Chicago, IL (Feb 12, 1997) -- We have yet again moved this gaming industry weekly update from Tuesdays to Wednesdays in case you were looking for the update last night and you couldn't find it. That is why.

Who said 1997 was going to be a boring year in gaming? Certainly not this Fool! The Gaming Index (Symbol: GAX) got pelted again this week and thoroughly trounced by the S&P 500 and Nasdaq Composite. Was there news to reflect the drop? Absolutely. The Nevada Gaming Control Board released the final numbers for gaming win in 1996. The following table was lifted wholesale from a post fellow gaming watcher Brigam posted in the gaming industry message folder:

1996 Casino Win       Dollars (Millions)   % Change,
                                           1996/1995
Atlantic City            $3,814             + 1.8%
Las Vegas Strip           3,580             - 1.4
North Las Vegas             146             +46.3
Boulder Strip               361             +17.6
Downtown Vegas              679             + 5.7
Laughlin                    491               4.8
Reno                        976             - 0.9
Lake Tahoe                  317             - 4.1
Nevada Total              7,370              +0.8%

Nevada Table Total        2,700             - 3.1%
Ataltic City Table Total  1,180             + 1.1%

Nevada Slots Total        4,670             + 3.2%
Atlantic City Slots Total 2,625             + 2.1%

One should also note that the latest issue of Forbes (Feb 24) has an excellent article explaining that the gaming industry's internal growth is sliding to a halt. One look at the table above illustrates this point. The Nevada total gaming win was up only .8%, which is actually down on dollar volume when you consider inflation. The Forbes article cites that nearly 40% of the revenues coming from the Las Vegas strip are coming from non-gaming portions of the mega-resorts. In other words, free food and cheap hotel rooms are being used less and less as a "loss leader" for gaming revenues and are going to be more important to a casino company's success in the future. People are still coming to Vegas in droves, but these people tend to be tourists, not gamblers.

Owners of Mirage <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MIR)") else Response.Write("(NYSE: MIR)") end if %> were treated to a double dose of good news this week. An issue of Fortune this week cited Mirage as being the second most admired company behind only the mighty Coke. Mirage beat out such well-known companies as Intel, Merck, and Microsoft to attain this award. It is good to see a member of the gaming industry finally get a little bit of respect! There is a lot to like about Mirage, Steve Wynn, and their past success. . . let's dub this effect the "Mirage-o-Philia" effect.

Mirage then came and beat earnings estimates by a penny this week and posted a fourth quarter profit of $.27. Mirage had compay wide EBITDA of $102 million versus $105 million in the previous year. The company reported stronger results at its flagship Mirage in Las Vegas, but results at its other properties in Nevada performed at or below year ago levels. Mirage ended trading today at 25 1/4, giving the company a trailing PE of approximately 24. Mirage is hitting on all cylinders and that is why the stock is trading at a premium to others in the industry.

The ITT/HLT take-over saga continued this week. Hilton <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HLT)") else Response.Write("(NYSE: HLT)") end if %> continued its posturing by announcing its intent to nominate 25 of its people to ITT's board. ITT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ITT)") else Response.Write("(NYSE: ITT)") end if %> has not scheduled a board meeting as of yet, but when the meeting comes along, it could be an interesting conference to follow if the Hilton $55 purchase proposal comes to a proxy vote. ITT also officially said "No" to the Hilton offer this week citing that it thought staying independent would best suit its shareholders. ITT also took a cue from Hilton and announced its intention to further downsize or split the company in order to be more gaming and hotel focused. ITT owns a stake in, among other things, Madison Square Garden and the New York Knicks. Selling of non-core assets seems to this Fool the right move for ITT to make. Stay tuned, there is much more to come from this story! Hilton traded down 1/2 to 27 5/8 while ITT rose 1 5/8 to 57 5/8 on the news that ITT is going to make the hostile offer that much more costly to Hilton.

Many have speculated that ITT would decide to go after another gaming company in order to increase its size to a point where Hilton could no longer fund a take-over. This ITT "fattening" defensive strategy was written about in several articles this week. Most seem to think Harrah's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HET)") else Response.Write("(NYSE: HET)") end if %> has the best possibility of being swallowed by ITT in its tactic since Harrah's stock has risen from the $18 range to 20 5/8 in the past few days. If Hilton is denied in its bid for ITT, Hilton looks to still be very much in a buying mood and could make an offer for another gaming company. While I have no idea what combinations of gaming companies we will see in the rest of 1997, I think it is a good bet that we are going to see further consolidation.

MGM Grand (MYSE: MGG) announced it has joined into a partnership with local businessman in Detroit in order to bid for one of the licenses available for a land based casino in Detroit. MGM also announced that it is has increased its available line of credit to $1 billion in order to fund any construction expenses in Detroit. The Detroit license is likely to be hotly contended between several well-known and well-capitalized companies in the industry. While it is still very early to handicap who will get the license, the early leaders include Harrah's, Sodak Gaming <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SODK)") else Response.Write("(Nasdaq: SODK)") end if %>, Circus Circus <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CIR)") else Response.Write("(NYSE: CIR)") end if %>, and of course MGM Grand. Again, stay tuned. . . much more to come from the motor city.

Stratosphere <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TOWVQ)") else Response.Write("(Nasdaq: TOWVQ)") end if %> announced that its cash flow for the four weeks ending Jan 26 was a paltry $553,000. This is far below the $2.267 million monthly cash flow level agreed to in its pre-packaged bankruptcy agreement with Grand Casinos <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GND)") else Response.Write("(NYSE: GND)") end if %> and Stratosphere's bond holders. Unless results at the unit dramatically increase, it looks likely that Grand Casinos will likely reconsider its agreement made with the Stratosphere bondholders. It looks to this Fool that a significant portion of the bankruptcy puzzle had changed and the previous agreement is likely to be voided. Again, stay tuned!

Earnings reported this week:

Aztar (AZR)        $.43
   [ ($.10) before tax benefit ]
Harrah's (HET)    ($.05)
  [ $.22 before charge ]

Parlay out and away. Stay Foolish!

Did you know. . .

That Missouri allows a single person to only lose $500 per gaming visit? The casino companies in the state are lobbying heavily against this "loss limit" regulation.