Bad times for casinos?

[jetset]

ECONOMIC DOWNTURN IMPACTS GAMBLING

Analysts take a pessimistic view in the short term

Reports from the Las Vegas Gaming Wire and mainstream business news outlets are suggesting that times are already tough, and could become tougher, in the gambling industry due to weakening economic conditions.

The LVGJ reports that gaming revenues on the Las Vegas Strip fell 3 percent in February, with the sinking economy, high gasoline prices, airline troubles and other downbeat financial news causing casino customers to stay at home or hang on to discretionary income.

Deutsche Bank gaming analyst Andrew Zarnett painted a bleak picture for investors should Las Vegas visitation and gaming spending continue to suffer, when he opined: "Looking specifically to an individual property on the Strip, we believe a 10 percent decline in revenues, linear across the board, including room rates as well as casino play, will likely lead to an approximate 20 percent reduction in EBITDA."

Las Vegas casino operators, Zarnett said, have reduced labour hours. What follows will be a reduction in staffing levels to reduce costs, and this has already manifested itself in the 440 lay-offs announced by MGM Mirage this week (see previous InfoPowa report)

Investment firms downgraded gaming stocks recently. Quarterly earnings for the period ended March 31 are forthcoming, but analysts, are not predicting good news. "We see both regional trends and destination markets like Las Vegas and Macau below previous estimates," Wachovia analyst Brian McGill said.

Goldman Sachs gaming analyst Steven Kent said stock prices are weak and operating results over the next few quarters will be challenged.

In Connecticut, the Connecticut Day newspaper reported: "Slot revenues continued to decline at both the state's casinos during the month of March, but while the losses at Foxwoods Resort Casino continued to grow, Mohegan Sun experienced its smallest decline in recent months.

Foxwoods saw their revenues slip 12 percent from March 2007 to $60.8 million, while Mohegan Sun's numbers dropped 1.4 percent to $76.8 million compared to last year.

Both casinos continue to blame the economy for declines in slot revenues and pointed out that casinos in other markets, like Atlantic City, are also struggling with sliding revenues.

Due to the decline in slot revenues, the state of Connecticut will also see lower contributions this year as compared to last year.

Mohegan Sun sent $19.2 million to state coffers, about $264,000 less than last year, and Foxwoods sent $15.2 million to the state, about $2 million less than in March 2007.

Patrons at Foxwoods appear to have cut back on their spending at the casino as the amount of money they spent at the slots, or handle, decreased by 12 percent to $694 million.

[RobWin]

"Hang on to Discretionary Income" is most definitely the Key Phrase statement in that article as it is most likely going to get even worse before everything starts to make a positive swing to the north !!

[pokeraddict]

Foxwoods saw their revenues slip 12 percent from March 2007 to $60.8 million, while Mohegan Sun's numbers dropped 1.4 percent to $76.8 million compared to last year.

It's hard to feel too sorry for them.

[uungy]

I cant see their problem. $60.8 Mil, would still do fine for my pocket. Why dont they just put it down to variance.

It would surprise me to say that revenuues go down, when economics are at a slow down, I would have thought more people would play/people would play more, firstly as a source of comfort (thats what a lot of players use it for, as a relaxation/let out) if business is hard. Secondly the temptation to make back losses or to make some other "source of income" is surely what adds to players

[RobWin]

I cant see their problem. $60.8 Mil, would still do fine for my pocket. Why dont they just put it down to variance.

It would surprise me to say that revenuues go down, when economics are at a slow down, I would have thought more people would play/people would play more, firstly as a source of comfort (thats what a lot of players use it for, as a relaxation/let out) if business is hard. Secondly the temptation to make back losses or to make some other "source of income" is surely what adds to players

Are you serious ?? Economies in a major slowdown and downturn, the price of gas and groceries going up everyday and you need to remember what got us to this point in the first place...folks hanging on to the discretionary income and the last few dollars they have in order to prepare for the worst case senario...just in case it actually happens...why would anyone that is using rational thought processes go and chance risking what little money they have left in order to do as you said "to make back losses or to make some other "source of income" is surely what adds to players"...anyone who thinks they can make a good living or "source of income" from chasing losses is totally out of touch with reality...

[uungy]

Completely true, however I would imagine a major source of income for casinos are the irrational players, whom dont play the games to the rules, which as some players see at "a gamble" etc. Its those players that are thei main income, whom I imagine would be on the same irrational line of thought when it comes to playing their savings

[RobWin]

Completely true, however I would imagine a major source of income for casinos are the irrational players, whom dont play the games to the rules, which as some players see at "a gamble" etc. Its those players that are thei main income, whom I imagine would be on the same irrational line of thought when it comes to playing their savings

Yea, you absolutely right about that one uungy, couldn't agree with you more there...

[winbig]

Foxwoods saw their revenues slip 12 percent from March 2007 to $60.8 million, while Mohegan Sun's numbers dropped 1.4 percent to $76.8 million compared to last year.

Sounds to me as if Foxwoods isn't running things right, and people are flocking to MS.

[jetset]

It's hard to feel too sorry for them.

Don't forget that these are revenue numbers - not profits.

[winbig]

Actually, the figures of $60.8M & 76.8M has to be profits.

If not, then someone has their numbers wrong.....very wrong.

Patrons at Foxwoods appear to have cut back on their spending at the casino as the amount of money they spent at the slots, or handle, decreased by 12 percent to $694 million.