Q2 2004 Dover Downs Gaming and Entertainment, Inc. Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: At this time, I would like to welcome everyone to the Dover Downs Gaming & Entertainment second-quarter conference call. (OPERATOR INSTRUCTIONS) Mr. McGlynn, you may begin your conference.

DENIS MCGLYNN, PRESIDENT AND CEO, DOVER DOWNS GAMING & ENTERTAINMENT, INC.: Good morning, everyone. Thanks for joining us for our second-quarter conference call. As usual I'm joined this morning by Tim Horne, our CFO; Ed Sutor, our Chief Operating Officer; and Klaus Belohoubek, our General Counsel. Tim is going to read our forward-looking statement disclaimer, and then we will get underway.

TIM HORNE, CFO AND SVP-FINANCE, DOVER DOWNS GAMING & ENTERTAINMENT, INC.: In order to help you understand the Company and its results, we may make certain forward-looking statements. It is possible our actual results might differ from any predictions we make today. Additional information regarding factors that could cause such differences appear in the Company's SEC filings. In the question-and-answer portion of today's call, we will only be responding to questions from analysts relating to historical information for the second quarter.

DENIS MCGLYNN: Thanks, Tim. The results of this quarter, as you may have noticed in our release, were somewhat moderated by softer than expected June numbers, which came in flat against the previous year, unlike April and May, both of which performed well ahead of last year. We had strong revenue and record hotel occupancy in the quarter; and it's worth pointing out that our July numbers are again well ahead of last year. Tim will be providing color on all of this momentarily.

I'm sure everyone is interested in our reaction to Pennsylvania's passage of slots legislation. We have been talking about this for a couple of years now, so clearly it was no surprise to anyone. Our expectation is that due to our respective locations Pennsylvania will impact Delaware Park more than the two downstate facilities, and they will likely attract more lower-end convenience customers who generally gravitate to the closest facilities.

We currently generate 7 percent of our customers from Pennsylvania, and these really are not convenience customers. These people have to drive past Delaware Park to get to us. So other than the initial curiosity associated with new facilities, we believe we will keep the loyalty of these customers we have established over the years.

We have superior amenities here such as our hotel and restaurants, which gives us an advantage, and we offer top-flight entertainment. So I believe will remain competitive. Over time operations in Pennsylvania will likely expand the market by creating new players who will begin moving around in search of wider variety of gaming experiences, and we think we're close enough proximity-wise to be able to take advantage of that. The fact that Pennsylvanians have to pas Dover Downs on the way to the Delaware and Maryland beach resorts is another advantage for us.

As for Maryland, there is no indication that slots legislation in response to Pennsylvania will be forthcoming, at this time anyway. The governor and the president of the Senate would like to see a special session to act on slots. However the speaker of the house, who has successfully blocked slots for 2 years now, won't agree to a special …