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U.S. casinos enter summer time in bad shape

U.S. casinos enter summer time in bad shape Are the casinos recession-proof - gambling experts say "no" as they rush to sell the stocks of the U.S. gambling giants. People have always believed that no matter what, gambling will continue to thrive, but the recent financial reports from the gambling companies the like of Harrah's Entertainment and the string of bankruptcy filings have cooled off the once hot commodity. So far this year Tropicana Entertainment LLC filed for Chapter 11 bankruptcy protection in May, defaulting on $2.67 billion in debt, Greektown Casino of Detroit and Illinois-based Legends Gaming, which has casinos in Louisiana and Mississippi, have also sought bankruptcy protection, and Harrah's Entertainment, the world's biggest gambling company (by revenue) posted a loss for the first quarter of 2008. And the summer period, once the bread and butter of the Las Vegas casinos, is shaping to be one of the worst ever.

 But don't believe those who say that people gamble less. Gambling is indeed recession-proof. On the other side, the gambling model in the United States is far from sheltered from the turbulence of the economy. The U.S. gambling industry is by large tourist-based. People visit Las Vegas casinos for the entertainment and often make a vacation out of it. But with the constant increase in fuel prices, people will travel less and less. Pair the travel costs with the bad timing of the recent boom of casino expansions and you have yourself a big mess with gambling companies filing for bankruptcy protection as they default on loans and credits. "This is the toughest environment we've faced," Gary Loveman, chief executive of global gambling giant Harrah's Entertainment Inc., was quoted. Meanwhile gambling is thriving. We took the Georgia lottery, being the state with no casinos, only to find out that Georgia Lottery sales for the first half of fiscal year 2008 soared to $1,693,837,400 – more than $133 million ahead of the record set in the first half of fiscal year 2007. Is it time for the change of the gambling model, or will the casinos bet on fuel prices coming down? Only the Q3 reports will tell.

 Published on 07/01/2008

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