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Dec. 30, 2008
Copyright © Las Vegas Review-Journal

Gambling's struggles projected to continue

By ARNOLD M. KNIGHTLY
LAS VEGAS REVIEW-JOURNAL
OTHER KEY GAMING TREND PREDICTIONS

* Advancements in technology that impact revenues and cut costs will continue to be attractive to operators even in an economic downturn.

* Gaming companies will increase efforts to export their brands globally.

* Gaming equipment manufacturers will continue to invest in games that appeal to a younger demographic, including lotteries, bingo and server-based technology.

* Increased use of electronic games, including the emergence of scalable electronic table games in which players at different locations on the floor wager on a single outcome.

* Increasing alliance between commercial gaming operators and outside investors, as well as between commercial and tribal operators.

* Internet gambling in the United States will be a hot federal issue for the new administration and Congress; gaming companies will fund lobbying efforts on both sides.

* More pronounced shift in market share among suppliers as operators attempt to shift away from International Game Technology participation games.

* Native American tribal gaming revenue estimates will remain on track to surpass U.S. commercial gaming totals.

* States consider expanding or legalizing casino-style gaming to help fill state budget gaps.

* Support from China to ease visa restrictions, increasing flow of visitors into Macau.




Casino companies will continue to eliminate jobs and struggle with large debt loads as the industry deals with an "unprecedented economic downturn" in the coming year, an annual outlook by independent research firm Spectrum Gaming Group forecasts.

The Atlantic City-based firm released its fifth annual "Top 21 Trends in Gaming" on Monday, saying fallout from the flailing economy will dictate next year's gaming trends.

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    • "It's no secret to anybody watching this industry that 2009 is going to be an extremely challenging year," Spectrum Senior Vice President Joseph Weinert said. "This is the first time the industry has really felt the impacts of the national economy. We don't see any catalyst for the industry to reverse its fortunes until the economy at large reverses its fortunes."

    The list addresses continuing changes in development, operations, consumer behavior, markets, politics, technology and other aspects affecting the casino industry worldwide.

    Although the list looks at the casino industry on a global scale, many of the issues raised could directly affect Las Vegas. Some of those issues include corporate and property debt restructuring in the wake of declining revenues; major gaming operators selling off properties to emerging operators; and the continued elimination of jobs, both through cuts and attrition.

    With the fourth quarter ending Wednesday, some gaming operators and individual properties -- Station Casinos, Harrah's Entertainment, Herbst Gaming, Hooters Hotel and Black Gaming in Mesquite -- find themselves facing bank covenants that could force them into restructuring early next year.

    Weinert said it would be in the banks' interests to work with these operators "to achieve the best solution possible" during the economic slowdown.

    "In times like this, it's not like these are company-specific problems that can be attributed to some glaringly bad decision by the company," he said. "Any lender has to recognize the bigger picture rather than looking at specific companies. They're caught up in recessionary times that are out of their control."

    Companies could try to raise quick cash next year by selling off assets, if any buyers can be found. That means this month's announcement that Kansas businessman and former New Frontier owner Phil Ruffin was buying the Treasure Island from MGM Mirage for $775 million could be a harbinger of future deals.

    Gaming analysts believe MGM Mirage will use the cash from the sale, $500 million, to help with the costs of the $9.1 billion CityCenter project or to add liquidity to the gaming company's books.

    Spectrum also believes the economy will lead to a continued moratorium on development of big-box gaming resorts and continued drops in prices for hotel rooms, shows and dining as gaming operators struggle to keep their properties filled with customers.

    Furthermore, the research firm believes convenience-based gaming will continue to achieve better year-to-year results than destination-based gaming properties.

    Weinert said it will be interesting to see whether gaming will recover before the overall economy -- something economic observers don't foresee happening before 2010 -- or whether it "goes lock-step with it" or even lags behind.

    "There is not a precedent for this," he said. "So, we'll be watching it closely."

    Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.

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    FONZIE wrote on January 04, 2009 08:14 PM: LOWER THE FOOD AND ROOM PRICES,GO BACK TO THE REAL VEGAS NOT THE GREEDY ONE IT IS NOW.I WAS GOING FROM N.Y. THREE TIMES A YEAR,I DRIVE TO FOXWOODS NOW.


    leona wrote on January 01, 2009 06:43 AM: casinos are a shallow despicable enterprise. Las Vegas would be a fantastic place to promote ecological tourism. It needs to be completely changed, people are no longer stupid enough to pour their money into such a losing place as a casino Change the whole place into a ecological tourism, and you won't regret it. People are not stupid, this planet is our only home and we want to do whatever it takes to make our planet home a healthy and beautiful place. Las Vegas right now is just a mess, it could be beautiful if you work with the environment, not against it.


    Rob wrote on December 30, 2008 02:51 PM: These casinos need to stop looking over the locals as players. I like to go out and play the tables, but not at 10, 15 or 25 dollar minimums. And why should people from out nof town be the only ones to get comped rooms. My cousin had never even BEEN to the Wynn and was comped a room for 3 nights. Go figure...


    John-AZ wrote on December 30, 2008 02:21 PM: Who Cares! belive, vegas isnt hurting at all. it is called lower revs people, they are not losing money, just making less so, "who cares!".


    Steve T wrote on December 30, 2008 01:46 PM: LOL...Hey anon, I hate to tell you this, but with the exception of live poker (possibly) all the games are rigged. They don't build those big air conditioned buildings in the desert by giving money away.


    anon wrote on December 30, 2008 01:11 PM: I hate to sound like sour grapes, because I am a firm believer int the Vegas economy and I know it will recover eventually however, I am glad to see that Terrible Herbst is having problems because believe that their games are rigged or are either so tight that they don't pay out. Either way I hope they go belly up and have to sell off all of their assets including their mansions and end up on the streets with a sign that says "will work for food" like all of the so many other lives they have destroyed.


    hmm wrote on December 30, 2008 12:58 PM: alright give me a break! Right now the strip hotels are CLOSE if not AT capacity right now....all these rich people are just using us as an excuse, so they can let people go and hold on to the millions they have and will aquire..


    Bill wrote on December 30, 2008 12:47 PM: You ain't seen nothing yet.


    Cassierides wrote on December 30, 2008 12:32 PM: Everybody come to the GREAT Midwest....so many casinos and where "local" sized play earns you free stays, meals, merchandise...great rewards. And the best? You are actually treated like a person. No wait staff that act snotty if you aren't playing high stakes....you can actually get rated by a VIP host and treated like a person. Imagine buying a drink in the lounge for only $3bucks! So come one...come all...Midwest gaming ins where it's at. Oh yeah...nobody will hand you Ads for their prostitues as you walk around in a safe environment and actually breathe clean fresh air.
    Wiscosnin baby....Wisconsin.


    casinocon wrote on December 30, 2008 11:44 AM: The recession is bad, but the Corporations also got completely out of touch with their customer. They jacked up the games, and thought we would pay through the nose for the privilege of staying in their "luxury" resorts. In 2009 they will have to give RFB away to keep anyone in the casinos. Sure, they will declare bankruptcy and restructure, and though I dread the layoffs, I do look forward to the deals.


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