U.S. Casinos to Lose Millions a Day Due to Katrina
NEW YORK — Hurricane Katrina may cost U.S. casinos with properties in the affected areas millions of dollars, analysts said on Monday.
Casinos on the Gulf Coast and in New Orleans were ordered to shut down on Sunday, as the hurricane approached landfall. Harrah’s Entertainment has the highest exposure in the affected region, with nine casinos there.
Goldman Sachs analyst Steve Kent estimates that Harrah’s, the world’s largest casino operator, will get nine percent of its 2005 earnings before interest, taxes, depreciation and amortization from its three casinos in the Gulf Coast — Harrah’s New Orleans in Louisiana, and Grand Casino Biloxi and Grand Casino Gulfport in Mississippi.
Kent also estimates that Harrah’s will get 12 percent of its 2005 EBITDA from six other casinos in the Tunica, Mississippi, inland riverboat region.
Harrah’s is also developing a $150 million hotel tower addition at Harrah’s New Orleans, expected to open in the first quarter of 2006.
Deutsche Bank analyst Marc Falcone expects Harrah’s to lose $1.8 million to $2.5 million in revenue for each day its casinos in the area remain closed. He expects them to stay closed into Tuesday and “potentially beyond.”
“While difficult to determine the financial impacts to operators with exposure to these markets … we would anticipate there will be some level of earnings impacts,” he said.
Falcone also expects MGM Mirage, which has two casinos in Mississippi, to lose $700 million to $1.1 million in revenue each day the casinos remain closed.
He expects Pinnacle Entertainment to lose $300 million to $600 million, Boyd Gaming to lose $200 million to $450 million and Isle of Capri Casinos to lose $150 million to $350 million a day.
Katrina made landfall at 7:10 am EDT in southern Plaquemines parish in Louisiana as a Category 4 storm, with maximum sustained winds of 140 miles per hour, according to the National Hurricane Center.
Shares of Harrah’s Entertainment were down more than 1 percent in light volume pre-market trade on the Inet electronic brokerage. Shares of MGM Mirage, Boyd Gaming and Penn National were down 2 percent in very light volume trade.