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Populism and Gaming

previously posted under Keith McCullough: 05/05/08 12:54 PM EST


This is an interesting submission. Obviously a joke but speaks to several broad and gaming specific trends at the state level:

1. Perception of public education in US not good
2. Public education used as excuse to increase taxes and/or find
additional revenue streams
3. Teachers' Unions on board with anything to get them more money
4. State budgets in trouble
5. Not much of an appetite for reducing spending
6. Gaming likely to expand during this downturn but higher gaming
tax rates also possible - good for slot suppliers, good and bad
for operators

Populism alive and well.


Guest column: "Slots and schools would be a perfect mix"
By STANLEY R. BAKER
Published May 04, 2008

"I vigorously rejected slot machines for years. But now, as a longtime supporter of public education (and a former teacher), I think the Maryland State Teachers Association may well be right about them.
Slot machines should be placed in our schools, from kindergarten through 12th grade. This program - "Slots for Tots!" - would make other states once again view us as an educational leader.
Machines would be allocated based on the number of students in each grade at each school, with more machines for each higher grade. The increased income older students receive from jobs and allowances would get some consideration.

Elementary schools pose a bit of a problem. Machines could be distributed in connection with bake sales and the like, with the most machines per grade going to the biggest hustlers.

The kindergartners would have the longest learning curve to become fully adept at using the machines. Learning what each prize level offers and how to put money in the coin slots will take valuable time from independent playing.

A few guidelines would make sure that the machines, and the schools, are not abused:

Machines would be available one hour before classes begin and one hour after they cease.

The machines would also be turned on for special functions outside the normal school hours: athletic events, back-to-school night, band concerts and school plays.

In order to receive state funding, every school would have to have its full allotment of machines. It would be unfair for a school or county to refuse participation and then reap the bounty produced by machines elsewhere.

Special weekend and vacation hours would be provided so that not a soul would be left behind. Teachers would be the first ones considered to keep the schools open at these time. They could grade papers and make lesson plans when not needed for direct supervision. It would be a dandy supplement to their income.

Only public schools would be allowed to participate. If other schools, groups, organizations or businesses wanted to partake of the revenue, they would need to submit a special grant application indicating why they, unlike any other businesses, should be entitled to feed at this particular public trough.

Funding of public education from tax revenue would be frozen at the 2008 level so that education would receive the full benefit of the slots revenue.

The benefits beyond revenue enhancement would be limitless:

Teachers at all grade levels would rejoice because there would now be something for students to do when rain or snowfall cancel recess.

High school students could perform basic machine maintenance, increasing their post-graduation employment opportunities.

Math classes would find slots a boundless way to teach important concepts, including probability.

Schools would be a perfect place to generate data for long-term studies on gambling addiction. Under their psychology professors, students could do research on why some students, and not others, become addicted.

Our public schools would truly become community centers.

Guidance counselors would find parents always available for conferences, and could see each student's parents or guardians each week. Scheduled conferences would become almost passe.

Bring' em on. These one-armed revenue enhancers fit the bill for a citizenry whose attitude is "Don't raise our taxes, and damn the consequences."

---

The writer is a Gambrills resident.

(letter to the Editor in HometownAnnapolis.com, 5/4/08)

US Market Performance: Week Ended 6/20/08...

Index Performance:

Week Ended 6/20/08:
Dow Jones (3.8%), SP500 (3.1%), Nasdaq (2.0%), Russell 2000 (1.1%)

2008 Year To Date:
Dow Jones (10.7%), SP500 (10.3%), Nasdaq (9.3%), Russell (5.3%)

THE WINNER'S CURSE, PART III: DUMB ACQUISITIONS AND FORMER CEO'S

(previously posted under Keith McCullough: 06/09/08 2:21 PM EST)


The Winner's Curse strikes again after another CEO was forced out following a disastrous casino acquisition. William J. Yung III stepped down as CEO of Tropicana Entertainment after pressure from bondholders.

Recall that Columbia Sussex, with Mr. Yung at the helm, won the bidding war for Aztar Corporation (owner of the 2 Tropicana casinos) in 2006 with its top tick 12x EV/EBITDA multiple offer. By the way, the AC Trop performance has been disastrous since the acquisition so 12x is not even reflective of how much they overpaid. EBITDA declined 15% in 2007 and 20% in Q1 2008. No surprise Tropicana recently filed for Chapter 11 protection.

The good news is that, at least in US Gaming, CEO's like John Bushy of ASCA and Mr. Yung are being held accountable for outrageous value destruction.

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GAMING AND TAXES: THE NEVER ENDING BATTLE

(previously posted under Keith McCullough: 06/19/08 6:32 PM EST)


Boom or bust, State governments will continue to pump water from the spring, in this case extract tax dollars from their favorite well: the casino industry. There is a battle raging in Nevada on how to close the growing budget gap. The Teachers Union originally proposed a large increase in the gaming tax but compromised with some casino companies to offer an increase in the hotel tax. Terry Lanni, MGM CEO, opposes an increase in the hotel or gaming tax and suggested raising the payroll tax among other measures. Get used to this folks. Unfortunately, most state governments were unwilling to curtail spending growth during the most recent economic boon. With receipts likely going lower in many states, governments will need to find more revenue. We've watched this sitcom before and it's not very funny. If the gaming industry is already paying its fair share , its share is likely to get fairer. Whether it's Nevada, New Jersey, or the riverboat markets, someone's taxes are going higher. There is a break in the clouds, however. New markets are born out of the economic bust periods due to, you guessed it, the quest for new tax revenue sources.

US GAMING VERSUS POPULISM

(previously posted under Keith McCullough: 06/10/08 2:24 PM EST)


US Gaming Versus Populism:

There was a WSJ article this today detailing increasing federal scrutiny of MGM's CityCenter construction site in Las Vegas. There should be. Six workers have died since commencement of the project in 2006.

The article is actually fairly balanced but wait until the rest of the Main Street media gets a hold of this one. Greedy corporation risking workers' lives to collect a $100 million bonus from a Middle Eastern Sovereign Fund (Dubai World) to finish construction on time.

I'll be waiting to pick up my NY Times one morning to see the headline:

"MGM, Oil Money, and The Value of Union Lives"

EYE ON POPULISM: WOULD THIS VOTE HAVE GONE THIS WAY UNDER THE EMPLOYEE FREE CHOICE ACT ?

(previously posted under Keith McCullough: 06/19/08 6:38 PM EST)


At Research Edge we have our Eye on a potential Union comeback in this country. In a close vote, security guards at MGM's Mandalay Bay in Las Vegas voted against the International Union of Security, Police and Fire Professionals of America. Of course, consistent with our democratic traditions, the vote was conducted through the secret ballot. Obama and a majority in Congress have indicated they would pass the Employee Free Choice Act which would effectively replace the secret ballot with an open petition. My view is that union elections become less free under this measure and in this case the vote would've been radically different.

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