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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