Casino Stocks Higher As Atlantic City May Get Four New Casinos (MGM, BYD, LVS, PNK, PENN)
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Shares of casino stocks are taking a turn upward today, as news is circulating that Atlantic City may get up to four new casinos.
Former Mayor James Whelan, now New Jersey State Senator Whelan, is going to introduce legislation today that would allow the building of four new casinos with a minimum of 200 rooms. Current legislation called for hotels with rooms of 500 or more. However, Whelan said that the world has changed since 1978, as you can now travel not that far and get the same experience for far less because the entry fee to build is much cheaper. Pennsylvania is a big threat, having legalized table games earlier this year.
Opposition may come from other builders that have already established a footprint in Atlantic City. The CEO of Trump Entertainment Resorts is one, saying that changing the rules right now, when they're all hurting, isn't really right.
The new casinos would experience a tax rate of 14%, compared to a 9% rate currently experienced by larger casinos.
Enticements to expand are in the legislation though. If you build a 500 room hotel, you get 20,000 square feet of gambling space. Kick it up to 500 rooms, and you get 30,000 square feet of gambling space, plus they'd get the extra 5% back that they paid in taxes to enter the market.
The move comes at a time when several of the major casino developers are shying away from the Atlantic City Boardwalk. The last big casino to open there was the Borgata in 2003. Others, like MGM Mirage (NYSE: MGM) are more focused on international operations and may sell their stake in Atlantic City holdings.
Stocks in the green today, and one's to watch as the legislation comes to fruition include:
Former Mayor James Whelan, now New Jersey State Senator Whelan, is going to introduce legislation today that would allow the building of four new casinos with a minimum of 200 rooms. Current legislation called for hotels with rooms of 500 or more. However, Whelan said that the world has changed since 1978, as you can now travel not that far and get the same experience for far less because the entry fee to build is much cheaper. Pennsylvania is a big threat, having legalized table games earlier this year.
Opposition may come from other builders that have already established a footprint in Atlantic City. The CEO of Trump Entertainment Resorts is one, saying that changing the rules right now, when they're all hurting, isn't really right.
The new casinos would experience a tax rate of 14%, compared to a 9% rate currently experienced by larger casinos.
Enticements to expand are in the legislation though. If you build a 500 room hotel, you get 20,000 square feet of gambling space. Kick it up to 500 rooms, and you get 30,000 square feet of gambling space, plus they'd get the extra 5% back that they paid in taxes to enter the market.
The move comes at a time when several of the major casino developers are shying away from the Atlantic City Boardwalk. The last big casino to open there was the Borgata in 2003. Others, like MGM Mirage (NYSE: MGM) are more focused on international operations and may sell their stake in Atlantic City holdings.
Stocks in the green today, and one's to watch as the legislation comes to fruition include:
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