Terrestrial Gambling Impacted By US Economic Downturn - 04-26-08

April 26 - The Las Vegas Gaming Wire reported this week that Analysts take a pessimistic view in the short term on the gambling industry due to weakening economic conditions.

According to the Las Vegas Gaming Wire, gaming revenues on the strip fell by 3% in February which is blamed on the economic downturn, increased fuel prices, airline problems and general economic pressures which are causing prospective visitors to stay at home because of pressures on their disposable income.

Andrew Zarnett, a gaming analyst from Deutsche Bank paints a rather a bleak picture for potential investors should Las Vegas revenues continue to suffer. He commented that a 10% drop in hotel and gaming revenues will in all likelihood results in as much as a 20 percent drop in EBITDA, which won't sit well with investors.

Zarnett, a Las Vegas casino operator, have reduced labour hours and are reported to be likely to lay off staff to reduce costs. This follows the news of MGM Mirage laying off 440 staff last week.

Gaming stocks have been downgraded across the board. Quarterly earnings for the period ended March 31 are due soon and analysts paint a bleak picture. An analyst from Wacvhovia bank commented that results from Las Vegas and abroad are expected to be lower than expected. 

The negative sentiment continues throughout the industry as one analyst from Goldman Sachs commented that earnings are expected to continue a downward trend.

In Connecticut Foxwoods experienced a drop in revenues by 12 percent from March 2007 to $60.8 million, while The Mohegan Sun's earnings fell 1.4 percent on the previous year. Visitors to Foxwoods seem to have cut back on their spending at the casino as the amount of money they spent at the slots, dropped by 12 percent to $694 million.

An overall drop in slot revenues is also reported on Atlantic City.

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