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| Opportunities & Exposures |
High Rollers
Caroline Waxler
08/02/2004
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Speculation’s Spread
Atlantic City and Las Vegas have traditionally been
the established gaming hotbeds. But today there are many more places to roll our
dice. Casinos dot Native American reservations across the country; at last count
there were 330 of these in operation. In California alone, where there are 106
Native American casinos, experts estimate that gaming is a $5 billion-a-year
business.
These casinos are quite profitable for their owners, in part
because management knows how to manage tax payments. States tax casino revenue
from slot machines. They do not tax revenue from table games, such as blackjack
and craps. As a result, table games are expanding quickly on reservations. I
suggest investing in one of the publicly traded casino operators that are
partnering with the various tribes to manage their casinos. Alternatively, I
advise looking into the private partnerships that are helping these tribes
develop their casinos.
A handful of states now permit slot machines at horse
racing tracks, and some even allow video poker machines. That handful will
increase as more state governments realize that they can collect significant
revenue through gambling. State budget deficits have ballooned, and gambling
revenues could provide some relief. For the gaming investor, these budget woes
and the lure of state-endorsed gambling spell opportunity. Investors can
position money with publicly traded racetracks, companies that manufacture video
poker machines or, as discussed above, even go so far as to obtain a gaming
license. With state governments predisposed to expand gaming revenues, we might
find it becoming easier to do today than in years past.
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