Shares of casino operators moved lower Wednesday as Wall Street reacted to Hurricane Ivan (search), the latest storm of the season, poised to hit the Southeastern United States within the next 24 hours.
Casinos along the Gulf Coast — from riverboats floating on the Mississippi River to gambling halls in downtown New Orleans — could suffer losses from both damage and lost revenue.
Hurricane Ivan continues to churn toward land, triggering massive evacuations.
Investors have sold off shares in a number of publicly traded companies with casinos in the region. The Dow Jones Casinos Index (search) moved lower by 1.14 points to 394.78 in afternoon trading. The biggest pull-back came from companies such as Pinnacle Entertainment Inc. (PNK), Penn National Gaming Inc. (PENN), MGM Mirage Inc. (MGG), Isle of Capri Casinos Inc. (ISLE), and Harrahs Entertainment Inc. (HET).
"Depending on the strength of this storm, there is a risk of substantial damage because of where some of these casinos are located," said Marc Falcone, an analyst with Deutsche Bank. "I don't see any devastating risk to the companies - nobody is going out of business and will continue to survive, but there will be a near-term impact on earnings."
There have already been a number of closures across the Gulf Coast region. Mississippi regulators closed casinos along the coast due to the storm's approach. State law there requires casinos to be built over water, with most on barges. In Louisiana, two casinos were closed in Baton Rouge and four in New Orleans.
Companies affected by the hurricane also could see an impact on third-quarter earnings, according to a report from Lehman Brothers analysts Felicia Kantor Hendrix. She contends earnings could drop by 1 cent per share for a number of companies, but could be easily made up if gamblers' postponed trips are rescheduled for early in the fourth quarter.
Penn National closed three of its casinos in Louisiana and Mississippi, but said it would reopen "as soon as practicable" once the storm has passed. The operations include the Casino Rouge in Louisiana, and Casino Magic and Boomtown Biloxi casinos in Mississippi. Shares of the company were down 58 cents, or 1.5 percent, at $37.70, but made up the losses in the extended session, recently gaining 58 cents to $38.28.
Harrah's New Orleans Casino closed for the approach of Hurricane Ivan. The company said - conditions permitting - the casino will re-open on Friday morning. Shares of Harrah's ended the session down 29 cents, or less than 1 percent, to $51.31.
"As this dangerous storm approaches, our No. 1 priority is ensuring the safety of our employees and customers," said John Payne, general manager of Harrah's New Orleans (search), in a statement.
"Like all New Orleans residents, we're hopeful the worst will pass us by, and we look forward to re-opening as soon as it is safe and practicable to do so."
Caesars Entertainment Inc. (CZR) said it was voluntarily closing its casino in New Orleans as well as two casinos on the Mississippi coast. Shares settled down 5 cents at $16.25.
MGM Mirage closed down 8 cents, or less than 1 percent, at $45.80. Pinnacle Entertainment closed down 63 cents, or 4.5 percent, to $13.31. Isle of Capri ended the day up 53 cents, or 3 percent, to $18.33, but lost all that ground in the after-hours session, recently changing hands down 53 cents, or 3 percent, to $17.80.
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