The Chips Are Down: Hotel Casinos Revenue Predicted to Decline in 2009

by Lou on January 12, 2009

According to IBISWorld, which publishes gaming industry research, hotel-casino revenue is forecast to decline 2.9 percent as rising unemployment erodes household earnings.

“Players who have incurred major losses from financial investments over the past 12 months may pass on the high-stakes tables for the next couple of years,” explained George Van Horn, senior analyst with IBISWorld. “The current ‘stay-at-home’ mentality and low consumer confidence will hit casinos particularly hard, making some Las Vegas gambling establishments likely casualties.”

Gross gaming revenue for Nevada was $12.85 billion in 2008, or – 1.8 percent below the previous year. It’s expected to decline by 3.2 percent in 2009 due to fewer international and domestic visitors, as well as a reduction in corporate spending.

Las Vegas, which historically attracts high-stake gamblers from around the world, is facing tougher competition from the UK, Hong Kong, Macau, Eastern Europe, and developing areas in the Middle East. IBISWorld predicts that some US. casinos may opt out of chasing high-rollers altogether as the costs and incentives to attract them increase significantly.

Non-hotel casinos are predicted to decline 2.1 percent in 2009. While racetrack casinos (racinos) have been on a growth trend in recent years—they are inexpensive to build compared to traditional casinos—many future development plans have been shelved in response to the economic climate.

The only growth area appears to be slot machine gambling on Native American Reservations, and large casino operators will continue pursuing agreements with tribal leaders to open more establishments.

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