While gaming investors are focused on the economy there’s another development of note to observe—a new president of the United States.

And with this new president comes renewed concern and opportunity, depending on your point of view.

Prior to his election, Barack Obama was not seen as a friend of the gambling industry, but several events have transpired that might hold the industry in good stead under the new president. Consider:
   
• Nevada primary.  This early primary election gave Nevada a bigger role in the nomination process than the state’s small population would normally dictate.

As such, all the candidates, including Obama, campaigned heavily in the Silver State, thereby getting to know the industry, its employees and its leaders much better. It didn’t hurt that Obama carried Nevada in the November election.

• Majority leader. Nevada’s Senator Harry Reid heads the Senate and was an important figure before the election. One should think he is even more important now with a Democratic president in the White House.
  
• The economy. It’s weak, and every industry is likely to get a sympathetic ear as job protection is important.

• Internet gaming. The U.S. has been fighting a futile battle against internet gaming. At some point, reality sets in and the government decides it is better to regulate and tax than to drive business overseas.

Rep. Barney Frank at some point will succeed in legalizing, or at least decriminalizing, internet gaming. And now he has a member of his own political party in the White House.

• Indian gaming. Outgoing Secretary of the Interior Dirk Kempthorne imposed some severe qualifications on tribes seeking to place land into trust for casinos.

Many of them are likely to stay as land-into-trust for gaming has become a political hot potato.

However, it would not be surprising to see some liberalization, which is the reason that tribes such as the Seneca in western New York and the Menominee in Wisconsin are waiting for new Secretary of the Interior Ken Salazar to take office to push for casinos in the Catskills Mountains and Kenosha, Wisconsin, respectively.

Hold And Wait
The recession has been especially hard on the gaming industry, hence its stocks.

Long gone is the idea that casinos are resistant to economic hard times.

The result, as we are all aware, has been the devastation of gaming stocks.

But that is not the only surprise.

Another expectation was that hard times would bring gaming expansion as a way to cure unemployment and fill state treasuries. But that hasn’t happened so far. Most efforts to expand gaming have been defeated, except for those permitting racinos where high tax rates dampen opportunities for profits that drive stock prices.

Yet another expected effect of hard times was to be consolidation, but that hasn’t happened yet, either.

We may still get expanded gaming. And there should be consolidation in a weakened industry.

But for now, investors have a bunch of companies in hold-and-wait mode, a situation that might last for a while.

By Frank Fantini

Frank Fantini is the editor and publisher of Fantini’s Gaming Report. A free 30-day trial subscription is available by calling toll free: 1-866-683-4357 or online at www.gaminginvestments.com.

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