Sector Snap: Gaming companies mixed post election

Measures voted on in Colorado, Maryland and Missouri on Tuesday were said to have passed with the majority of precincts reporting. In Colorado, voters looked to raise bet limits, expand casino operating hours and mandate statewide approval to change the gaming tax rate. Missouri voters dealt with issues such as capping casino licenses, raising the gaming tax and removing the $500 loss limit.

Maryland sought to allow 15,000 slot machines at five locations. Robert LaFleur, an analyst with Susquehanna Financial Group, said in a client note that the passage of Maryland's referendum benefits equipment suppliers such as Bally Technologies Inc., WMS Industries Inc. and International Game Technology, as it provides more business opportunities, but is harder to gauge for casino operator Penn National Gaming Inc.

"The Maryland market is a key feeder market for Penn's Charles Town facility, however, Penn has hedged its bets by acquiring a potential slot site in Maryland," LaFleur wrote.

The analyst noted that even with the passage it will likely take a while for the Maryland slots to get up and running, as local approval is still needed and securing funding may be hard.

Elsewhere, voters rejected efforts to allow casinos in Ohio and Maine.

Nicholas A. Danna IV of Sterne, Agee & Leach Inc. said Penn, which lobbied against Ohio's initiative since it did not want increased competition for its Lawrenceburg, Ind., facility, benefits from the measure's defeat.

Penn National Gaming's stock added 37 cents to $20.32 in midday trading. Shares of Bally Technologies fell $1.08, or 4.5 percent, to $23.14, while WMS's stock dropped 60 cents to $25.91. Shares of International Game Technology slipped 79 cents, or 5.6 percent, to $13.78.

J.P. Morgan's Joseph Greff saw upside for Pinnacle Entertainment Inc.

"We think, given the decisions in both Missouri and Ohio that Pinnacle is the biggest winner this Election Day as the removal of Missouri loss limit will benefit Pinnacle at their Four Seasons/Lumiere Place property in downtown St. Louis," he said.