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Gaming analysts: Industry’s recovery could lag economy
Justin M. Bowen / File photo
Analysts with Moody’s Investors Service said Wednesday that the gaming industry’s recovery could lag that of the economy as a whole.
Wednesday, Sept. 9, 2009 | 5:54 p.m.
A recovery for the gaming industry remains uncertain, even if the national economy improves, an international financial research company said Wednesday.
Moody’s Investors Service said its rating for the U.S. gaming industry remains negative as analysts have watched monthly gaming revenues slide.
“Unfortunately, our view is that the economic forecast would suggest that there is going to be a very slow recovery in the U.S. beginning next year, which would suggest that the worst could be over for the U.S. gaming industry,” Moody’s Vice President and Senior Credit Officer Peggy Holloway said. “However, we think there is the highest degree of uncertainty surrounding the timing and the pace of the overall economic recovery as well as any recovery in gaming.”
Holloway said Moody’s would closely watch monthly gaming revenues during the next two months for indications as to when the industry will recover. If revenue declines further in September and October versus previous months, Holloway said, it would be an indication that gaming revenues haven’t reached bottom.
“I don’t think anyone is in a position to make a strong call on a robust recovery given the severity of the decline in consumer spending,” Holloway said.
Moody’s Senior Vice President Keith Foley said the rating service’s definition of stabilization doesn’t mean an increase in revenues.
“Gaming revs in the sector will stabilize when we believe it isn’t getting any worse. Stable doesn’t necessarily mean recovery; it just means the gaming revenues hit bottom and stay there for a period of time,” Foley said.
During today’s conference call, Moody’s analysts outlined three scenarios for the gaming industry when the economy improves, which they called the good, the bad and the ugly.
The good, Holloway said, would be if gaming revenues snap back as the economy recovers, which Moody’s believes has a low probability of happening.
The bad is if the economy improves and gaming revenue trends stabilize at current levels, while the ugly is if gaming revenues continue to decline as the economy recovers.
Holloway said Moody’s believes “the bad” is the most likely scenario for several reasons, including a stall in the overall economic recovery and the continuing stress on consumers.
“Since gaming has proved to be an expenditure that consumers can live without, it speaks to our concern that the recovery in gaming will not take hold very robustly,” Holloway said.
Foley said Moody’s will have a better outlook on the gaming industry during its annual gaming conference call in November.
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vegas is as dead as that giant sony handheld video game in that photo.
now today we get a story about employees at planet hollywood cheating.
turn the lights out, folks.
Even after this Great Recession shifts into a tepid recovery, American middle-class consumers will bear the psychological scars of prolonged financial insecurity.
The will see, and understand, the the value of dollar in a much different light.
The boom times are over.
The challenge for Vegas will be to repackage its "visitor experience" in a manner that is consistent with the "new normal."
A lag makes sense. When consumers do start opening their wallets, it will be for more essential expenditures. It can't be repeated often enough: we need to diversify the economy. Yesterday's announcement about the Brookings Institute was just what the doctor ordered. Keep the different ideas coming.
gaming stocks have flatlined while financial and certain industrial corporations have flourished since march '09. vegas is at a crossroads and it cant afford to stand still and hope that the gaming industry picks up speed.
LV is the caboose in the U.S. economic train. Let's hope that consumers decide that the train will be make better time if the caboose is left at the station.
Gaming stocks flatlined? Thats a joke, I have made a small fortune the last few months on a certain Vegas company. Vegas will always be the leader in American Gaming period. There is not even a close second. And the company I am invested in also leads the world in international gaming. Yeah you guessed it. Las Vegas Sands.
who is going waste money gamblig, its down around the world, las vegas is too hot, polluted and has high crime
Think it's bad now? Wait for the tax increases next year. Who do you think is going to pay for this free health care?
How many more months will it take for the casinos to see they need to give people more good times and play for their money? Get rid of the PRNG and go back to the RNG. The odds were in the casinos favor anyway. They just got too greedy.
Those Moody's guys are geniuses.
the $15 aspirin pays for free health care fool. The people that don't pay or don't have insurance are subsidized by the people the do pay or have insurance. The emergency room wait time has doubled in the last few years. Conditions that could have been controlled become worse. Gee if only those poor people would just die without costing anyone any money.