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Casinos Still Like Odds

The White House and Congress weren't the only things on voters' minds last week. Gambling measures showed up on the ballots in a handful of states.

Gaming equipment makers could emerge as winners from the mixed bag of results, according to Wall Street analysts, although some casino operators could also see modest benefits in specific locales.

Voters approved measures expanding gaming in Florida, Oklahoma and Wisconsin. Among the states with significant defeats were California and Nebraska.

In a nail-biter in Florida, voters approved a proposal paving the way for the legalization of slot machines at racetracks and Jai Alai establishments -- known as frontons -- in Miami-Dade and Broward counties. The proposal passed after election officials found 79,000 absentee votes that were originally overlooked in electronic counting on Tuesday, according to The Associated Press.

The Florida results could benefit gaming equipment makers such as International Game Technology (IGT), wrote Merrill Lynch analyst David Anders in a research note. Existing owners of the seven racetracks and frontons also would stand to gain, he added. Those owners include Isle of Capri Casinos (ISLE), Florida Gaming (FGMG.OB), Churchill Downs (CHDN) and Magna Entertainment (MECA). (Merrill Lynch does and seeks to do business with companies covered in its research reports.)

Still, hurdles remain before the first slot-machines ring. Voters in the Miami-Dade and Broward counties need to approve local referendums, which J.P. Morgan analyst Smedes Rose expects will be held in March or April. A legal challenge focusing on the validity of the signatures used to put the proposal on the ballot is scheduled to be heard in January, Rose noted. Meanwhile, gaming proponents will be submitting legislation to pass an amendment to the state constitution. "We expect Gov. [Jeb] Bush to oppose, but tax revenues are dedicated to state education, so he may be hard-pressed to oppose," Rose wrote in a research note.

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