AGEM Index

After reporting four consecutive monthly increases, the AGEM Index reported relatively no change in November 2013 when compared to October 2013. During the month, the index posted a composite score of 193.47, which was down a modest 0.04 points from the prior month. Compared to a year ago (November 2012), the AGEM Index increased 59.66 points (+44.6 percent).

In November, six of the 16 global gaming suppliers reported month-to-month increases in stock price, with three up by more than 5 percent. Meanwhile, of the nine manufacturers that reported declines, four were down by more than 5 percent. One company, Wells-Gardner Electronics (WGA), posted a flat stock performance month-to-month. Also during the month, Bally Technologies (BYI) completed its acquisition of SHFL entertainment (SHFL); SHFL was removed from the AGEM Index accordingly.

The broader stock markets outperformed the AGEM Index in the latest month. The S&P 500 ended the month at 1,805.81, up 2.8 percent from the prior period. The Dow Jones Industrial Average reported slightly more growth, rising 3.5 percent month-to-month to 16,086.41.

Meanwhile, NASDAQ was up 3.6 percent from October, rising to 4,059.89.

Selected positive contributors to the November 2013 AGEM Index included the following:

• With a stock price of $25.90 (+7.1 percent), Konami Gaming, Inc. (KNM) contributed 1.81 points.
• Daktronics (DAKT) contributed 1.27 points, due to a 27.9-percent rise in stock price to $15.30.
• GTECH S.p.A. (GTK.MI) reported a stock price of €22.65 (+1.2 percent) and contributed 0.92 points.

Selected negative contributors included the following:

• International Game Technology (IGT) posted a month-end stock price of $17.49 (-7 percent) and contributed negative 2.09 points.
• Due to a 6.5-percent decline in stock price to AU$4.72, Aristocrat Technologies (ALL) contributed negative 1.61 points.

On Nov. 26, 2013, online gambling was launched in New Jersey, which is the biggest expansion of gambling in the state since the first commercial casino opened in Atlantic City in 1978 and gives AGEM-member suppliers a new market for their technology and game content. New Jersey is the third state to launch online gambling. Nevada was first in April with Ultimate Gaming’s poker-only site,, and in September, Caesars Interactive launched its website. In October, Delaware joined the online gaming market with a variety of online casino games.

On Nov. 21, New Jersey had a soft-launch of its online gaming sites, allowing gamblers to test the systems by invitation only. The soft-launch was meant to test a number of factors, including geo-location technology that checks whether a player is located within New Jersey’s borders, identity-verification systems, anti-money laundering systems, payment processing systems and customer service functions. During the trial period and in line with expectations, there were minor bugs and fixes required. Anecdotal reports suggested that gamblers ran into some challenges associated with location and identity verification.

Despite the modest glitches, regulators were satisfied with the trial period and allowed sites to be launched to the public statewide on Nov. 26. Six Atlantic City casinos are now operating their Internet gambling sites for gamblers within New Jersey. The casinos include Boyd Gaming’s Borgata, the Taj Mahal, Trump Plaza, the Tropicana, Caesars Entertainment’s Bally’s Atlantic City and Caesars Atlantic City. The Golden Nugget Atlantic City is currently working to fix some issues with its site and expects to go live in the coming days.

Although New Jersey was the third state to launch its online gambling sites, Internet gaming in New Jersey has the potential to be larger than Nevada and Delaware. The state has a population of nearly 9 million people, which is three times larger than that of Nevada. Meanwhile, experts believe Delaware’s market will be relatively small, due to its population of just 918,000.

Analysts have differing estimates regarding how much revenue Internet gaming in New Jersey will generate. Gov. Chris Christie expects revenue will reach around $1 billion by July. However, many analysts expect an estimated $300 million by this time next year. For comparison, Atlantic City’s 12 brick-and-mortar casinos reported $3 billion in revenue in 2012. Borgata accounted for the largest share with $613 million.

Approximately 51,000 online gambling accounts have been created since the trial period began. In January, the first report reflecting online gaming revenues is expected to be released, which should provide some insight into the size and scope of the market, along with its revenue potential for operators and the government.

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