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TWST: Todd, has the return on investment fallen significantly in this industry?

Mr. Jordan: Absolutely. It was evident in the latest round of openings in Las Vegas over the past two and a half years, where Paris had the highest return on investment, somewhere in the mid-teens, while the other new properties had low double- digit, high single- digit returns. Contrast these ROIs with the historical 20 % plus returns and one should think twice about building in Las Vegas right now. I think the problem is not so much the level of EBITDA they’re generating, but the investment cost. The bar has been raised so high that it’s difficult to make a good return. And if you’re going to build a new property in Vegas, you’re going to want something that is going to outdo the previous resorts. Translation: you are going to have to spend a lot of money. That should really impede new construction in Vegas. It’s interesting to note that the high level of capital put into Las Vegas has really driven demand, but because the returns are so low it has actually hurt the companies that built the properties although it has helped everyone else. One metric that we haven’t talked a lot about yet is RevPAR. I think Mike touched upon how new properties drive new demand into Las Vegas. The overall RevPAR in Las Vegas exploded after these new properties opened, starting with Bellagio in 1998. Vegas RevPAR in 1999 increased something like 7 %. In 2000 RevPAR grew 12 %. However, if you go back to periods where there has been no supply, the RevPAR growth was anemic.

TWST: Todd, how would you differentiate among these local markets in terms of which you think offer the best opportunities for investors to take positions in companies that are exposed to them?

Mr. Jordan: I think you really have to look at the quality of the assets and the quality of the management team. To give you an example, Argosy Gaming (NYSE:AGY) is a very small company relative to the bigger cap names, but they’ve put together great property level managers, and they’ve invested a lot to upgrade and renovate their properties. Now they own a collection of high quality, efficiently run properties. The numbers speak for themselves. Over the last two years, and even in the last two months of this year, every single Argosy property outperformed its respective market. For investors to capitalize on the riverboat trends, you want to look for companies that have high quality assets.

TWST: Which markets is Argosy in?

Mr. Jordan: Argosy’s Lawrenceburg casino is in southeastern Indiana, which primarily serves the Cincinnati market. They’re in Kansas City, Iowa, Baton Rouge, and Alton, Illinois, which services the St. Louis market. There are opportunities in the riverboat markets, because we’ve started to see a convergence of the multiples between the bigger cap, Vegas-based operators and some of the smaller cap names that have more riverboat exposure.