Riverboat Casino Ratings Bouyed by Regulations, Demand, Moody's Says

Thursday, March 02, 2000
The operators of many of the riverboat casinos along the Mississippi and Ohio Rivers are likely to enjoy smooth sailing as growing demand, limited new supply, and relaxed regulations support stronger operating results and possibly rating upgrades, Moody's Investors Service reports. The rating agency also cautions, however, looser gaming restrictions in one jurisdiction or the strengthening of one casino's position through the addition of new amenities could put pressure on neighboring operations. "Overall, our rating outlook is positive and we expect more upgrades than downgrades of companies in this industry over the next 6-18 months," says Moody's VP/Senior Analyst Todd Gray. "But at the same time, the rising tide for the sector as a whole will not lift all the riverboat operators." Specifically, the analyst says among the companies in line for a potential rating upgrade or positive outlook change are Hollywood Casino Corporation (B3), Hollywood Park (Ba3), Horseshoe Gaming (Ba3), Lady Luck Gaming (B2), Hollywood Casino Shreveport (B3), Players International (Ba3), and Station Casinos (Ba2). Companies more likely to experience either a rating downgrade or a negative outlook change include Alliance Gaming (B2), Majestic Star (B2), Mirage Resorts (Baa2), and President Casinos (Caa1). The analyst points out that many of these companies also operate land-based casinos, and that rating changes in any direction are also influenced by the performance of these other properties, as well as by management's financial and strategic policies overall. Since riverboat casinos first opened in Iowa in 1991, the operators of such casinos have seen demand grow faster than supply. This is likely to continue to be the case, especially as new regulations in Illinois, Missouri, and Louisiana either eliminate certain operating restrictions in an attempt to increase tax revenues from the casinos or eliminate a source of potential competition. For example, in Illinois, gaming revenues have increased dramatically since last June, when Governor George Ryan signed a law eliminating the cruising requirements on the state's nine riverboat operators. Prior to this law, the flow of customers was limited by the requirement that the riverboats set sail for a minimum of two-hour cruises. Following the change, revenues were up an average of 35 percent from July though December 1999 over the same period in 1998. And in Louisiana, two Baton Rouge casinos owned by Louisiana Casino Cruises (B1) and Argosy Gaming (Ba3) have seen their revenues increase more than 20 percent since last summer's ban on video poker in non-casino locations, such as bars and truck stops. Louisiana Casino Cruises was upgraded in November to B1 from B2, in part because of these gains. In addition to more favorable regulation, "new amenities such as hotels, restaurants, improved parking, and entertainment facilities, are likely to attract new traffic, as well as increase the amount of money that the average customer spends per visit," according to Moody's Todd Gray. New competition is likely to remain limited either by the number of gaming licenses granted by some states or by the fact that many of the best locations for such facilities have already been taken, the analyst says. He also says more consolidation among the industry is likely as existing operators are afforded limited opportunities for growth as a result of the same factors. Moody's rates the debt obligations of 24 gaming companies owning riverboat casinos in the U.S. These companies have approximately $18.5 billion of rated debt outstanding and are rated in the range from Baa2 to Caa3. A total of 83 riverboat casinos, with annual revenues of more than $7 billion, currently operate in the U.S.
Maritime Reporter February 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Contracts

ECO Orders Rolls-Royce Equipment for New AHTS

Rolls-Royce has been awarded a contract worth $30.6m with the American owner Edison Chouest Offshore (ECO). The contract for ship equipment comprises Azimuth main propulsion,

Seadrill: Rig Rates Have Not Bottomed

The market for oil and gas drilling rigs continues to deteriorate as oil companies cut back on investments, Seadrill Chief Financial Officer Rune Magnus Lundetrae

Kvichak, Vigor Announce Merger

Merger positions combined company to play a dominant role in recapitalization of North Pacific fishing fleet and emerging Arctic oil gas operations. Kvichak

Legal

Cosco Boxship Detained Over Illegal Arms

Colombian authorities detained a vessel operated by China's largest shipping group for illegally transporting thousands of cannon shells, about 100 tonnes of gunpowder

Kvichak, Vigor Announce Merger

Merger positions combined company to play a dominant role in recapitalization of North Pacific fishing fleet and emerging Arctic oil gas operations. Kvichak

'Governments Must Act to Save Thousands of Migrants'

The humanitarian crisis in the Mediterranean Sea is spiralling out of control. EU Member States must act urgently to prevent the loss of thousands more lives,

 
 
Maritime Careers / Shipboard Positions Maritime Standards Naval Architecture Offshore Oil Pipelines Pod Propulsion Salvage Ship Repair Ship Simulators Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.2349 sec (4 req/sec)