Since our last report in Gaming & Leisure Magazine, a number of gaming operators posted third quarter earnings and several equipment manufacturers announced facility expansions and acquisitions. During the quarter, companies with operations in the United States and China reported somewhat mixed results. On the gaming supplier side of the industry, Konami Gaming and Ainsworth Game Technology moved forward with facility expansions in Las Vegas, with completions expected in 2015 and 2016, respectively. Consolidation within the gaming equipment manufacturing industry has continued in recent months. Las Vegas Revenue Growth for Wynn. On a company-wide basis, Wynn Resorts posted net revenues of $1.37 billion during the third quarter of 2014, which was down from $1.39 billion, a decline of 1.5 percent from a year ago. The 5.6-percent decline in net revenue from operations in Macau was largely offset by a 9.0-

percent increase in net revenue from Las Vegas operations. Adjusted property EBITDA for the company was $458.8 million during the third quarter of 2014, representing a 5.3-percent increase from the third quarter of 2013. Las Vegas operations reported net revenues of $427.8 million, a 9.0-percent increase from the $392.5 million reported in the comparable quarter of 2013. Adjusted property EBITDA rose an impressive 25.1 percent to $133.3 million, up from $106.5 million generated in the third quarter of 2013. Wynn Resorts’ Las Vegas properties reported an occupancy rate of 89.3 percent during the third quarter of 2014, which is up from 87.9 percent a year ago. Average daily room rate (“ADR”) also increased 6.8 percent to $267 from $250, while revenue per available room (“RevPAR”) increased 8.2 percent to $238. Wynn’s Macau operations dipped during the third quarter with net revenues of $942.3 million, which represented a 5.6-percent decrease from the same quarter last year. Adjusted property EBITDA in Macau was down 1.1 percent year-over-year, falling from $329.1 million to $325.5 million. Wynn’s Macau operations achieved an occupancy rate increase of 2.8 percentage points, rising to 98.5 percent. ADR was $327, which was up 5.5 percent compared to the same quarter of 2013, while RevPAR increased 8.4 percent to $322. Las Vegas Sands’ Results Moderate For the first time this year, Las Vegas Sands reported a company-wide 1.0-percent annual decline in net revenues, falling from $3.57 billion to $3.53 billion. Conversely, consolidated adjusted property EBITDA increased slightly (+0.6 percent) to $1.283 billion compared to $1.275 billion in the year-ago quarter. The company’s international properties posted

mixed results during the quarter. Sands Cotai Central reported a net revenue increase of 10.8 percent and the Venetian Macao achieved a slight increase of 0.8 percent compared to the third quarter of 2013. The Four Seasons Hotel Macao experienced the greatest decline in net revenue of 19.6

percent, while Sands Macao was down 8.3 percent.

Marina Bay Sands reported a decline of 5.0 percent

when compared to the year-ago quarter.

Domestically, the company’s Las Vegas

properties, which consist of The Venetian Las

Vegas and The Palazzo, and includes the

Sands Expo and Convention Center, reported

an increase for the second quarter in a row, rising

1.5 percent compared to the same period

last year. Adjusted property EBITDA also

increased, rising 3.6 percent. In Pennsylvania,

net revenues at Sands Bethlehem reported an

increase of 3.6 percent and an adjusted property

EBITDA improvement of 0.7 percent.

MGM Resorts Reports Revenue Rise

MGM Resorts International reported a 1.0

percent increase in net revenue in the third

quarter of 2014, rising to $2.49 billion compared

to $2.46 billion for the same period last

year. Adjusted property EBITDA increased

2.0 percent to $570 million.

MGM China faced a revenue decline of 2.0

percent compared to a year ago, falling to $794

million. However, MGM China’s adjusted

property EBITDA increased 12.0 percent to

$214 million. Despite a 34.0-percent increase

in main floor table games revenue, VIP table

games revenue fell 19.0 percent, due to a

decline in turnover and hold percentage.

Net revenues at MGM’s Las Vegas Strip properties

(excluding ARIA) increased 2.9 percent

year-over-year to $1.3 billion due to gains at all

but three locations. Bellagio led the way with a

9.9-percent gain, followed by Luxor (+7.6 percent)

and Monte Carlo (+6.5 percent). The

Mirage, Excalibur and MGM Grand Las Vegas

reported net revenue declines of 6.9 percent, 0.8

percent and 0.4 percent, respectively.

Konami Expanding Vegas Operations

Investments within the gaming manufacturing

segment of the industry continue to move forward.

One of the notable construction projects

currently underway in Las Vegas isn’t a new

resort casino, it’s the renovation and expansion of

the North American headquarters for Konami

Gaming. The company began construction on

the expansion of its corporate offices and manufacturing

center in April of this year.

Upon completion in summer of 2015, the complex,

which will total 316,000 square feet, will be

home to Konami’s corporate offices, sales center

and manufacturing and equipment services for its

North American and European gaming businesses.

It will also allow the slot machine manufacturer to

expand its workforce. The new facility is expected

to meet the silver certification level for Leadership

in Energy and Environmental Design (LEED). The

price tag on the project has yet to be released.

Ainsworth Breaks Ground

in Las Vegas

For the first time, Australian-based Ainsworth

Game Technology is coming to the United

States. In early October, the company broke

ground on its new North American headquarters

located on 24 acres in Las Vegas. The project is

expected to span 290,000-plus square feet.

Based out of Sydney and traded on the Australian

Stock Exchange, Ainsworth is looking to potentially

triple its current employee base in North

America and have an increased focus on the video

game generation.

On hand for the groundbreaking ceremony

was the company’s founder, 92-year old Leonard

Ainsworth, who reportedly remains active in

the business, along with Chief Executive Officer

Danny Gladstone, North American President,

Mike Dreitzer, and Nevada Governor Brian

Sandoval, among others. The company indicated

the Las Vegas site was chosen based on its

market expectations for growth in the North

American market. The company also expects to

be able to more effectively serve their customers

within the region.


Brian R. Gordon, CPA


Scientific Games Acquires Bally Tech

New York-based Scientific Games Corporation,

one of the world’s leading developers of technology-

based products and services for the worldwide

gaming and lottery markets, recently completed

its acquisition of Las Vegas-based Bally

Technologies on November 21. The $5.1-billion

buyout consisted of $3.3 billion in outstanding

Bally shares plus the assumption of $1.8 billion

in existing Bally debt.

The transaction is expected to create $235

million in cost savings and result in an employee

count of approximately 8,300 people worldwide.

The company also announced its organization

will consist of three operating units going forward:

Gaming, Lottery and Interactive.

Last year, Scientific Games bought slot maker

WMS Industries for $1.5 billion, and Bally purchased

table games provider, SHFL Entertainment, for $1.3

billion. Now, all four companies are under the

Scientific Games umbrella, and there has even been

talk of moving its corporate headquarters to Las Vegas.

Global Cash Buying

Multimedia Games

Consolidation continues in the gaming supplier

industry as Global Cash Access Holdings, Inc.

came to an agreement in July to purchase

Multimedia Games Holding Co. for $1.2 billion

in cash. Awaiting shareholder and industry regulatory

approvals, the transaction valued

Multimedia Games at $36.50 per share.

Las Vegas-based Global Cash Access is a casino

supplier of ATMs, point-of-sale transactions

and money-transfer services as well as slotmachine

ticket redemption and jackpot kiosks.

The company’s website states it processes more

than $50 million in transactions every day.

Multimedia Games is based out of Austin,

Texas. The company recently moved beyond

its traditional role of supplying slot machines

to Native American casinos and entered markets

such as Nevada, Pennsylvania and New

Jersey. As of September 2013, it had 205

gaming licenses in 29 states.

The merger is expected to close early next

year and Global Cash Access estimates the

combined operations with Multimedia Games

will generate $30 million in cost synergies and

$800 million in revenue. It was also announced

the new company’s headquarters will remain in

Las Vegas, while the gaming development

operations will remain in Austin.

GTECH to Acquire IGT

The Las Vegas-based slot machine manufacturer,

International Game Technology (IGT), recently

entered into a merger agreement with the

Italian-based lottery group GTECH S.p.A.

GTECH is expected to acquire IGT for $6.4 billion.

The transaction, which is expected to close

by the second quarter of 2015, is comprised of

$4.7 billion in cash and stock, along with the

assumption of $1.7 billion in net debt.

The acquisition is projected to shift GTECH

away from its Italian-based market and broaden

its operations within the international casino

business. The transaction will also be the largest

foreign acquisition by an Italian firm since 2009.

When the transaction is completed, Georgia

Worldwide will become the parent holding company

for the combined operations.

IGT posted somewhat weaker financial performances

in 2014, reporting an annual net

income decline of 9.0 percent for the fiscal

year ending September 30. The Nevada-based

slot machine maker also confirmed a 7.0 percent

workforce reduction in fiscal year 2014,

achieving approximately $30 million in cost

savings during the second half of 2014, with

an estimated $50 million in cost savings

expected on an annualized basis in 2015.

JCM Global Buys Out FutureLogic

JCM Innovation Corp., a manufacturer of currency

validating equipment and cash registers,

completed its acquisition of U.S. based printer

company FutureLogic in early September 2014.

JCM’s line of peripheral component products

now includes bill validators, printers and digital

media as well as FutureLogic printers for a

wide range of applications, including the creation

of player vouchers for casinos and other

gaming operators.

JCM Innovation is part of Tokyo-based

Japanese Cash Machine Co. Ltd., which reported

the deal with FutureLogic was worth $70.6 million.

In 2013, FutureLogic reported sales of

$47.2 million, up 9.5 percent from 2012. The

completion of this purchase is expected to further

enhance JCM’s competitive position within the

industries it serves worldwide, including banking,

gaming, kiosk, retail and transportation.

Brian Gordon is a principal with the Nevadabased

advisory services firm, Applied Analysis.

Gordon has extensive consulting experience

within the gaming and leisure industries.


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