AGEM Index

The AGEM Index increased in the final month of 2012. The composite index at the end of December 2012 was 135.73, representing an increase of 1.92 points, or 1.4 percent, when compared to the prior month. Compared to the same month of the prior year, the index was up a respectable 16.7 percent. The index reported month-over-month increases during the majority of 2012, rising in eight of the past 12 months. During the month of December, nine of the 17 global gaming operators reported increases in stock price when compared to November 2012. In addition, of the eight operators that reported declines, only two were of more than 5 percent.

With a resolution to the “fiscal cliff” issue generally anticipated, broader stock markets reported modest increases during December 2012, with each rising by less than 1 percent. NASDAQ ended the month at 3,019.51, up 0.3 percent compared to the prior month. The Dow Jones Industrial Average fared slightly better, increasing 0.6 percent to 13,104.14. Meanwhile, the S&P 500 reported the greatest increase of the three, ending December at 1,426.19, up 0.7 percent from the end of November 2012.

Selected positive contributors to the December 2012 AGEM Index included the following:

• Ainsworth Game Technology (AGI) contributed 1.07 points due to a 16.1 percent increase in stock price to AUD$2.81.
• INTRALOT S.A. (INLOT) reported a 27.3 percent increase in stock price to €1.96 and contributed 0.78 points.
• With a stock price of €17.20, up 1.6 percent, Lottomatica (LTO) contributed 0.66 points.

Selected negative contributors included the following:

• With a stock price of $22.42, down 7.4 percent, Konami (KNM) contributed negative 1.58 points.
• Aristocrat Technologies (ALL) contributed negative 0.33 points, due to a 3.4 percent decline in stock price to AUD$3.15.

Massachusetts continues to make headlines as casino operators move forward with plans to compete for one of the three resort-casino licenses and one slot facility license available throughout the state. Regardless of wins, gaming equipment manufacturers are expected to benefit from the expansion.

In western Massachusetts, Ameristar Casinos surprised competitors in early December when the company decided to pull out of the bid for a $910 million resort casino in Springfield, after paying $16 million for a 40-acre site just one year before. Ameristar also announced a deal to be acquired by Pinnacle Entertainment in the month. The announcement left MGM Resorts International and Penn National as the only two operators competing for proposed properties in Springfield. On Jan. 3, 2013, both companies met the deadline to submit their final proposals to the city for review. The regulatory process requires the companies to receive approval from the mayor, city council and voters before reaching the Massachusetts Gaming Commission where the final licensee will be selected.

Even if they gain approval from the city of Springfield, MGM and Penn National could still face competition for the western Massachusetts license from Mohegan Sun. While the company has not yet submitted the required application and $400,000 fee to the state, Mohegan Sun continues to assert it will do so by the Jan. 15 deadline for its proposed casino in Palmer. MGM submitted the fee in August, while Penn National did so in December.

Competition is heating up for the eastern Massachusetts casino license as well. In December, Wynn Resorts leased a 37-acre site along the Mystic River in Everett where it plans to develop a $1 billion casino. The company plans to submit its application and $400,000 fee to the state before the deadline, and if awarded the license, will purchase the site.
If Wynn moves forward with its plans, it will be competing with Caesars Entertainment. The company partnered with Suffolk Downs to build a $1 billion property at the Suffolk Downs racetrack in east Boston. Caesars and Suffolk Downs submitted the application and fee for their planned property in early August.

While a resort casino is not likely to open in Massachusetts until 2017, the state could see a fully operational slot facility by early 2014. However, competition for the single license has been relatively weak, and for months it appeared Plainridge Racecourse would be the only applicant. In the last month, competition has increased and it now appears the company will be bidding against Raynham Park and one other applicant.

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