AGEM releases April 2013 Index

The AGEM Index has now reported monthly increases in eight of the past 12 months. 

The latest performance is primarily due to 13 of the 17 global gaming manufacturers reporting month-to-month increases in stock price in April. Of the four manufacturers reporting declines in valuations, just one, Transact Technologies (TACT), reported a decline of more than 5%. 

Each of the broader stock markets reported increases in April of 2013 when compared to March 2013. The Dow Jones Industrial Average reported a closing price of 14,839.80, up 1.8 % from the prior period. The S&P 500 also reported a month-to-month increase of 1.8 %, rising to 1,597.57. Meanwhile, NASDAQ reported the greatest increase of the three, rising 1.9 % to 3,328.79. 

The gaming equipment manufacturer sector's performance in April outpaced the broader equities' markets. Selected positive contributors to the April 2013 AGEM Index included the following: 

With a stock price of us$ 22.70 (up 13.9 %), Konami contributed 2.95 points. 

Lottomatica reported a 5.6% increase in stock price to 19.36 euros and contributed 1.85 points. Due to a stock price of us$ 4 (up 7.7 %), Aristocrat Technologies contributed an additional point to the composite index. 

Selected negative contributors included the following: 

SHFL Entertainment contributed negative 0.27 points due to a 4.7 % decline in stock price to us$ 15.80. With a stock price of us$ 9.99 (down 4.9 %), Daktronics contributed negative 0.13 points. 

A number of states are considering bills that would expand gambling within their borders. In Texas, Senator John Carona filed Senate Joint Resolution 64. If passed, the bill would create a Texas Gaming Commission, as well as allow three licenses for casinos in counties with more than 1.5 million people, three casino licenses on barrier islands in the Gulf of Mexico and authorize the state's three federally licensed Indian tribes in Livingston, El Paso and Eagle Pass to build casinos on their land. In addition, three licenses would be awarded for casinos at the class one race tracks and nine licenses for slots or casinos at the lower-tier race tracks. 

Since passage of the bill would require a constitutional amendment, it is required to obtain approval from two-thirds of the legislature as well as earn a majority vote from the public. However, the proposal remains in the Senate Business and Commerce Committee, which it must pass before moving on to the legislature. Such an approval remains uncertain at this juncture. 

If approved, the gaming sector in Texas could have significant economic impacts. According to a study released by the Texas Association of Business, it could create 74,000 jobs, us$ 3.4 billion a year in salaries and wages and us$ 11.8 billion in annual economic activity. The state would also be expected to benefit from an estimated us$ 1.2 billion in annual revenues, us$ 945 million a year in direct gaming taxes and us$ 260 million a year in indirect taxes. As currently proposed, approximately 85 % of the revenues would go to the state's property tax relief fund, five percent would go to city and county governments and ten percent would fund treatment for compulsive gamblers. 

In Illinois, a bill that would allow for five new casinos within the state, as well as an additional 1,200 slots at existing race tracks, recently passed the state Senate and is now awaiting approval from the House. If approved, the five casinos would be located in Chicago, Rockford, Danville, Lake County and the south Chicago suburbs. According to the Commission on Government Forecasting and Accountability, it is estimated expanded gambling in the state will result in about us$ 268 million in annual revenues - us$ 128 million of which would go to funding education, us$ 50 million to the Gaming Board, and the remainder would be used for economic development and agricultural programs. Governor Pat Quinn vetoed previous proposals due to ethical concerns. The latest bill addresses these concerns by giving the Control Board authority over the Chicago casino and banning licensees from making political contributions. 

Proposed gaming expansion bills are being considered in a number of other states as well, but with many facing an uphill climb, their fates remain uncertain. However, if approved, new gaming opportunities potentially benefit gaming equipment manufacturers.