LACO and WPT

[Fraubump]

I see in Cardplayer that WPT is awarding 2000 shares of LACO (Lakes Entertainment--formerly Lakes Gaming) to winners this season. LACO owns 80% of WPT from what I read on the web. Didn't occur to me that WPT was owned by a publicly traded company. If it had occurred to me I would have bought some, but now it seems pretty expensive: hard to know, of course: WPT might be just a fad, might not. Hard to know how much of a pure WPT play it is.

Anyone done any diligence on LACO?

[adios]

No but I will do some this weekend and report back. BTW thanks for bringing this to our attention.

[MaxPower]

They also develop and manage casinos. Take a look at their income statement and balance sheet. They went from a 15 million dollar profit in 2000 to an 11 million dollar loss in 2003. Revenues went from 59 million to 1.5 million. I don't know how this happened, but I don't have a lot confidence in the management of a company when I see those numbers.

The WPT is nice, but you still have to wonder about the rest of the company.

Personally, I like to invest, not speculate, so this one isn't for me right now.

[Sooga]

Yea I don't like it much either... negative returns, negative cash flow, and startlingly low volume. Plus the stock has been rising spiking up consistently for the past few days. I wouldn't expect it to continue. Sure it's worth a 'gamble', but I wouldn't put a lot of money into this.

[Wildbill]

Here let me save you the trouble. They are as mentioned first and foremost a manager/developer of tribal casinos. They had operations to manage in Minnesota and Louisiana which were wildly profitable for them. The only problem with those is they have limited lives and unless you convince the tribe that you add value by having your people around. After 7 years their tribes didn't believe that they did. Many years ago they were managers of regular casinos too, some might have heard of the Grand Casino chain. That was theirs years ago, they sold off the commercial casino side and decided to stick to the tribal business. That was the risk they took and yes right now they are taking it badly. On the good side though is they have two good potential projects that are just bottled up in the courts, one in Michigan near Grand Rapids and one in California near Sacramento. That one in CA could be a serious goldmine it is very close to a very affluent area and of course has the edge of being a good winter alternative when the roads to Tahoe are snowed-in. These things take time, but if you are someone that cares about margin and return on investment, you have to love this particular business. Most of the deals pay 25% or so of the casino profits and this is pure margin, the costs are built into the equation before the check is cut. That is why this business, which has plenty of money and expertise around despite lacking current operations, still has lots of value. The WPT is really a meaningless piece of the business as it really has little potential for making money for a publicly traded company. Maybe in a few years it could see some franchise value, but really all it is now is an organizer of what were already existing tournaments. Good ratings and positive feedback to the game of poker isn't going to exactly turn into a profit for anything but the business levels of the casinos involved in hosting tournaments and maybe Travel Channel gets a little more return in advertising and fees from cable subscribers. You can literally pay no attention to the WPT, it has little chance of making or breaking the value of LACO.

[Fraubump]

I agree with this analysis. I do believe WPT has had some speculative influence on the stock and suspectrthat's why it's had this nice run up in the last year. But past tense seems to be situation here. Maybe you could ride the train a little longer, but you'd be gambling at this point.

[FredJones888]

If you are looking to buy it now then you missed the boat.

Also the entire market is not as strong as the media is leading people to belive, so watchout.