead. Dave Lyons, who oversees slot operations at
the company‘s four Atlantic City properties, embraces this precious lead-time with the joy
reserved for inventors. ―It‘s been an absolute home run,‖ Lyon said…―In my 23 years in the
business, this has been the most significant event regarding slot machines.‖ David Bontempo, Vol. 8, No.
8, 5-26-03

Gaming Industry Weekly Report
Earnings season for gaming companies is just about completed and one trend has been established
and that is that there is no trend. We see absolutely no trend for this recently completed quarter‘s
earnings, company by company, and no clear trend in earnings for the remainder of the year. In
other words, the results appear to be changing from region to region, in the case of the casino
companies, and based on individual products and activities for suppliers. 5-2-03
There is no doubt that the activities in the first few months of the year should be looked at as a
learning experience for gaming stock investors. Between learning that the stock market tends to
either give a worst case scenario for a group of stocks, such as the riverboat regional operators in
the first quarter, or a best case scenario, such as these same stocks first quarter of last year, to the
fact that legislative sessions are nothing but a roll of the roulette wheel or a shooting of the dice,
we have seen it all. Politicians debating gaming are just like the mainstream media covering
gaming related stories. Very few do any research and believe there is nothing wrong with making
uneducated decisions or comments that actually affect people‘s lives. 5-19-03
Louisiana March gaming revenue fell 4.3% to $179.2 million with the New Orleans market rising
2% while Shreveport, Lake Charles and Baton Rouge all declined with Lake Charles bearing the
brunt of the decline, down 12.1%. In Lake Charles, Delta Downs‘ revenues fell 15.8% while
ISLE and HET were both down over 10%. It did look like Pinnacle Entertainment was the only
one having a good month with their two properties up a combined 7.5%. 5-2-03
Missouri April gaming revenues rose 3.4% to $108 million. St. Louis led with 5.9% growth, led
by a 55.8% gain at Ameristar. Combined with their KC property, ASCA was up 26.5%. ISLE‘s
two properties were also up a combined 6% but HET, led by a 10.9% decline at their Maryland
Heights property, was down a combined 7.2%. The KC market was down 1%.

Once again our old friend, Illinois Governor ―Lightning‖ Rod Blagojevich caused us to get more
cautious but the spineless lawmakers in Illinois caused us to actually come right out and say,
protect your profits. Over the Memorial Day Weekend, instead of being at barbeques, the Illinois
Legislature was busy watching Blagojevich stubbornly insist that he wants taxes increased on
casinos in the state in order to help bridge the budget deficit but he would throw the industry a
bone and sunset (drop the rates back) the provision once the Emerald Casino license is
operational. We can‘t understand it but for some reason it cannot penetrate the cranium of
Lightning Rod that there is no value in the 10th license. Then again, maybe that is what he is
after all along as ―he does not want an expansion of gaming.‖ Perhaps Blagojevich is really a
card carrying member of Reverend Grey‘ anti-gaming cult and is willing to destroy the state of
Illinois just so that there cannot be one more casino operating. 5-30-03

Gaming Revenue News
Nevada: Clark County gaming revenues were up 0.7% in February. The Strip grew 3.8% for the
month; Downtown Las Vegas fell 1.5%, Laughlin was off 1.3% and Boulder Strip gained 4.7%.
…Washoe County‘s revenues fell 3.6% in February, with Reno down 3.5%, Sparks off 0.4% and
North Lake Tahoe down 15.6%. …South Lake Tahoe was up 3.3% in February.
Atlantic City: Atlantic City revenues declined 3.0% in March, compared to a 6.5% increase the
year before.
Colorado: Colorado revenues fell 9.0% in March, compared to a 9.9% increase the year before.
…Black Hawk declined 8.7%, Central City was down 11.4% and Cripple Creek fell 9.3%.
Mississippi: Mississippi revenues fell 3.8% in March. Last year‘s revenues were 4.7% ahead
2001‘s results. …For February, the Coastal region fell 4.4%, the North River areas declined 5.0%
and South River gained 2.3%. Vol. 17, No. 5, May 2003

Gaming Update: Colorado Division of Gaming
Blizzard Slows AGP Growth. The Blizzard of 2003 left Colorado casinos stuck between a dismal
February and a remarkable March in 2002. Casinos statewide reported $57.0 million in
March…down 10.3 percent from $63.5 million in March 2002. …As a result of the massive
snow storm the third week of March, casinos were open only an average of 29.7 days during the
31-day month. Vol. XII, Issue 5, May 2003

Hartford Courant
Casinos Deliver Cash to State. The Indian casinos turned over nearly $32 million to the state last
month, revenues earned from losing gamblers playing the casinos‘ 12,696 slots. The figure is
expected to top $400 million for the fiscal year ending in June from gambling at Foxwoods
Resort and Mohegan Sun casinos. ―The market is still under-supplied,‖ said gambling analyst
Sebastian Sinclair, president of Christiansen Capital Advisors. For example, an industry rule of
thumb suggests that when a casino‘s ―win per machine‖ exceeds $200, there is room for
expansion, Sinclair said. Mohegan Sun‘s win per machine was $349 for April and Foxwoods' was
$319. Even if the machines averaged just $300 a day for a year, it would mean a single slot was
earning about $110,000 annually. Rick Green, 5-16-03
Trump to File Suit Vs. Tribe. A lawyer for casino and hotel impresario Donald Trump said
Tuesday that he will file a lawsuit in Superior Court today against the Eastern Pequot tribe and its
financial investors. Trump, who operates casinos in California, Indiana and New Jersey, had a
deal to develop and manage a casino for the Paucatuck Eastern Pequots, one of two tribal
factions. Trump "wants to get this off the ground and get it moving," said Robert I. Reardon, a
New London lawyer representing Trump. "There is a binding contract here." Reardon declined to
comment further, except to say, "The complaint is very specific."
Indian Country Today
NIGC Oversight Hearing. Commission requests greater power. Leaders of the National Indian
Gaming Commission and the National Indian Gaming Association testified May 14 before the
chairman of the Senate Indian Affairs Committee, Ben Nighthorse Campbell. Phil Hogen, head
of the NIGC, explained how the commission will use its $12 million in tribal fees. He then pled
the case to give the NIGC more legal power in regulating Class III casino operations. Ernest
Stevens and Mark Van Norman, chairman and executive director, respectively, of NIGA, spoke
against broadening NIGC‘s hold over Class III gaming, saying that the combined tribal and state
regulatory systems work fine already. NIGA also expressed its displeasure about the last minute,
behind closed doors change to the fiscal year 2004 budget. The appropriations committee axed
Congress‘s $2 million dollar ante for the NIGC, while putting the commission‘s 50 percent
funding increase solely on the backs of the gaming tribes, without consulting them. Both the
federal agency and the lobbying entity for Indian gaming agreed on one thing: IGRA should be
amended to allow tribes to triumph over recalcitrant states that refuse to negotiate Class III
compacts where such forms of gambling (slot machines, blackjack card games) already occur.
The U.S Supreme Court‘s 1996 Seminole Tribe v. Florida decision declared that a state‘s
sovereign immunity would prevent a tribe from filing a lawsuit over the state‘s failure to grant a
E.S. Dempsey, 5-16-03

Indianapolis Daily Star
Casinos Generate $182M in April Revenues. Indiana's riverboat casino revenues dipped slightly
in April, dropping nearly $17 million statewide. But the revenue decline comes on the heels of a
record month for the casinos. In March, a typically strong month, the boats posted nearly $200
million in revenue. And the April total of $182.6 million is up from the same period a year ago,
when the boats posted $165.3 million in revenue, according to data from the Indiana Gaming
Commission. Kristina Buchthal, 5-21-03

International Gaming & Wagering Business
The New Cash. As ticketing systems continue to make their way across slot floors, casino
operators are becoming increasingly convinced of the multiple benefits of coinless systems. But
ticketing systems are perhaps only the first wave of coinless and cashless technologies taking the
industry by storm. Account-based gaming, where patrons use player cards as wagering conduits;
debit cards, used to upload credits onto games; and smart cards are just a few of the many other
cashless technologies casinos are now adopting.
Robyn Taylor Parets, Vol. 24, No. 5, May 2003

Server-Based Gaming. Server-based gaming – already a reality in certain market segments and
jurisdictions – appears poised to advance into more traditional casino venues. …―It‘s something
we‘re looking at carefully because there seem to be some other business models out there that are
more consistent with our IT structure….We believe the slot floor of the future should be more
system-centric than game-centric,‖ Bruce Rowe, VP Harrah‘s noted. He noted that server-based
gaming – in which game outcomes are determined by random number generators located on a
central server – is already in use in video lottery operations, some Indian gaming facilities and
racinos. …―The benefit to the operator is that there‘s a ton of these so-called garage-shop game
designers that can offer you product outside the traditional providers,‖ Scott Kreeger VP Station
Casinos said. ―There‘s always a value in having a game that provides better entertainment value.
The more competition and creativity that‘s out there, the better for the player.‖ But, Kreeger
stressed, it will take significant push from a significant player to bring such technology to the
mainstream. ―It‘s going to take a major manufacturer or a major operator to commit full-tilt in
one direction,‖ he said. Don‘t be surprised if Station Casinos is out in front on this type of
technology, Kreeger said.
Marian Green, Vol. 24, No. 5, May 2003

Reborn on the Bayou. Among the states that legalized gaming in the early 1990s, Louisiana has
had more problems with its industry than all the other new jurisdictions combined. Its former
governor is in jail for crimes related to the licensing of riverboat casinos. State legislators have
been convicted of corruption in the video poker business. A poorly thought-out regulatory
structure complicated licensing and regulation. The land-based casino in New Orleans was
closed for more years than it‘s been open, thanks to an unrealistic tax structure and lengthy
bankruptcy proceedings. Many of the state‘s riverboat casinos were plagued with delayed
openings and abrupt closings, bankruptcies and relocations, and legal fights over whether they
would have to cruise. After many of the casinos and video poker outlets had been built and
opened for business, they had to face elections to determine whether they would be allowed to
continue operations. Now things have settled down. It will be 10 years this October that the first
Louisiana riverboat casino opened. The state seems to have put the gaming-related scandals and
bankruptcies behind it. The regulatory structure has been radically reformed and operates
smoothly. …There are 14 riverboat casinos, with a 15th license issued and the site under
development. Harrah‘s New Orleans is the large land-based casino on the edge of the French
Quarter. More than 14,000 video poker machines are installed at truck stops, bars, restaurants,
hotels and racetracks OTBs.
Fred Faust, Vol. 24, No. 5, May 2003

International Casino Surveillance Network
Trained to Cheat Slot. A zone 12 casino has reported they caught a group, namely James ―Jim‖
GUNTHER, Billie MORE and Ludda BISHOP, cheating slot machines. This group informed
casino security they had been trained to cheat slot machines by a subject named Dave
KARMONA. The scam involved making a max bet of fifty-four (54) nickels in a Williams Slot
Machine, then hitting the play button and as the reels are spinning, then hitting the collect button
followed by inserting another nickel, thereby allowing the cash-out and the retention of credits.
Then the entire process can be repeated over and over again.

Kansas City Star
Kansas City Casino Revenues Down Again. For the second consecutive month, Kansas City's
four riverboat casinos in April failed to match gross revenues from a year ago. And it may be no
coincidence that slot machines in Kansas City have never been tighter, with casinos taking more
money from slot players than at any time in the market's history. Falling revenues in April led to
the first back-to-back down months in market history. Last month the casinos raked in $50.2
million, down 1 percent from $50.7 million in April 2002. In March the shortfall was 2.1 percent.
"It does make March look like the beginning of a trend," said Missouri Gaming Commission
analyst Jim Oberkirsch. ―But that's not a big surprise. We have felt for some time that the markets
were going to enter a slow growth phase, and we're definitely seeing the beginning of it in Kansas
City.‖ Rick Alm, 5-15-03
Proposed Tribal Casino Clears First Hurdle. Two Kansas Indian tribes and the Unified
Government of Wyandotte County and Kansas City, Kan., agreed Thursday to details of a $170
million tribal casino proposal near Kansas Speedway. …The agreement is the first of several
hurdles the project must clear, including gaining approval from Gov. Kathleen Sebelius, the
Kansas Legislature, the Bureau of Indian Affairs, the U.S. Interior Department and the Federal
Indian Gaming Commission. Rick Alm, 5-16-03

Las Vegas Review-Journal
Station Casinos Execs Lectured on Role in California. Gaming Control Board members used a
routine appearance by Station Casinos executives at a Wednesday panel meeting to lecture the
executives on their concerns regarding Station's deal to manage a Sacramento-area tribal casino.
Inadequate regulations and a system that allows the tribe to act as casino owner, regulator and
appeal court makes California casino operations a tricky business, the panel members told Station
executives. Control board member Bobby Siller questioned Station execs about the property's
two private gaming rooms. Nevada private gaming operations have tough rules that specify who
can play and for how much, but Station bosses told Siller that the Auburn tribal gaming
commission hasn't created its own rules. ―It would appear that without written policies, you'd be
setting yourself up for legal challenges,‖ Siller said. Jeff Simpson, Gaming Wire, 5-8-03
Gaming Revenue Up in March. Nevada casinos reported a 3.4 percent increase in March
revenue, winning $834.7 million, up from $807.2 million in March 2002, the Nevada Gaming
Control Board said Friday. The comparison benefited from soft numbers that followed the Sept.
11, 2001, terrorist attacks. March winnings were 2.6 percent below the $856.4 million casinos
won in March 2001. Strip casinos won $395.6 million, up from $395.3 million, a 0.1 percent
increase. Jeff Simpson, Gaming Wire, 5-10-03
Federal Gambling Regulators Satisfied with Harsh Fine. Federal gaming regulators said Tuesday
they were placated by the civil agreement between MGM Mirage and the Nevada Gaming
Control Board, staving off for now moves to revoke Nevada's exemption from federal anti-money
laundering regulations. ―If we thought Nevada wasn't complying (with anti-money laundering
regulations) or enforcing them, we could pull the exemption," said Alma Angotti, senior
enforcement counsel for the federal Financial Crime Network. Rod Smith, 5-28-03
Moulin Rouge Destroyed in Fire. A massive fire erupted early today at the storied Moulin Rouge
and burned for hours, destroying most of the shuttered casino, which was Las Vegas' first
integrated resort. J. M. Kalil, 5-29-03

Las Vegas Sun
Las Vegas March Visitor Volume Off. Las Vegas visitor volume fell in March from last year's
levels, primarily due to the outbreak of the Iraq war and the city hosting a major convention in
2002 that wasn't here this year. The Las Vegas Convention and Visitors Authority reported 3
million visitors in March compared with 3.3 million in March 2002, a 7.4 percent downturn.
Convention attendance was off 17.6 percent for the month, to 565,678 from 686,867 a year ago.

Garfield Slots Face Scrutiny. Mikohn Gaming Corp. announced Monday that it had acquired the
casino rights to Garfield and would develop games by the end of the year. Terms were not
disclosed. Bobby Siller of the state Gaming Control Board said today that he expects the Garfield
theme to come under scrutiny because the cat character is attractive to children. 5-13-03
Rival Convention Venues Make Gains. Las Vegas continued in 2002 to host most of the nation's
largest conventions, but rivals chipped away at the city's market share, the recently released
Tradeshow Week 200 says. …Las Vegas hosted 35 of the top 200 shows and leased net square
footage totaling 16.9 million square feet, 26.1 percent of the market share. …Last year, Las Vegas
had 40 of the top 200 shows. Chicago also had fewer shows this year than last. The biggest gains
were made by Orlando, which climbed from fifth to third with 20 shows, and Rosemont, Ill., and
San Diego, which broke into the top 10 with five shows each. Las Vegas Sun, 5-13-03
Gaming Firms to Be Hit by Tax Hike. Nevada's gaming industry will not escape new taxes. The
head of Nevada's Task Force on Tax Policy made that point Friday when he outlined the effect a
proposed gross receipts tax plan would have on the industry at the Financial Executives Gaming
Forum in Las Vegas. Guy Hobbs, chairman of the tax task force, said gaming companies will
face a quarter to half a percentage point increase in gaming taxes, new taxes on items such as
liquor sales and an increased per-employee head tax.
Kevin Rademacher, 5-27-03

North Vegas Casino Moves Ahead. Coast Casinos Inc.'s plan for a new casino-hotel in North Las
Vegas is making its way through the city approval process.
Dan Kulin and Kevin Rademacher, 5-29-03

Milwaukee Journal-Sentinel
Judge Sends Gambling Suit to State Supreme Court. A federal judge Thursday tossed to the state
Supreme Court a lawsuit challenging the legality of Gov. Jim Doyle's new gambling agreement
with the Forest County Potawatomi tribe - a move that bolstered Republican lawmakers' hopes of
forcing a renegotiation of the generous terms of the pact. The suit claims the gambling compact
violated the state constitution by unfairly cutting the Legislature out of the decision and also went
against a 1993 state ban on gambling expansion. A spokesman for the Democratic governor said
the move would mean only a procedural delay and the case likely would still be decided in
federal court. Steve Schultze, 5-30-03

Nevada’s Washington Watch
Ensign Says Federal Budget Good News for Gaming Industry. Nevada U. S. Senator John Ensign
says the recently passed federal budget has good news for Nevada‘s gaming industry. The
Senator has succeeded in his long fight to remove funding for a provision in the budget that
would have forced Nevada‘s gaming establishments to withhold jackpots in the event the jackpot
winner was delinquent in child custody. ―Cracking down on deadbeat dads is a worthwhile and
noble effort, but putting gaming employees in a law enforcement role is the wrong approach,‖
Ensign said. ―This would have also created a burdensome and unnecessary expense for Nevada‘s
gaming industry.‖ Vol. 9, Issue 78, May 2003, p. 15

Press of Atlantic City
Casino Win Falls for 3rd Month. War, a bad economy and Easter doldrums led to a third straight
month of declines in gambling revenue for the casino industry. The 11 casinos reported gross
gambling revenue of $344.1 million in April, down 4.7 percent compared to the same month last
year, according to unofficial results obtained Friday by The Press of Atlantic City. Joe Weinert, 5-5-03
CCC Keeps Former Caesars Exec Out of Casinos. Former Caesars President Gary DiBartolomeo
cannot even park cars in a casino hotel because too little time has passed since his gaming license
was revoked for lies and regulatory violations that he blamed on a gambling compulsion, the
Casino Control Commission ruled Wednesday. So, a resigned DiBartolomeo said afterward, he'll
plug on with his new job selling timeshares from his office ... inside Trump Taj Mahal Casino
Resort. ―It's kind of ironic,‖ he said. ―I can work in the hotel so long as I'm not affiliated.‖ Joe
Weinert, 5-8-03

Assembly Waits to Hear From Casinos. The chairman of the Assembly Budget Committee said
Tuesday the casino industry is running out of time to meet with lawmakers and offer alternatives
to a proposed tax hike on casino revenue. ―We haven't heard a hell of a lot from the industry and
we've got five weeks to go,‖ said Assembly Budget Committee Chairman Louis Greenwald, D-
Camden. ―The clock's ticking.‖ Greenwald is part of a group of southern New Jersey Democrats
who have opposed Gov. James E. McGreevey's plan to raise $135 million by increasing the
casino revenue tax from eight to 10 cents and by imposing a new tax on complimentary casino
rooms and meals. But Greenwald made it clear during the Assembly budget hearing that the
casino industry needs to meet with lawmakers soon.
Pete McAleer, 5-28-03

Cuts Urged in Gaming Enforcement Funds. Should Atlantic City spend twice as much as Las
Vegas each year on gaming enforcement? That's the question state Sen. Bill Gormley and
Assemblyman Frank Blee, both R-Atlantic, are asking as the Atlantic City casino industry looks
for alternatives to the governor's proposed tax hike on casino revenue. Gormley is suggesting
that the state Legislature look at ways to reduce the budgets of the two agencies that regulate
Atlantic City's casino industry, the Division of Gaming Enforcement, or DGE, and the Casino
Control Commission. The casinos would pass the savings to state and local programs. Pete McAleer,

Reno Gazette-Journal
Washoe Hotel Occupancy Drops in March. Washoe County‘s hotel room occupancy statistics
slipped again in March, declining 3.4 percent from March of 2002 to an overall rate of 66.3
percent, according to statistics provided by the Reno-Sparks Convention & Visitors Authority.
…Full-service hotels, which make up the bulk of the Washoe County market with almost a half
million room-nights available had a 4.1 percent drop in occupancy, sliding from 76.1 percent to
72.9 percent. Thomas J. Walsh, 5-7-03
There is a new major attraction in the heart of downtown Reno, next to the Reno arch – the
Xtreme Park located at the Plaza at Harrah‘s Reno. …The centerpiece of Xtreme Park is a 145-
foot tall thrill ride called the Xtreme Machine. A three-minute ride that travels at speeds in excess
of 100 mph, the Xtreme Machine propels riders 213 feet straight into the air. …―This ride will be
the most intense three minutes of your life,‖ a spokesman said. 5-8-03
Indian Gaming Having ‗Severe‘ Effect on Reno, MGM Exec Says. Indian casinos in California
that have siphoned off revenues from Nevada casinos will continue to have a ―profound impact‖
on the future growth of the state‘s gaming industry and a ―severe‖ effect on Reno, the chief
financial officer of MGM Grand Inc. said Thursday. James Murren, speaking at the Nevada CPA
Gaming Forum — a two-day affair at the Flamingo Hotel — said revenues at MGM‘s three
casinos at the southern Nevada border town of Primm have been cut in half and that Mandalay
Resort Group‘s two casinos in nearby Jean ―don‘t make a nickel‖ in the wake of competition from
Indian casinos in California. Casino revenues in Reno ―are flat and going down‖ and once the
planned Thunder Valley casino opens on Indian land near Sacramento this year ―it‘s going to have
a profound impact there,‖ Murren said. …MGM Mirage wants to build a hotel-casino in Las
Vegas or Atlantic City, N.J., by the end of the decade, Murren said Thursday. Murren told an
audience after his keynote address that the resort would be a ‗‗big one‘‘ and cost well over $1
billion. Jeff Burbank, 5-23-03

Strictly Slots
IGT Keeps Beating the Odds. Despite the doldrums of the stock market, International Game
Technology, the creators of many of your favorite slot machines, continues to flourish. Its stock s
up about 2% so far this year, and in Business Week’s annual list of the 50 best-performing
companies in 2003, IGT took the #18 spot – up from #46 in 2002. Over the past three years, IGT
shares have more than tripled. Vol. 5, No. 5, May 2003, p. 16
Megabucks Hits on the Strip. The largest slot machine jackpot in gaming history -
$39,713,982.25 – was won Friday, March 21 on a Megabucks machine at Excalibur Hotel Casino
on the Las Vegas Strip. The winner, who requested anonymity, is a 25-year-old software engineer
from Los Angeles. He had been visiting family members in Las Vegas and keeping track of
college basketball‘s ―March Madness‖ with some friends.
Vol. 5, No. 5, May 2003, p. 48

How IGT Makes Great Slot Games. How do make a great slot game? Probably the same way the
Keebler elves make cookies. The elves take all those familiar ingredients – eggs, flour, sugar,
butter, vanilla, chocolate, nuts – and then make something special by mixing in their own
distinctive personalities. IGT games have their own special flavors, too. It‘s that ―magic‖
ingredient that separates pretty good games from great ones. We think of our games as mini-
movies. On any given Friday night, there are always new movies opening. Some are dramas,
some are comedies, some are musicals, and some are based on TV shows or other movies we‘re
familiar with. We‘re creating fast-paced video and audio entertainments like those, plus ours
have the added bonus of giving money back to the ―viewer.‖ …Ah, so what about focus groups
and scientific testing and slot player parties? To tell the truth, those things are no help to us
because they don‘t give an accurate picture of what players are really looking for. So we make
the games we want to play – and we work them, and we play them, and we make sure they are
just right before they go out into the gaming market. We refine the art, and we redo and redo and
redo the math until the game gives the player value and time for their money.
…Our games have to be fun…how about giving a player a chance to win hundreds of thousands
of dollars by betting pennies? Now, there‘s some magic for you.
Joe Kaminkow, VP of Product Development, IGT, Vol. 5, No. 5, May 2003, p. 58

                                                           Ken Adams

                                                210 Marsh Avenue, Suite 103
                                                      Reno, NV 89509
                                             (775) 322-7722 Fax (775) 322-7806

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