US Supreme Court Favors Indian Casinos

Published March 21, 2004 by OCR Editor

Electronic gaming equipment makers can expect rising revenues after the Supreme Court decision last Monday to allow American Indian tribal casinos install electronic gaming devices. It provides new opportunity to sell games to previously reluctant buyers

J.P. Morgan expects the number of Class II machines to grow by 100,000. But other analysts caution that optimism and claim that the figure is too high. The number to them seems to be way to aggressive considering the size of the market. They only anticipate thirty to fifty thousands units.

J.P. Morgan also said that IGT could be one of the biggest benefactors of this decision. The company could gain half of the market share for Class II games which would net between $550 and $730 million in marginal revenues. This would add almost .50 cents earnings per share to the company's stock.

Harrah's Entertainment and Station Casinos operate a few American Indian casinos and Caesars Entertainment intends to open up some in the market as well. Therefore this decision will affect large operators as well as gaming unit makers.

Previously, the uncertain legal and regulatory outlook discouraged operators from targeting the American Indian casino market. Now that legality is not an issue it's time to start moving forward.