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29th February 2000


    In less than a week the face of gaming is expected to change forever as
California voters amend the state constitution to permit Indian casinos to
have slot machines and casino-banked table games.

    A great deal has been written about how expanded Indian gaming will
affect the Nevada casino industry. But some companies will profit, especially
the suppliers as upwards of 45,000 new slot machines will be ordered over the
next two years or so.

    Among the most likely winners are:

    • International Game Technology (IGT), if only because it is the biggest
slot machine company.

    • Shuffle Master (SHFL) and Mikohn (MIKN). These are two small companies
where even modest successes can significantly affect the bottom line. They
also are two-fers. Both make games, and SHFL also makes automated card
shuffling machines.  MIKN makes casino signage.

    • Anchor Gaming (SLOT), another two-fer. Anchor has the popular Wheel of
Fortune slot machine that it shares with IGT, but  it also will help build
and manage a $90 million Indian casino near San Diego. It is expected to open
by next March.

    • Other suppliers, including WMS Gaming (WMS) and Casino Data Systems
(CSDS). Both game-makers, CSDS also is a two-fer with a slot tracking system.

    There are even some casino companies expected to benefit, including:

    • Harrahs Entertainment (HET), which will help build and will run a $100
million casino near San Diego to open next year.

    • Station Casinos (STN), which will do likewise with a 200,000-saqaure
foot casino near Sacramento that will short stop visitors to Reno and Lake
Tahoe. The casino will open in 2002, assuming the tribe can get federal
approval to take its land into trust.

    • Lakes Gaming (LACO), which intends to run a couple Indian casinos.

    HET has a downside because its casinos in Lake Tahoe and Reno may lose
some business to the new northern California casinos. But Indians have been
laying low prior to the referendum. Once passed, there may be a number of
partnerships announced, and HET may have one or two of them. A
Harrahs-managed casino in northern California would be considered a good
cross-marketing opportunity for its Tahoe and Reno properties.

    A complete report on California was published a few weeks ago and sent to
paid subscribers. New subscribers may request a copy by e-mail.


    There is some speculation that the MIR board will meet today to discuss
the $17 a share buyout offer from MGM Grand (MGG). Just to make sure the
board understands the game, MGG CEO Terrence Lanni sent a letter to them
Monday pointing out that they will be hard-pressed to bring the stock price
up to the $17 being offered if they turn it down.


    Best performing stocks Monday over $500 million in market value: Mandalay
Bay (MBG) +7.44%, MIR +6.25%, MGG +3.03%.

    Worst of the big caps: Park Place (PPE) -7.14%, HET -3.07%, GTech (GTK)

    Best of the small caps over $1: American Wagering (BETM) +32.95%,
International Lottery and Totalizator Systems (ITSI) +25%, Gametech (GMTC)

    Worst of the small caps: Elsinore (ELSO) -20%, Alliance Gaming (ALLY)
-14.89%, Full House Resorts (FHRI) -12.5%.

    Wildest on the Wild Wild Web: Dice-Surebet Casinos (DICE) +36.36%.

    GAX closed up Monday .8% at 216.58.


    More than 140,000 stock car fans are expected to descend on Las Vegas
Motor Speedway this weekend for Winston Cup racing. About 90,000 will attend
the Busch Grand National race on Saturday.

    The Las Vegas Review Journal ran a big story today on the excitement and
how Boyd Gaming (BYD) plans to cash in on America’s fastest-growing sport by
sponsoring the Saturday race.

    Actually, there is a pure play on Nascar and gaming. It is Dover Downs
Entertainment (DVD). DVD is the only company in America that combines Nascar
racing and casino gambling.

    The company’s flagship and namesake property has a 2,000-machine slot
casino and runs two Nascar weekends each year. Here are some highlights on

    --Auto racing continually expands. Dover Downs adds 10,000 to 15,000
seats a year and increases ticket prices 8 percent. Capacity for this year’s
races is expected to by north of 130,000. The track has approval to expand to
170,000 seats (180,000 attendance counting infield).

    --Endorsements, TV rights and merchandise sales continue to grow. MBNA
America, the credit card giant, sponsors both race weekends and the fee goes
up double-digits each year. In addition, MBNA America now also sponsors races
at DVD’s other auto tracks. The much ballyhooed TV contract is expected to
add 6 cents per share to DVD’s net this year and another 7 cents next year.
DVD is a year ahead of everyone else because its TV contracts expired at the
end of last race season.

    --The company is expanding. It bought another racing company that owned
tracks in St. Louis and Memphis and runs the Grand Prix of Long Beach, which
draws more than 200,000 fans. DVD is expanding and improving the Memphis
andSt. Louis tracks. St. Louis eventually goes to 120,000 seats. A new
superspeedway in Nashville will open next year with 50,000 seats and is
designed to go to 150,000. DVD is seeking a Winston Cup -- the Big Leagues of
the sport -- at both Nashville and St. Louis.

    --The casino is a cash cow. A year ago, there were 1,000 machines. That
was expanded to 1,500. Now, the addition to 2,000 machines and other
amenities is nearly finished. This cash cow has allowed DVD to expand without
debt prior to now. But expansions are coming so fast that some debt was run
up. Two million shares of stock are being sold to pay it down.

    --The company is building a 500-room hotel (first phase 250 rooms) to
capture gamblers for more than day trips.

    --Although a slot machine casino, the property is built-new to a Las
Vegas quality, one of the reasons people drive past other slot casinos to
Dover Downs.

    It is worth noting that Delaware Gaming Investments, which owns and this newsletter, has a position in DVD.


    WASTING NO TIME: Pinnacle Entertainment (PNK) had a news announcemdent on
the very first day of its new incarnation. The former Hollywood Park is
selling its Turf Paradise horse racing facility to Jerry Simms, a private
investor, for $53 million. The company earlier sold Hollywood Park, then some
land surrounding it. It is selling two low-margin casinos in Mississippi to
Penn National (PENN). The money is going into paying down debt.

    PNK’s biggest project is Belterra, an upscale riverboat and resort due to
open in southeastern Indiana next year.


    As expected, regional brokerage RJ Steichen raised its earnings estimates
on SHFL for this year. The projection goes from 90 cents to 97. The company
estimates $1.16  next year.

    In raising its estimate, Steichen reiterated the strong earnings news
SHFL announced for the quarter that ended Jan. 31: revenue increase of 42
percent, earnings up 85 percent and 26 percent over estimates, EBITDA up 46
percent, net income 20.8 percent of revenues.

    Not mentioned but worth noting are the stock buybacks. SHFL had more than
11 million shares out not long ago. Now it’s  7.1 million. SHFL has increased
its R&D budget for a PC-based slot platform that promises to dramatically cut
machine costs. And it is expanding its table and slot games business as fast
as it can, but the money continues to pile up, hence the buybacks. 78 percent
of revenue is recurring in this nearly debt-free company.

    SHFL finished down .31 today at 10.19. Steichen’s announcement came just
moments before the final bell.

    HARD ROCK REPORTS. Though not a public company, Hard Rock Hotel does have
public debt so it chooses to report its results. For the quarter, revenue
rose 45.8 percent to $26.3 million and EBITDA rose to $4.8 million compared
to $4.2 million.

    For the year, Hard Rock revenue rose 16.8 percent to $88.4 million and
EBITDA was up $18 million from $17.9 million, exluding $5 million for
preopening expenses of its expansion.


    Isle of Capri (ISLE) thought it had a sweetheart deal when it bought
development rights in Boonville, MO, from Marvin Davis. Unfortunately, town
fathers do like Caribbean-themed Isle Style. They prefer the Victorian look
planned by Davis. ISLE said no problem. The building will be Victorian on the
outside and Caribbean inside.

    That has prompted Bill Grace, owner of a casino in St. Joe’s, to ask the
state gaming commission to give him the Boonville license so he can build the
casino the town fathers want.

    Hmmmm. And ISLE is trying to move into Missouri in a big way, buying the
Flamingo boat in Kansas City and applying for a license to build a new casino
in South St. Louis. There’s some feeling Ameristar (ASCA) may have first dibs
on the St. Louis license. Oh well, one out of three is good in baseball.

    Boonville, by the way, is in central Missouri, halfway between KC and St.

    AMERCIAN BINGO ANNOUNCED that it has completed two-thirds of its 2
million share repurchase program bringing the number of shares down from 9.85
million in 1998 to 9.04 million today. Company president Jeffrey L. Minch
said he’ll ask for further buyback authority after he completes the current

    BINGO has been a very troubled company since its CEO was fired for
questionable practices. The stock finished Monday unchanged at an even
dollar. BINGO is focusing on its Bingo business, which includes 20 southern
Bingo halls. It loses its video slot machines in South Carolina on July 1
when that industry goes dark.

    Starnet (SNMM) MADE IT OFFICIAL TODAY. The company is selling its Adult
Entertainment Division. This is also known as pornography on the Internet.
It’s what embarrassed SNMM last year when Vancouver, BC, police raided its
headquarters looking for illegal porn. They didn’t find any. That didn’t stop
the stock from falling like a rock. From a high around 24 the former darling
of Internet gaming stocks plummeted below 4 before recovering. The company
also left Vancouver for Antigua and promised to focus on Internet gaming.

    SNMM also announced that vice president Matthew Staisor and
former Kentucky Racing Commission chairman Brownell Combs II have joined
their board.

    These appeals to respectability did not move investors. SNMM closed down
3.71 percent Monday to 6.88.

    ALSO ON THE NET, Associated Press reported that a Louisiana attorney
general is not going to allow Mardi Gras Holding Group Inc. to find a
loophole to gambling on the Net. Mardi Gras intends to build a televsion
studio in Monroe, LA, where  a broadcast of casino-type games with live
dealers would be transmited to Antigua and then onto the Net. The company
says there will be no gambling in Louisana or anywhere in the United States
and that it is only telecasting, not gambling, from these shores. The AG has
another idea. There was no word in the story whether the company will proceed
and force the AG to sue, though that was implicit.

    MORE FUN IN VEGAS OUTSIDE CASINOS. The LV Review-Journal reported Monday
that Mandalay Bay plans a one million-gallon aquarium including a
walk-through for visitors. The LV Sun later reported that Sahara Casino plans
to build the fastest roller coaster in town. It will run up to 70 miles per
hour and will climb as high as 224 feet. The coaster should be finsihed in
late March or April.

    MDI SEEKS LISTING. MDI Enertainment (MDIH) announced it will seek a
Nasdaq small cap listing. The company runs entertainment-based promotions for
state lotteries. It closed today at 10.5, down .375.

    A FINAL WORD ON SUPER STEVE. It seems that when the mighty fall, the
little guys can’t resist piling on. Such is the case with Steve Wynn. The
Magic Man has been criticized in ever more harsh words and strident tone in
recent months. Now, the noise is a din.

    The latest attack came from Bloomberg News service on Monday. A story
pointed out how Wynn makes $2.5 million a year salary, a standing bonus of
$1.25 million, receives $4 million in rent from MIR for his art hung at
Bellagio and has had options repriced as the stock fell.

    All of this is true enough and worth attention. What was surprising,
however, was the editorializing. For example, the story ends with the line
“All gamblers know that in the long run the house doesn’t lose. Sadly for
Mirage’s shareholders, Steve Wynn is the house.”

    The article also calls his performance as CEO “awful” and there are a lot
of similar comments.

    Oh, well. If nothing else, the gaming industry is entertaining to watch,
and read about.

©Copyright 2000, Gaming Investments.