ShareThisIt turns out casinos aren't recession-proof after all.That used to be an economic truism, but it's been put to the test in the last year, and especially since the start of 2008."The last six months have really blown conventional wisdom to smithereens," said Joseph Weinert, an analyst with Spectrum Gaming Group.Las Vegas reported its Strip revenues had dropped 16 percent last month. Atlantic City, N.J., had a horrible June as well. Revenues also were down in Illinois, St. Louis and Kansas City, Mo.As a result, casino stocks tumbled -- MGM Mirage share prices fell nearly 22 percent on the news out of Vegas, while Las Vegas Sands Corp. was down to a three-year low and Wynn Resorts Ltd. dropped 9.8 percent on the bad news, according to MarketWatch news service.Casinos from Atlantic City to Vegas are being forced to reconsider construction projects, trim work force and drop room rates to their lowest levels in five years.The troubled capital waters are proving especially difficult to navigate.Not long ago, an investor could secure a multimillion-dollar line of credit by putting up just a quarter of the full project price in equity.Now, said Dennis Farrell, an analyst with Wachovia Securities, finance houses are asking for 50 percent investor equity.Some casinos were designing "projects that were probably too aggressive," Farrell said."And now operating conditions have turned, and these capital structures have too much leverage on them."(E-mail Bill Toland at btoland(at)post-gazette.com.)(Distributed by Scripps Howard News Service, www.scrippsnews.com.)
Casinos tumble in sour economy
Submitted by SHNS on Mon, 07/14/2008 - 14:01
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