Deutsche Bank drops gaming coverage

Wall Street investment house Deutsche Bank dropped its research coverage of the gaming industry's equity side this week and its Las Vegas-based analysts formed an independent research and advisory firm.

Bill Lerner, who moved Deutsche Bank's equity gaming research office to Las Vegas in 2006 to be near the industry's major companies, will head Union Gaming Group with Rich Moriarty, Deutsche Bank's former and institutional sales director, and former Deutsche Bank analyst Grant Govertsen.

Lerner said the move follows a trend started by equity analysts in other industries, in which small, independent research firms have been formed, breaking away from Wall Street's research structure and the association with a large bank.

"There's a growing call for independence in research," Lerner said. "We plan on providing very specific market insight and advise the industry and investors."

He said clients being targeted by Union Gaming include institutional investors, gaming companies and the government entities.

Deutsche Bank will continue to provide research and analysis on the gaming industry's high-yield bonds and bank debt. That division is based in New York and headed by analyst Andrew Zarnett.

In addition to Deutsche Bank, Morgan Stanley discontinued its equity research coverage of the gaming industry.

Lerner said Union Gaming will not be a "cheerleader" for the gaming industry, but views the gaming industry as a long-term opportunity. Some gaming operators may be forced to sell casinos and resorts to help lessen their financial burdens, creating new ownership groups and other investment opportunities..

"Our view is that this unfavorable environment is going to transition," Lerner said. "We understand that focused industry expertise, local market presences in Las Vegas and global relationships across the sector are tremendous advantages for clients."

He said Wall Street now has a negative view of the gaming industry, which opens opportunities for independent research firms.

"Wall Street right now is running away from the industry," Lerner said. "We are running toward it."

Contact reporter Howard Stutz at or 702-477-3871.


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