AGEM Index

The AGEM Index reported a composite value of 185.58 in November 2014, which represents a decline of 1.41 points (-0.8 percent) when compared with October 2014. Compared with a year ago, the index fell 7.89 points (-4.1 percent). The AGEM Index reported month-to-month declines for three consecutive months and year-over-year declines for two consecutive months. In November, Scientific Games Corporation (SGMS) completed its acquisition of Bally Technologies, removing Bally from the index.

During the latest period, 10 of the 16 global gaming suppliers reported a monthly decline in stock price, with six falling by more than 5 percent. Of the six companies reporting gains in stock price, only one was up by more than 5 percent.

Broader equities markets continued to trend in a positive direction in November 2014. The Dow Jones Industrial Average ended the month at 17,828.24, up 2.5 percent from the prior month. The S&P 500 also reported a 2.5 percent increase during the period, rising to 2,067.56. NASDAQ reported the greatest monthly increase of the three major indices, rising 3.5 percent to 4,791.63.

Selected positive contributors to the November 2014 AGEM Index included the following:
• Scientific Games Corporation (SGMS) contributed 3.10 points, due to a 28.6 percent increase in stock price to $15.14.
• International Game Technology (IGT) reported a stock price of $17.03 (+3.9 percent) and contributed 1.39 points.
• With a stock price of $36.29 (+4.0 percent), Multimedia Games (MGAM) contributed 0.36 points.

Selected negative contributors included the following:
• Due to a stock price of $59.03 (-5.3 percent), Crane Co. (CR) contributed negative 1.56 points.
• Konami (KNM) reported a stock price of $18.80 (-6.6 percent) and contributed negative 1.50 points.

With the results of the November 2014 election in the rear-view mirror, the fate of gaming-related initiatives was decided by voters in eight states. The initiatives largely focused on the expansion of gambling within each state. The results are highlighted below and demonstrate that, while gaming continues to expand throughout the United States, residents in some areas remain hesitant to allow it to move forward.

In South Dakota, voters approved a ballot measure to amend the state constitution to allow live craps, roulette and keno in casinos in the city of Deadwood as well as in tribal casinos in the state. The games are subject to approval from the South Dakota Legislature during the upcoming legislative session. The South Dakota Commission on Gaming expects casinos will be able to begin offering the new games by July 1.

In Massachusetts, voters rejected a measure that would repeal a 2011 law allowing for three casino licenses and one slots-only facility in the state. As a result of the election, the Massachusetts Gaming Commission officially awarded casino licenses to MGM Resorts International and Wynn Resorts. While the operators received approval for their casinos a few months ago, licensing was delayed until the fate of gaming in the state was known.

MGM Resorts International plans to build an $800 million resort in Springfield, while Wynn Resorts will be developing a $1.6 billion resort near Boston. Both operators plan to begin construction on their properties in 2015, with the first resort expected to open by 2017. In addition, Penn National Gaming, which was awarded the license for the slot facility, continues to move forward with construction. The $225 million property in Plainville is expected to open next year. Ballot initiatives in California, Colorado and Rhode Island that would have expanded gambling in the three states were all rejected by voters in the November election. In California, the North Fork Rancheria Band of Mono Indians will not be allowed to build its proposed tribal casino nearly 40 miles from its reservation.

In addition, Colorado voters denied a measure to allow a racetrack operator in Arapahoe County to add a casino to its facility. The initiative was the eighth failed ballot attempt at expanding gambling in the state in 20 years.

Finally, voters in Rhode Island rejected an initiative to allow Newport Grand to add table games at its facility, which is the second time the initiative has failed in two years. However, voters did approve a second ballot measure that will allow them to approve a casino’s location before it relocates.

Other initiatives that gained approval from voters involved the legalization of charitable raffles or lotteries. In Kansas and South Carolina, nonprofit, religious and veteran groups will now be allowed to hold raffles for fundraising purposes. Meanwhile, in Tennessee, organizations serving veterans can now hold annual lotteries.

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