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Tioga Downs firm looks to cash in on N.Y. racinos
 Message was posted: 08:05 Jul 14th, 2006     
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One year into Tioga Downs and Vernon Downs, Nevada Gold & Casinos executives expect each New York racino to produce about $7 million in operating income for the Houston-based concern.

Combined, the two will produce operating earnings for the company in the "mid-teens," Nevada Gold executives told analysts Wednesday, referring to a number that could land between $13 million and $18 million.

Company representatives said in the first year, the two New York operations could produce at least $1 million in expenses for the company because of steep start-up costs. After that, however, the company expects the two racinos to produce, on average, about $1 million in operating earnings each month.

Nevada Gold & Casinos Inc. owns a 40 percent interest in American Racing and Entertainment LLC, which operates the two New York racinos. Company executives said they paid $10 million for the 40 percent interest in American Racing. Nevada Gold also has a management contract in place with American Racing to run the two New York racinos. The contract has incentive clauses that raise the company's take if it can hit certain revenue targets at the two New York venues.

Vernon Downs is expected to open for harness racing at the end of August and the gaming portion of the operation, featuring 900 video gaming machines, will open in late September, company representatives said. The harness portion of Tioga Downs opened in early June, and the gaming portion opened two weeks ago.

"Tioga Downs has gotten off to a great start," said H. Thomas Winn, Nevada Gold chief executive officer.

Winn said that over the first seven days, the gaming machines at Tioga Downs had an average "win-per-unit" of $193 per day. Win-per-unit is an auditing figure used by the gaming industry to measure the financial success of each VGM.

The chief executive noted to analysts that the New York State Lottery Commission paid the $23 million in costs for the 750 VGMs at Tioga Downs. In addition, the state lottery agency pays the $2 million to $3 million annual maintenance costs for the machines.

Profit margins at the two New York racinos are expected to be 9 percent to 10 percent, company representatives told analysts.

Nevada Gold describes itself as a developer, owner and operator of gaming facilities and lodging and entertainment facilities in Colorado, Oklahoma, California and New York.

The company reported a fourth-quarter loss of $1.7 million, 13 cents a share, on revenues of $3.2 million, compared with net income of $500,000, 4 cents a share, on revenues of $2 million in the fourth quarter of 2005.

Nevada Gold stock, which trades on the American Exchange, closed at $7.27, down 6 cents on Wednesday.





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