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Multimedia Games Holding Company, Inc. Message Board

  • las_vegas_researcher1999 las_vegas_researcher1999 Jun 3, 2003 10:57 AM Flag

    ^^^^^ Message to STN management

    Brought over from being posted on the STN board.

    ^^^^^ For STN management
    by: las_vegas_researcher1999
    Long-Term Sentiment: Strong Buy 06/03/03 10:53 am
    Msg: 1917 of 1917


    This was originally a response to obid but for some reason it did not grab on the STN board.

    June 9th.

    You're welcome.

    The Sacramento paper should have stories about mobs of people and I think it's a shame not to have II's in from the start since compacts could take a year.

    1. MGAM participation is tax free so the net cost against current or especially future taxation will not be that great.

    2. STN should learn to love participation since that's how they'll be paid by TV.

    3. III's outdraw II's right now but is that a problem? All that means is that during quiet periods that people will pass up II's for III's, but during busy periods, II's will earn their way. The problem would be if II's earned double what III's earned, and stole business from the III's.

    4. TV has a period of saturation business that may last half a year or maybe a year. Any business lost because the III's are "too busy" for some or many is business lost forever because it's not a situation where the II's winning money could possibly deplete the pool of money in the Sacramento market.

    5. I don't know exactly how the Auburn contract reads, but just to guess using round numbers, say that there's a 10% gaming tax and cost of buying machines (not counting III participations), and STN gets 30% of what's left, so STN ends up with 27% of the win and the tribe 63%. If there were 1500 RTB's then MGAM would get 30% tops, STN would get 21%, and the tribe would get 49% (CA gets zilch and MGAM eats the cost of machines). Using this example, STN is only giving up 6% but under Gov Grayout's new compacts the taxes will be raised so much on all machines or on machines over the 2000 count, that the MGAM machines will cost less than II's. Since TV is an effective monopoly, the excess will be taken up by MGAM II's (and don't tell me that II's are worst than marginal generic III's, if locations are equal), but as pointed out before, so what if during quiet periods that people walk by the II's to get to the III's -- you only get worried if it's the other way around.

    The bottom line is that the II's don't cost STN that much more over the III's, and that's especially so under the probably terms of a new compact which may freeze STN for a year. If people feel the III's are too crowded then they may not be like at Foxwoods and they'll just look but not play, and that business is gone forever with the vast Sacramento money pool. By insisting on a "principle" of no or minimal participation, STN will be costing its shareowners and the tribe big bucks so let me suggest that making money is a "higher principal."

    Actually, I fully expect II's to be at TV, especially after RTB receives the Good Housekeeping Seal of Approval, but every week without RTB will cost STN and the tribe a lot of dough.

    It's too late for all parties to make the open but not too late to minimize the problem. Anyone who doesn't think TV will be mobbed has to try another business.

    Remember, I'm the guy who insisted that the original plans for 2000 slots was no good.

    Thank you. I wish I could be at your soft or hard open.


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