International edition
September 21, 2020

It fell short of the gains reported in the broader equity markets

AGEM released its September 2010 Index

(US).- After declining three of the last four months, the AGEM Index witnessed its largest increase since April. During August, the composite score of 17 global gaming suppliers rebounded 5.15 points, or 5.86 %, to 93.04. While the latest movement is positive, it is important to note that the index remains down 20.3 % from a year ago.

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dditionally, the AGEM Index fell short of the gains reported in the broader equity markets as the Dow Jones Industrial Average and Standard and Poor’s 500 Index increased 7.7 %  and 8.8 %, respectively, during September.

The AGEM Index is largely driven by the performance of slot manufacturers, which has remained relatively weak due to many casino operators reducing their capital expenditures during the latest business cycle.  With the contraction in slot replacements over the last several years, it is inevitable that operators will need to increase their investments in new hardware.

If not solely to remain competitive, within the next two years many gaming properties will eventually need to begin rotating machines and systems that will have become largely antiquated over what will have been more than three years of downturn.

Selected positive contributors to the index during the month included: Lottomatica, adding 1.56 points to the index based on a 4.56 % increase its stock performance, and Konami, which contributed 1.24 points to the index based on a 10.17 % gain in its stock valuation.

Selected negative contributors to the index included: IGT, posting -0.23 points to the index with a 1.03 % decline in its stock price, and Intralot, with its stock price dropping 8.39 %t, contributing -0.07 points to the index.

At the heart of gambling in the United States, and quite possibly the hardest-hit economy, changes in the Las Vegas gaming landscape continue to evolve.  In downtown Las Vegas, gaming revenue has remained weak in recent years as tourists flock to the ever-bigger and more modern hotel-casinos of the famous Strip that are being forced to compete on price.

The latest casualty came in September with the Plaza announcing its plans to cease operations of its 1,037-room hotel for at least a year during renovations. This is the second a hotel to close its doors downtown within the last 12 months after Binion’s closed the doors on its hotel operations in December.  As hotel operations are temporarily out of service, demand on gaming will likely be impacted.

Additionally, Isle of Capri, a former owner of the now shuttered downtown Lady Luck, was approved for a Nevada gaming license in September.  Management has indicated that there is potential for them to enter the Las Vegas locals market, possibly adding competition and new investment in the gaming sector.

Other news out of Las Vegas during September include Carl Icahn selling the furniture from the unfinished 3,800-room Fontainebleau hotel-casino suggesting that in the near term, the billionaire doesn’t expect a strong market recovery and that his plans for finishing the stalled project as currently programmed are slim.

Despite broader economic conditions, MGM Resorts International CEO Jim Murren said that CityCenter has “been profitable all quarter.”  Additionally, its under-construction Deutsche Bank-owned neighbor, The Cosmopolitan of Las Vegas, began interviewing potential employees for the 5,000 positions needed to open the property by December 15th. The property is expected to debut with a 9,290 sqm gaming floor.

The Hollywood Casino Perryville is the first slot casino in Maryland to open and will remain so until the Ocean Downs Racetrack is completed, which is expected in December.  The 1,500-slot casino is approximately 40 miles northeast of Baltimore.

While the Kansas Lottery Commission reviewed applications for a new casino near Wichita, Harrah’s announced that it would withdraw its proposal suggesting that the remaining two applicants will move forward in the selection process. 

In Missouri, potential operators of the state’s last gaming license continue to make proposals for a new casino.  Looking ahead, it is expected that a study analyzing the four proposed casino sites will be completed in October with the state gaming commission ruling on its selection thereafter.

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