Further Consolidation, Modest Growth In Store for Global Gaming Industry, Says S&P Equity Research Report

Standard & Poor's Equity Research Services believes casino stock valuations will depend on a variety of factors over the coming 12 months, including prospects for companies being able to boost earnings and cash flow, according to a report published today in Standard & Poor's CreditWeek, the financial market intelligence leader's weekly magazine on investment risk. The special report on the global gaming and lodging industry with contributions from both credit and equity analyst perspectives, also indicates that growth opportunities will partly depend on the regulatory environment in the U.S. and elsewhere.

For the U.S. gaming industry, Standard & Poor's U.S. Equity Research projects that casino winnings in 2006 will total $50.3 billion, up 5.5% from an estimated $47.6 billion in 2005. Further, it estimates growth from the Las Vegas Strip area to outpace that of the broader industry, helped by strength from both leisure and business travelers whose budgets may be less crimped by higher energy prices than drive-in customers visiting regional gaming locations.

"In the foreseeable future, we expect that Las Vegas and Atlantic City will remain the largest U.S. gaming markets," said Thomas Graves, CFA, senior analyst, Standard & Poor's Equity Research Services. "However, we see a long- term trend toward legislators or voters approving geographic industry expansion. Arguments for increased legalization of gaming include opportunities to boost tax revenues, encourage tourism, and create jobs."

Despite the growth of opportunities in the U.S. and inroads made by American firms in Macau and Singapore, Standard & Poor's Equity Research Services has a neutral outlook on the group of seven casino stocks that it covers, although recommendations vary on individual issues. For instance, Las Vegas Sands (LVS: Standard & Poor's ranking: Sell, $71); Wynn Resorts (WYNN: Sell, $71) and MGM MIRAGE (MGM: Hold, $41), to name a few.

The equity research reports and recommendations provided by Standard & Poor's Equity Research Services are performed separately from any other analytic activity of Standard & Poor's. Standard & Poor's Equity Research Services has no access to non- public information received by other units of Standard & Poor's. Standard & Poor's does not trade on its own account.

Standard & Poor's Special Report on the gaming and lodging industry was developed in parallel with an investor conference on this same theme, hosted by Standard & Poor's Rating Services this week in New York. Other areas in the report include overall credit insights about the global gaming and lodging industry, assessments about continuing developments along the Las Vegas Strip, an examination of the gaming industry's recovery along the Mississippi Gulf Coast, the future of Macau gaming, and more. Copies of CreditWeek's special report are available to subscribers of RatingsDirect, Standard & Poor's Web- based credit research and analysis system, at http://www.ratingsdirect.com. In addition, for a short time, this research and video commentary by the authors are available at no charge at http://www.standardandpoors.com or by clicking here.

About Standard & Poor's

Standard & Poor's, a division of the McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research and data. With 6,300 employees located in 21 countries, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com.


2006-06-14