The Passed Seven
by Paul Larson (TMF Parlay)

MARKET CLOSE        7/4/97   7/11/97
Nasdaq Composite:   1467.61  1502.62 (+2.39%)
S&P 500 (SPX):       916.92   916.68 (-0.03%)
CBOE Gaming Index:   206.38   202.80 (-1.74%)

Chicago, IL (July 11, 1997) -- That's right, it's July 11 -- a day where 7/11 are not just chapters in bankruptcy law, names of local mini-marts, or good numbers to throw in craps. Unfortunately, today was not a lucky day at all for the gaming stocks. In fact, it was yet another downright lousy week for the gaming industry with the Chicago Board Options Exchange gaming index running the opposite way that the bull market is sprinting -- an all too familiar occurrence this past year.

One stock that did have a good week was TRUMP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DJT)") else Response.Write("(NYSE: DJT)") end if %>. Trump's stock rose significantly after news hit from the company's shareholder meeting that Trump was looking to sell one of its three Atlantic City properties. As seems to be the case more and more, this news hit the AOL gaming message board before any of the wire services picked up the story. The company refused to even hint at what property they were putting on the block, but just about everyone seems to think that Trump Plaza is the most likely to go. I don't think anyone expects The Donald to sell his "crown jewel" Taj Mahal. Furthermore, the newly rethemed Trump Marina is also most likely to see a positive impact going forward should the H-tract land being developed by MIRAGE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MIR)") else Response.Write("(NYSE: MIR)") end if %> grow that portion of Atlantic City.

Since Trump already has a major presence on the boardwalk in Taj Mahal, it makes sense for the company to diversify and sell the other boardwalk unit to raise some much-needed cash for expansion and/or debt-reduction. Trump has publicly stated interest in growing the company in both the Detroit and Nevada markets, but lacks the financial power to meaningful expansion with the company's massive debt load. Beyond the question of what unit is to be sold, the bigger question is at what price and who will be doing the buying. The previews to this show sure do look interesting.

Another stock that has been on the minds of many investors lately is CIRCUS CIRCUS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CIR)") else Response.Write("(NYSE: CIR)") end if %>. Circus has had its estimates and ratings severely cut by no less than five major brokerage houses the past few weeks. The company's stock made a new annual low on Tuesday before recovering somewhat to $22 1/16 on some rather large trading volume.

The concern with Circus is their plans for development on the southern end of the Las Vegas strip. Skeptics in Circus see a company with $1.4 billion in debt, flaky seasonal room rates in Las Vegas that they fear is the start of a trend downward, and most importantly, yet another Las Vegas project with a nearly a $2 billion price tag looming on the horizon. Bulls, on the other hand, see a blue chip gaming company that is buying back its stock while gearing up to dominate the largest gaming market anywhere. Regardless of where you stand with Circus, it is clear that the company is adding leverage -- both in the traditional financial sense and in the sense they are increasing their exposure in a market they already have sizable exposure to. This is almost the polar opposite of what Trump announced they are doing this week. Leverage can be good or bad, but the one certainty is it speeds success or failure up.

There was more news out of Louisiana this week. HARRAH'S ENTERTAINMENT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HET)") else Response.Write("(NYSE: HET)") end if %> let it be known that the company does not expect to extend to its bankrupt subsidiary in New Orleans any further debtor in possession financing needed for Harrah's Jazz to continue its bankruptcy reorganization. Harrah's cited the lack of the Louisiana legislature to pass an amended land-based casino operating contract as the main reason for its strategic move. To make a long and complicated story short, it's looking less and less likely that Harrah's Jazz in New Orleans is going to ever reopen under the Harrah's banner.

We almost had a winner in the "guess the merger announcement" game this week. JACKPOT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: J)") else Response.Write("(NYSE: J)") end if %> announced that their bid for COLORADO GAMING (OTCBB: CGME) was rejected. This caused a rather precipitous drop in Colorado Gaming's shares on Friday. Colorado Gaming operates the Bullwhackers and Silver Hawk casinos in Blackhawk and Central City, Colorado. Since no one guessed this combination in our Foolish contest, the game continues. Nevertheless, all new entries to the game are closed. Be sure to check the gaming message board for the latest updates on the game.

HOLLY HOLDINGS (OTCBB: HOPR) was delisted from the Nasdaq small-cap market this week. The stock, which has had a split adjusted price as high as $7 11/16 this year, closed at $0.16 on Friday. The company expects the stock to begin trading on the "bulletin boards" later this week. The lesson here, as it was two weeks ago when looking at the internet gaming companies that have imploded, is to be extremely careful in this sector -- especially with small-caps.

And finally, for our laughable press release of the week, I highly encourage you to read this press release from BETTING INC. (OTCBB: BETT). I know twelve year-olds who have better grammar than what was put on the wire by this company. As regular gaming board contributor Mary Ann Snyder said of the release, "What also struck me is a phenomenon that I have noticed in the Hallowed Halls of Microsoft, namely, that people are under such stress that their speech becomes curiously truncated. Things like adverbs, adjectives, pronouns, and other nonessential speech pacing devices get dumped." Could we have "The next Microsoft" on our hands with Betting Inc? (That was a joke, and a bad one at that.)

Not only did the grammar have me on the floor laughing, but the company also said that the company expects to see "2% to 6% of 500 Billion Dollars Plus of Gaming Industries" (exact quote). Let's see -- 5% of $500 billion is $25 billion, which is greater than the annual gaming revenues of all of Nevada and Atlantic City as well as the gross revenues of Microsoft combined. I guess if you are going to blow some hot air, you might as well blow it in style.

Winners and Losers

AMERICAN BINGO <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BNGO)") else Response.Write("(Nasdaq: BNGO)") end if %> was the most notable winner after the company pre-announced their quarterly numbers and said they expect to have second quarter revenues of roughly $1.3 million with earnings per share of roughly $0.08-$0.10.

Top percentage movers (stocks over $1)
Winners                Closing Price   Weekly Move
Amer. Bingo (BNGO)         $5 1/16       +22.7%
Interactive Flight (FLYT)  $6 7/8        +19.6%
Video Lottery (VLTS)       $7 3/4        +14.8%
Gaming Venture (GVCU)      $2.44         +14.7%

Losers                 Closing Price    Weekly Move
Colorado Gaming (CGME)     $2 1/2        -41.2%
NetBet (NBET)              $2 1/8        -19.0%
Virtual Gaming (VGTI)      $3 1/4        -18.8%
Kids Quest (KIDQ)          $4 1/4        -17.0%

Quarterly Earnings Summary

No official earnings to report at this time. Trump's earnings were scheduled to be released this past week, but the announcement got pushed back. In addition to the Bingo release I elluded to above, CASINO RESOURCE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSNR)") else Response.Write("(Nasdaq: CSNR)") end if %> pre-announced revenues of roughly $4 million and said it expects to pull a profit in the second quarter.

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