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Workshop Registration
The Reynolds Center has announced its 2009-10 free workshop schedule.
Select a workshop and register from the drop-down menu below.
Online Seminars
The Reynolds Center registration for Fall 2009 free online seminars.
The Big Picture
By Chris Roush
An Economic Upswing?
By Jennifer Hopfinger
Mixing in Multimedia
By Stephanie Riel
Sourcing the Street
By Karen Dybis
When Disaster Strikes
By Henry Dubroff
Open Books Make Gaming Coverage More Comprehensive
By Howard Stutz
It was different covering the casino industry before Wall Street took over.
Most of the major Las Vegas Strip hotel-casinos were privately held up until the early 1990s; so financial reporting was somewhat non-existent. Articles stemming from coverage of the gaming industry were mostly human interest and were found in the Review-Journal's local news section.
A gaming company's finances and casino profits were considered private and the casino bosses kept it that way.
But times have changed. Today, gaming coverage is big business, especially in Nevada and other U.S. jurisdictions where casinos have been legalized. Gaming came about as a way of funding public tax coffers, so there is local interest in casino performance.
As corporate ownership grew and casino expansion boomed across the United States, financial coverage became more of the story. In cities outside of Las Vegas, reporters with questions about a particular gaming company that operates a local casino are commonly directed away from that property's management to the corporate communications office.
Today, only a handful of Las Vegas casinos are privately held; the ultra-hip Palms Casino, controlled by the Maloof family, is the most commonly recognized.
Business reporters covering the gaming industry, which includes hotel-casinos, slot machine manufacturers and lottery companies, have more access to a company's financial information and performance than in years past.
Unlike industries where direct sales, such as automobiles and homes, drive revenues, gaming industry profits are spurred by a casino customer's gambling losses, revenues generated by hotel room rentals, as well as restaurant, entertainment and retail expenditures.
Gaming reporters have become used to deciphering such terms as "RevPar," which relates to the individual amount of revenue earned by a hotel-casino's available rooms, or "Same Store Sales," which refers to revenue earned by casinos owned by a particular gaming company in the previous reporting period.
All publicly-traded gaming corporations, as with other companies whose stock is traded on Wall Street, are covered by the Sarbanes-Oxley Act of 2002, which called for, amongst other reforms, enhanced financial disclosure. The Act came in the wake of a series of corporate financial scandals, including those affecting Enron, Tyco International, and WorldCom.
What this allows is a much more open look at how a gaming company is performing. When a casino company has an event that could affect its financial standing, it must make that announcement public.
Daily fluctuations to a company's stock price is one way to gauge a company's performance - or if an event has taken place. A reporter can look into a company's recent filings with the Securities and Exchange Commission or ask a stock analyst who follows the business why a particular stock is up of down.
A quick note on analysts: they are expected to disclose if their firm has a financial stake in the company's they cover.
A reporter can also check with their sources within a company; and don't be fooled by the typical excuse: "We don't comment on stock prices." Corporate spokesmen and company executives follow their stock prices and the prices of the competition from the opening bell to the closing whistle.
Many states - and gaming companies - will break out a casino's individual monthly financial performance. For example, Louisiana and Mississippi provide monthly gaming revenue figures that list the results for each casino. Nevada also offers a monthly breakdown of gaming revenue - typically referred to as gaming win - but it's reported statewide and by region. Individual properties are not released.
In covering a casino company's financials, revenue from operations and cash flow - commonly referred to as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) - are the most widely used figures.
An earnings per share is a financial statistic that measures the amount of net income relatable to each share of common stock. Gaming companies will typically report both basic and diluted earnings per share. Business reporters should use the basic figure, which is a Generally Accepted Accounting Principles (GAAP) number. GAAP is a common set of standards and procedures used in the preparation of financial statements. The Associated Press and Bloomberg use GAAP numbers.
Gaming analysts typically will focus on diluted earnings per share, which take into account any non-operational financial impact on a company during a quarter.
Some gaming companies believe operating revenues and cash flow are good ways of determining performance. Other gaming executives want the press to focus on earnings per share.
Recently, the financial reports of two gaming companies showed examples of the varying differences.
Harrah's Entertainment, the gaming industry's largest casino operator, reported a loss in announcing its fourth quarter 2005 results. Despite a year-over-year operating revenue jump of 76.2 percent and an increase in cash flow of 85.1 percent, Harrah's earnings per share was a loss of 78 cents. The diluted earnings per share were 68 cents. Why? The company took $273.3 million in write-downs, an accounting procedure that does not involve cash, on losses from its four hurricane-damaged casinos in Mississippi and Louisiana.
Harrah's officials knew the earnings release was going to be confusing and made certain media covering the results were briefed as to why there was a loss on what seemingly were positive operational results.
In another matter, International Game Technology, the gaming industry's leading slot machine manufacturer, was a Wall Street darling on the day of the company's earnings announcement, despite what seemed to be an off 2005 fourth quarter.
IGT said the company's quarterly earnings per share was 34 cents, up a penny from the prior year. However, the company's quarterly earnings were down 1.4 percent, revenue was off 8 percent and overall revenue was down 4 percent. Seemingly bad news, right? The stock price that day closed up more than 10 percent from its previous day closing.
IGT cut costs in many areas during the quarter and made Wall Street happy despite the operational results.
These examples show that gaming company financial news can be confusing despite more openness than ever before.
Howard Stutz is a gaming and business reporter with the Las Vegas Review-Journal.
Email this article
Copyright © 2009 Donald W. Reynolds National Center for Business Journalism
The Reynolds Center has announced its 2009-10 free workshop schedule.
Select a workshop and register from the drop-down menu below.
The Reynolds Center registration for Fall 2009 free online seminars.
By Chris Roush
An Economic Upswing?
By Jennifer Hopfinger
Mixing in Multimedia
By Stephanie Riel
Sourcing the Street
By Karen Dybis
When Disaster Strikes
By Henry Dubroff
Open Books Make Gaming Coverage More Comprehensive
By Howard Stutz
It was different covering the casino industry before Wall Street took over.
Most of the major Las Vegas Strip hotel-casinos were privately held up until the early 1990s; so financial reporting was somewhat non-existent. Articles stemming from coverage of the gaming industry were mostly human interest and were found in the Review-Journal's local news section.
A gaming company's finances and casino profits were considered private and the casino bosses kept it that way.
But times have changed. Today, gaming coverage is big business, especially in Nevada and other U.S. jurisdictions where casinos have been legalized. Gaming came about as a way of funding public tax coffers, so there is local interest in casino performance.
As corporate ownership grew and casino expansion boomed across the United States, financial coverage became more of the story. In cities outside of Las Vegas, reporters with questions about a particular gaming company that operates a local casino are commonly directed away from that property's management to the corporate communications office.
Today, only a handful of Las Vegas casinos are privately held; the ultra-hip Palms Casino, controlled by the Maloof family, is the most commonly recognized.
Business reporters covering the gaming industry, which includes hotel-casinos, slot machine manufacturers and lottery companies, have more access to a company's financial information and performance than in years past.
Unlike industries where direct sales, such as automobiles and homes, drive revenues, gaming industry profits are spurred by a casino customer's gambling losses, revenues generated by hotel room rentals, as well as restaurant, entertainment and retail expenditures.
Gaming reporters have become used to deciphering such terms as "RevPar," which relates to the individual amount of revenue earned by a hotel-casino's available rooms, or "Same Store Sales," which refers to revenue earned by casinos owned by a particular gaming company in the previous reporting period.
All publicly-traded gaming corporations, as with other companies whose stock is traded on Wall Street, are covered by the Sarbanes-Oxley Act of 2002, which called for, amongst other reforms, enhanced financial disclosure. The Act came in the wake of a series of corporate financial scandals, including those affecting Enron, Tyco International, and WorldCom.
What this allows is a much more open look at how a gaming company is performing. When a casino company has an event that could affect its financial standing, it must make that announcement public.
Daily fluctuations to a company's stock price is one way to gauge a company's performance - or if an event has taken place. A reporter can look into a company's recent filings with the Securities and Exchange Commission or ask a stock analyst who follows the business why a particular stock is up of down.
A quick note on analysts: they are expected to disclose if their firm has a financial stake in the company's they cover.
A reporter can also check with their sources within a company; and don't be fooled by the typical excuse: "We don't comment on stock prices." Corporate spokesmen and company executives follow their stock prices and the prices of the competition from the opening bell to the closing whistle.
Many states - and gaming companies - will break out a casino's individual monthly financial performance. For example, Louisiana and Mississippi provide monthly gaming revenue figures that list the results for each casino. Nevada also offers a monthly breakdown of gaming revenue - typically referred to as gaming win - but it's reported statewide and by region. Individual properties are not released.
In covering a casino company's financials, revenue from operations and cash flow - commonly referred to as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) - are the most widely used figures.
An earnings per share is a financial statistic that measures the amount of net income relatable to each share of common stock. Gaming companies will typically report both basic and diluted earnings per share. Business reporters should use the basic figure, which is a Generally Accepted Accounting Principles (GAAP) number. GAAP is a common set of standards and procedures used in the preparation of financial statements. The Associated Press and Bloomberg use GAAP numbers.
Gaming analysts typically will focus on diluted earnings per share, which take into account any non-operational financial impact on a company during a quarter.
Some gaming companies believe operating revenues and cash flow are good ways of determining performance. Other gaming executives want the press to focus on earnings per share.
Recently, the financial reports of two gaming companies showed examples of the varying differences.
Harrah's Entertainment, the gaming industry's largest casino operator, reported a loss in announcing its fourth quarter 2005 results. Despite a year-over-year operating revenue jump of 76.2 percent and an increase in cash flow of 85.1 percent, Harrah's earnings per share was a loss of 78 cents. The diluted earnings per share were 68 cents. Why? The company took $273.3 million in write-downs, an accounting procedure that does not involve cash, on losses from its four hurricane-damaged casinos in Mississippi and Louisiana.
Harrah's officials knew the earnings release was going to be confusing and made certain media covering the results were briefed as to why there was a loss on what seemingly were positive operational results.
In another matter, International Game Technology, the gaming industry's leading slot machine manufacturer, was a Wall Street darling on the day of the company's earnings announcement, despite what seemed to be an off 2005 fourth quarter.
IGT said the company's quarterly earnings per share was 34 cents, up a penny from the prior year. However, the company's quarterly earnings were down 1.4 percent, revenue was off 8 percent and overall revenue was down 4 percent. Seemingly bad news, right? The stock price that day closed up more than 10 percent from its previous day closing.
IGT cut costs in many areas during the quarter and made Wall Street happy despite the operational results.
These examples show that gaming company financial news can be confusing despite more openness than ever before.
Howard Stutz is a gaming and business reporter with the Las Vegas Review-Journal.
Copyright © 2009 Donald W. Reynolds National Center for Business Journalism