2008
Casinos weathering economic storm
Posted by admin in Casino NewsBy Frank J. Fahrenkopf, Jr.
President & Chief Executive
American Gaming Association
Today’s volatile economic climate is stoking fears in individuals, companies and industries from Wall Street to Main Street.
The gaming industry is no exception. But, interestingly, there are mixed results across the country. While some gaming markets struggle, others are posting modest gains. The current economic situation is complex and fluid, and casino revenue reports vary from state to state.
As with the broader economy, the commercial casino industry began to feel the effects of the current economic downturn in the second half of 2007 following the collapse of the housing market and a widespread decrease in consumer spending. Although the industry continued to expand in some states, such as Iowa and Pennsylvania, gaming revenues began to stall elsewhere.
2008 continues to pose economic challenges for the industry. The sagging national economy, significant job losses, high gas prices and myriad more problems are forcing consumers to cut their budgets to stay afloat. Tightening capital markets are applying increased pressure to commercial developers across the country.
In Nevada, statewide gaming revenues dropped substantially this summer. Through July, revenues were down 6.6 percent when compared with the first seven months of 2007. In Las Vegas, on the Strip, gaming revenues were down 6.5 percent. A decline in visitation, aggravated by a significant dip in the number of available airline seats, is largely to blame for these losses.
Casinos elsewhere, though, are outperforming 2008 projections. In Pennsylvania, Philadelphia Park Casino was projected to earn $297 million annually, but it just completed its first full year with $325 million. The nearby Harrah’s Chester Casino earned $332 million, nearly $100 million more than expected. Likewise, gaming revenues in Iowa have increased throughout 2008. Second-quarter revenues were up 7.5 percent from last year. And in August – aided, in part, by an additional weekend – Iowa gaming revenues climbed 5.4 percent. Casinos in Missouri, too, have experienced consistent growth in 2008. Throughout the first half of the year, they earned more than $427.5 million, up more than 5 percent from the same period last year.
The news is mixed in New Jersey and Mississippi, although both states are weathering the economic storm slightly better than Nevada in recent months. In Atlantic City, casinos reported $468.3 million in wins last month, a .7 percent increase over August 2007 wins, which is most likely attributable to the same extra weekend in August that boosted Iowa’s numbers. Overall gaming revenues in New Jersey are down in 2008, partially due to smoking bans in Atlantic City and competition from neighboring casinos in Pennsylvania .Similarly, Mississippi casinos have registered relatively flat revenues throughout the year, earning $238.1 million last month, $1.2 million less thanAugust 2007 winnings. However, gross gaming revenues from Mississippi’s Gulf Coast casinos have exceeded pre-Katrina levels for much of the year.
In sum, the gaming industry, like every other sector of the economy, certainly is facing tough times. But though it is not immune from economic struggles, the gaming industry is enduring and adaptable. The current market challenges encourage innovation and creativity, which will serve the industry well in the long term. The industry continues to be committed to the communities where it operates and play a vital role in the economic mix of cities and towns across the country. The industry will continue to weather the storm, and when the economy begins to improve, the gaming industry will rebound stronger than before.
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