Business: A Run of Bad Luck in Gambling Stocks

• Share

IN last summer's declining stock market, the shares of companies that own casinos in Las Vegas rose as high as gamblers' hopes. They have faded just as fast. A combination of boardroom battles, rumors of underworld links and Government investigations, reports TIME Correspondent Roger Beardwood from Las Vegas, have tarnished the investment luster of the gambling industry. The downward slide of casino companies' stocks has left many investors feeling as though they had fed the family fortune into a one-armed bandit.

"Skimming" Profits. The companies' winning streak started shortly after Invisible Billionaire Howard Hughes bought the Desert Inn and the Sands in 1967. Rumors ran through Wall Street: the Strip was becoming respectable. Mob-connected casino operators who had been hounded by the Internal Revenue Service for "skimming" profits before paying their taxes were selling out to a new generation of professional managers. And the new casino owners seemed to be on to a sure thing. Last year, for example, Las Vegas gaming tables took the gamblers for $338 million, 24% more than in 1968. But soon, casino company stocks were doing no better than the gamblers. Some recent performances:

> Parvin/Dohrmann Co., the hotel-equipment supply firm that bought the Aladdin, the Fremont and the Stardust, has seen its stock drop from a 1969 high of 141½-a share to last week's 28⅜. Last year the Securities and Exchange Commission accused company officials of manipulating the stock and making misleading statements about proposed mergers. For a while, Parvin/ Dohrmann stock was suspended from trading. The SEC claimed that, at the behest of Company Chairman Delbert Coleman, Parvin/Dohrmann had paid Washington influence-peddler Nathan Voloshen $50,000 in a vain attempt to raise the ban. In February, Coleman resigned and trading was resumed. Parvin/ Dohrmann reported a profit of $10.2 million for last year, compared with a $618,000 loss in 1968. Its casinos made all of the money, but company officers said last week that they will change its name to Recrion Corp. because of "the adverse publicity."

> Continental Connector Corp., a mini-conglomerate that bought the Dunes, has experienced a stock drop from last year's high of 83⅝ to 27⅜ in mid-December, when the American Stock Exchange halted trading. The ban will be lifted when the company re-certifies its financial statements for the past three years. The SEC accused Continental Connector's management of issuing two proxy statements falsely stating that an audit, which included the Dunes, had been made in accordance with generally accepted accounting principles. As one result, the owners of the Golden Nugget casino have called off merger talks with Continental Connector.