On Tuesday, voters across the country cast their ballots and made their voices heard. Expect to hear an ongoing debate now regarding the ramifications of the sweeping congressional shift on corporate America in general and Wall Street in particular. Rather than pontificate about the potential impact that the changing political climate could have on your portfolio, I want to discuss the results of several key ballot initiatives.
No, I'm not referring to hotly contested issues like minimum wage hikes, illegal immigration, or stem-cell research. As an avid follower of the gaming industry, I was particularly interested to see how voters would respond to three casino-related measures. Not surprisingly, as it is on most other topics, the public was divided right down the middle on the expansion of gambling.
First, we go to Lake Charles, La., where local voters had to consider a referendum allowing Pinnacle Entertainment (NYSE:PNK) to move forward with the construction of a new $350 million casino resort. Last week, I touched on Pinnacle's plans to build the upscale Caribbean-themed resort next door to its existing L'Auberge Du Lac property, which has quickly become Louisiana's highest-grossing riverboat casino.
However, without the approval of Calcasieu Parish residents, the Sugarcane Bay project would never have gotten off the ground. Because the license had been acquired from Harrah's Entertainment (NYSE:HET), voters had to choose whether or not to allow the firm to relocate across town. Fortunately, local citizens had already seen Pinnacle's hefty investments transform their sleepy town into a regional tourist destination. And with the promise of 2,200 new jobs and additional tax revenues, voters gave the thumbs-up by a wide 2-1 -- overcoming the objection of local business leaders who wanted any new casinos to remain on the downtown lakefront.
Elsewhere, though, voters dealt gaming advocates two minor setbacks at the polls.
In Rhode Island, a partnership between Harrah's and the local Narragansett tribe to develop a 500-room casino resort was shot down for the third time. Despite a $14.5 million marketing campaign and promises of reduced property taxes, the creation of approximately 3,800 jobs, and financial aid for an impoverished Indian tribe, Harrah's plans to develop a billion-dollar high-end resort near West Warwick, R.I., were soundly rejected.
Just as Maine voters did in 2003, Rhode Islanders chose to let more than $140 million in annual tax revenues slip through to neighboring Connecticut, home of the massive Mohegan Sun and Foxwoods Indian casinos -- where players from Rhode Island and Massachusetts wagered an estimated $1.2 billion last year.
Finally, Ohio residents had similar concerns about adding more than 31,000 slot machines to the state's seven racetracks. While a "yes" vote on issue No. 3 would have put Ohio racetracks on a more level playing field with other area racinos and provided hundreds of millions toward college scholarships, Ohioans unplugged the measure by a 56%-46% vote.
Though passage could have been a boon to slot makers like International Game Technology (NYSE:IGT), as well as Penn National Gaming (NASDAQ:PENN), owner of Toledo's Raceway Park, the winds of change are clearly blowing.
Gaming is increasingly viewed as a socially acceptable form of entertainment, and with state legislators looking for less intrusive ways to plug widespread budgetary gaps, it's not surprising that casinos have proliferated throughout the heartland of the country over the past decade. In the Midwest, for example, Kentucky and Ohio will soon be the only two states without some form of casino gaming.
In any case, Tuesday's election is a reminder that politics can play an important role in our portfolios -- particularly in the heavily regulated gaming industry.
Double down on these Foolish articles:
- IGT Strikes It Rich
- Did Congress Kill Online Poker?
- From the Florida Gaming Summit
- A Closer Look At Casino Stocks
Get in the game with Motley Fool CAPS, our new community intelligence stock-picking service, and help make us smarter.
Fool contributor Nathan Slaughter owns shares of IGT but none of the other companies mentioned. The Fool has an ironclad disclosure policy.
