Gambling no longer the ace in the deck
WHEN the economy hits the skids, the gambling industry is often considered immune, on the theory that people will aim for a big win to get out of financial trouble.
But recent figures from the worlds gambling centres suggest the current downturn might be different.
MGM Mirage, the largest casino operator on the Vegas strip, said it would sack 400 middle managers as part of a plan to save $US200 million ($212 million) a year.
The company said there were signs of a slowdown at its properties, which include the Bellagio and Mandalay Bay.
Nevada Gaming Board figures show gambling revenue across the state fell 3.9 per cent in February from a year earlier.
On the US east coast, casino revenue in Atlantic City fell 9.9 per cent year-on-year for March, with the New Jersey Casino Control Commission reporting a 6.4 per cent decline in revenue during the first three months of the year.
Every casino in Atlantic City reported a fall in revenue in March, although the recession cannot be solely blamed for the decline. New poker-machine parlours have opened in neighbouring Pennsylvania and gamblers have stayed away from the casinos following a new partial smoking ban.
Shares of gambling companies are well down from their year highs, as analysts and investors have woken up to an apparent oversupply in the US casino industry. Many hit 12-month lows this week.
MGM Mirage closed at $US51.08 on Thursday, down from a 12-month high of $US100.50.
In Britain, gaming companies such as Ladbrokes and William Hill have also fallen.
Goldman Sachs last week issued a report, titled "Why This Downturn Could Be Different", saying that the current slump for casinos could be worse than in previous economic slowdowns.
With 12 states now offering casino gambling, up from just two in 1980, casinos have to fight hard for new business.
So why have gamblers broken a habit of a lifetime in this downturn? Anecdotal suggestions from pit bosses and casino employees suggest that many regular players have reached their credit limits. Additionally, different types of people now gamble, and their wagering behaviour is swayed more by the economy.
2008-04-30
