Hotel Casinos to Slide 2.9 Percent in 2009

Gambling may have spiked over the holidays, but overall, hotel- casino revenue is forecasted to decline 2.9 percent by December 2009 as rising unemployment figures further erode household earnings.

With this year’s disposable income expected to decline by 0.8 percent, and first-quarter national unemployment figures expected to reach 7.6 percent, before climbing to 8.7 percent by the end of 2009, the gaming industry will feel the pain. Although slot machines will fare better than gaming tables, the lack of high rollers will affect bottom lines.

In 2008, gross gaming revenue for Nevada was $12.85 billion, representing relatively flat growth –1.8 percent from the previous year. This figure is expected to decline by 3.2 percent in 2009 due to fewer international and domestic visitors, as well as tightening corporate-sector spending.

While Las Vegas has historically attracted high-stake gamblers from around the world, it is now facing tougher competition from the U.K., Hong Kong and Macau China, Eastern Europe, and developing areas in the Middle East.

The financial and operating risks associated with pursuing the high-roller market will persist, but some U.S. casinos may opt out of chasing high-end players altogether as the costs and incentives to attract these players increase significantly.

Another sector expected to decline moderately is state lotteries. A certain level of demand from core customers will remain, but the instant gratification offered by poker machines is more attractive to many gamblers, despite the higher prize pool. With events like the upcoming Super Bowl in Tampa Bay, sports betting will also challenge the lotto dollar.