Monarch Casino & Resort, Inc.

Historical Figures $

The Birth of a New Era in Entertainment

The Monarch Casino and Resort “post January 2012” is the creation of a new era in online gambling and in fact in social media. Social networking, is likely to revolutionize online gaming – and in fact the world’s gaming industry.

The years 2011, 2010 have been characterized by the tremendous growth of what’s called personal communication companies, or as they are called Social Networking. The social networking giants already compete with:

and are changing our way of living. Communication through Social Networking may match in significant to Albert Einstein’s theory of relativity. Speaker Newt Gingrich relies on Social Networking in raising campaign money. Who needs Joe Kennedy?

These companies have multi billion dollars in market capital, tremendous growth rate and current and eventual profitability. They have already made a mark in the world we live in today.

Little attention has been paid that companies like Zynga and Facebook basically not only connect people at various parts of the world but provide individual services to a tremendous client base.

The Surprising Potential Winners of Online Gaming … Online gaming has been taking slow but steady steps to asserting its market possibilities. A Justice Department decision opened the door for online poker and lotteries online recently, and a number of bills to regulate poke are in a drawer somewhere on Capitol Hill.

Everyone seems to be angling for a piece of what could be a massive market. Facebook has explored real-money gambling in the U.K. and recently gave a presentation to the lottery industry on how they could use Facebook to connect with players. Zynga (Nasdaq: ZNGA) introduced a poker game before moving to Farmville and may also be interested in the revenue a real-money game could provide.

Table maker Shuffle Master (Nasdaq: SHFL) recently launched an interactive division to offer the company’s proprietary games online with a free version available for U.S. players.

Written in a financial paper it may sound out of place, but conceptually it is true that dating services are contributing to a social function and by interconnecting people they provide a service more popular by the day.

In January 2012 the US Congress had passed the long awaited Gaming Legislation. It sets the potential rules and tax structures for individual states. In any case, Congress passed the bill that would regulate gaming on a federal level. This decision is a milestone in online gambling or in fact gambling and is preceded by the statewide revision of the federal law. It seems that the law would apply for each state separately and most of the permits will be localized. However, larger companies with interconnections like MGM, BWIN.Party, Boyd Gaming, will take the lion’s share of the business because of the interconnecting lines they have to various states and the financial power that they command. In any case, they are the best known names in poker like the World Cities of Poker and they are able very quickly to build the critical mass of players from a massive data base of previous visitors.

Pressure is mounting on Congress to legalize and regulate online gaming in the very near future. But the pressure isn’t coming from gaming companies or poker players. If Congress does act soon, it will be pressure from states that are working to regulate and tax online gaming themselves that forces it to act.

State vs. Feds: Fight now states like Nevada, New Jersey, Iowa, and others are getting ready to pass legislation to legalize and regulate online poker and lotteries. With 51 (including Washington, DC) potential sets of rules and tax structures, the pressure is on Congress to pass a bill that would regulate gaming n a federal level.

A Washington money grab: If the Feds end up regulating online gaming in some way nationwide, there’s no question that the advantage goes to large gaming companies with the brand recognition and infrastructure to expand quickly into the new market. The partnership between MGM (NYSE: MGM), Bwin.Party, and Boyd Gaming (NYSE: BYD) will take a lion’s share of the play. The two gaming sites would be able to offer the best-known names in poker like the World Series of Poker, the Bellagio, and Caesar’s Palace. They would also have the ability to quickly build a critical mass of players form a massive database of previous visitors.

Las Vegas giants Wynn Resorts (Nasdaq: WYNN) and Las Vegas Sands (NYSE: LVS) would be players as well but the impact won’t be as big as companies with more casino offerings.

Monarch Casino is a well run, well financed small company which is circled around a single casino, Atlantis Casino Resort, with various related facilities.

Business Summary: Monarch Casino & Resort, Inc. through its subsidiary Golden Road Motor Inn, Inc. owns and operates the Atlantis Casino Resort Spa, a hotel/casino facility in Reno, Nevada. Its Atlantis Casino Resort Spa features approximately 61,000 square feet of casino space, a hotel with 824 guest rooms, 10 food outlets, an enclosed year-round pool with waterfall, an outdoor pool, a health space, 2 retail outlets offering clothing and resort gift shop merchandise, a full service salon for me and women, an 8,000 square foot family entertainment center, and approximately 52,000 square feet of banquet, convention, and meeting room space. The company also operates approximately 1,450 slot and video poker machines, approximately 38 table games, including blackjack, craps, roulette, and others, a race and sports book, and Keno and poker room. Monarch Casino & Resort, Inc. was founded in 1972 and is based in Reno, Nevada.

The company is well capitalized and statistical figures are a solid base for expansion.

The leverage factor in Monarch and this report is not dedicated to the analysis of Atlantis Saloon is the total picture when it is put together with some artistic futuristic ideas.

The company has 16 million shares outstanding, at the current price of 11 the market cap is about $170 million.

The book value is $8. The stock has a range of $12.34 at the high of the last 52 weeks and $8.28 at the lowest level. Half of the company stock is owned by insiders who are the original stockholders.

MCRI Key Executives:

Mr. John Farahi, 64

• Co-Chairman, Chief Exec. Officer
• Member of 1993 Directors Stock Option Plan Committee
• Member of Operations Committee
• Member of Strategic Planning Committee
• Co-Chairman of Golden Road Motor Inn Inc.
• Chief Exec. Office of Golden Road Motor Inn Inc. and
• Chief Operating Officer of Golden Road Motor Inn, Inc.

 Mr. Bob Farahi, 61

•  Co-Chairman, President, Secretary
• Member of Strategic Planning Committee
• Member of 1993 Directors Stock Option Plan Committee
• Co-Chairman of Golden Road and
• President of Golden Road

Below is an analysis of Monarch Casino and Resort, Inc. after January 2012. It is our vision and analysis.

1. A market cap of $170 million is accounted at the moment by the Atlantis Hotel and its related operation. The company’s revenue base is solid revenue bar around $150 million level with a steady net income of over $8 million. Also in the past boom of Las Vegas and Reno gambling it hit $25 million. 
2. The company has about $20 million cash and solid borrowing capability for expansion.
3. In the last few years, there were several steps for corporate expansion.

Now Monarch is in Reno, Nevada is likely to be one the biggest volume of online traders.

Its chief competitor in size is Boyd Gaming whose statistical description and operational description is listed below.

Boyd Gaming Corporation, together with its subsidiaries, operates as a multi-jurisdictional gaming company in the United States. As of December 31, 2009, the company owned and operated 15 casino entertainment facilities located in Nevada, Mississippi, Illinois, Louisiana, Indiana, and New Jersey. It owned approximately 812,500 square feet of casino space, containing approximately 21,400 slot machines, 425 table games, and 7,550 hotel rooms. The company also owns and operates a pari-mutual jai-alai facility located in Dania Beach, Florida, as well as engages in travel agency business. In addition, Boyd Gaming Corporation holds a 50% interest in a limited liability company that operates Borgata Hotel Casino and Spa in Atlantic City, New Jersey. The company was founded in 1988 and is headquartered in Las Vegas, Nevada.

Monarch set up a team to work with a number of larger American or overseas gambling companies to set up rapidly growing online gaming business. There are many British companies including Windmill 888, Ledbrooke; Windmill who has already gone to Nevada to buy three companies and they are trying to expand by finding partners in the United States. England has the wherewithal, capabilities and the history and America has the population.

The market is not only the population which one would expect in Nevada for online gaming, but we have to take into account the Social Netowrking companies who could multiply 2, 3, 4-fold the potential players.

If therefore we envisage that the online gaming business in a year’s time, for instance, could be anywhere between $25 to $50 million and if we assume that the company doesn’t have to issue new shares, the net earnings power of the company will change dramatically.

And this is where the story unfolds. 

1. We have a stable casino company – Monarch Casino
2. We have a stable management and capital structure and cash reserve.
3. We are domiciled in Nevada; one of the best areas for online gaming.
4. We are capable of creating a business in online gaming and Social Networking whose income could equal or double the current net income of the company.

The net result is likely to be a very positive effect on the price of the stock and the capitalization. Subsequently, the company could have access to an additional $50 to $100 million and become an international entertainment conglomerate.

Incidentally, that is where we can start with a comparison to an English casino such as Windmill. Windmill is international, Windmill is diversified and has a market cap of $2.5 billion. Monarch today has a market cap of $175 million and is situated at the absolute heart of the future of the online gaming and gambling business.

This is why the company is interesting.