HARD TIMES UNTIL 2010

26 December 2008

US gambling industry has a rough road to ride

 

The respected Fitch Ratings agency in the United States has predicted that the gambling industry can expect a tough economic environment through to 2010, reports Business Wire.

"Following one of its most challenging years in recent history, the U.S. gaming industry will remain under significant pressure in 2009, with a recovery unlikely until 2010," the publication reports.

Fitch forecasts that the current economic recession has triggered the steepest GDP (gross domestic product) decline in the major advanced economies since World War II. The financial profile of the U.S. consumer is expected to remain stressed in 2009, as weak employment trends coupled with depressed real estate and equity prices continue to undermine consumer confidence.

With net worth and personal income under pressure, and continued tight household credit conditions, Fitch predicts that U.S. consumer spending will dip by 1.6 percent in 2009 and remain depressed into 2010. And the decline in energy and commodity prices won't outweigh this drag on the economy, says Fitch.

Fitch goes on to explain that the US gaming industry experienced a greater impact from the difficult financial conditions for consumers in 2008 than many investors expected. Generally, gaming spend per visit has been affected more than visitation levels, which can be bolstered by promotions. Considering the combined effect of recent declines in gas prices, and reductions in airline capacity and international demand, Fitch believes local markets will fare better than destination markets, such as the Las Vegas Strip.