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September 19, 2014

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Report: Rising gas prices will bring weaker results to gaming industry

Higher fuel costs will likely take a toll on the U.S. gaming industry as Americans scale back on discretionary spending to fill their gas tanks, according to a new Moody’s Investors Services report.

The credit rating service said in a report released Thursday that the increase in gas prices could flatten all or a considerable portion of the favorable earnings the gaming industry has experienced in the recent months. Weaker companies could find the period especially challenging, Moody’s indicated in the report.

Moody’s noted that most gamblers in the United States drive to casinos, and as they continue to cut back on spending, they’ll likely take fewer trips or shorten their stay, and spend less while they’re there.

The report indicated the gaming markets that will be the most affected by the fuel price increases will be those where guests have to drive a significant distance to get to the destination, like Lake Charles in Louisiana, where Las Vegas-based companies Pinnacle and Boyd Gaming own casinos.

The company also said Strip casino operators such as Caesars Entertainment and MGM Resorts International, which depend on their Las Vegas resorts for a significant portion of their revenue, could face difficulties as well because a large number of their customers drive from Southern California, where gas prices are some of the highest in the nation.

Air traffic to Las Vegas could also be affected as the price of jet fuel rises.

Casino operators such as Wynn Resorts and Las Vegas Sands, who derive about 75 percent of their revenues from overseas markets, will fare better, Moody’s said.

But a few markets where customers only have to drive a short distance to get to a casino, like the Philadelphia metropolitan area, might dodge the effects of higher fuel costs. The effect will only be temporary because Moody’s said that over time, high energy prices will dissuade those gamblers, too.

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  1. For the wealthy it won't make much of a difference. For your middle income players, there will be a difference. It's not just the rise in gasoline, it's everything else that is also going up because of gas. Those nickels and dimes do add up. If gas continues to go up, look out. Gas was the straw that broke the camels back when the ression first started. Here we go again

  2. I guess the casinos need to give out gas cards as comps. lol. Gee I wonder who making ALL OF THE MONEY FROM THE GAS INCREASE more Billionairs for the USA

  3. Gas expensive????? We have gone through this discussion in a different article a couple of days ago. It's ridiculous to hear that 4 dollars per gallon is considered as much if you take into consideration that in most other countries world wide you pay at least 50 per cent more than that.

    Stop whining about gas price and start driving smaller, more fuel efficient cars. You will feel the difference in your wallet.
    It doesn't take a P.H.D. to figure this out, my friends. Big cars are useless and take too much gas.

    From Switzerland

  4. Boris

    Did you read the article? Who was crying about gas prices at 4$ a Gallon. The article is about gasoline prices and gaming revenue. Just because other country's pay more than us for gas, what's your point? Maybe Switerland is getting screwed on their gas, not the USAs problem.

  5. Anthony

    Yes, it's about high fuel prices affecting casino revenues. To a certain degree I can agree with that. Small time gamblers on a super low gambling budget of, let's say, 100 or 200 bucks for a weekend of fun, they will probably not drive too far anymore if gas gets more expensive. People with 5000 or 10,000 dollars in their gambling bugdet provisioned will not be really concerned whehter they pay 3.50 or 4.50 on the gallon. They will come to gamble, anyways.
    I am more concerned about people already on a total tight budget , living from paycheck to paycheck with their heads in a mountain of bills to pay, such people will probably have to cut down on leisure and gambling. That is making sense.

    Let's quickly change subject: In the news today, it was said that the U.S. is close to bankruptcy. Not that this is particular new to us, but they also said that the budget situation looks actually worse than Greece or Portugal. It's a horrifying scenario, don't you think so?

    Let me give you a short lession in gas pricing overseas: More than half of what we pay on the pump is actually not for the gas, but for taxes, fees, etc. it's a way for the government to take us drivers out and finance other stuff. Such as public transportation, road maintenance, etc.

    I noticed that the U.S. doesn't have a competitive public transportation system. This is not new to us, of course. Therefore, most people totally depend on their cars. Some drive 2 hours or more every day, just to get to their workplace. I take it you are with me on that one so far, are you?

    Now your government is desperately trying to cut expenses and find ways to generate revenues from all kinds of businesses. It wouldn't surprise me if they will very soon raise energy taxes in order to get more revenues coming in. What this means for your ultra-cheap gas prices is obvious. I would prepare myself before this happens. Remember, smart people already drive fuel efficient cars.
    From Switzerland

  6. Boris
    Like others have said, it is EVERYTHING that is going up here in the U.S. When you are making minimum wage and travel 20-25 miles a day, sometimes more, to that minimum wage job, $30 a week for gas is extremely difficult. Plus, add in the cost of food going up, it's hard to keep up. My gas budget has gone from $20 a week to $30-32 a week and I only drive an average of 9-10 miles a day. I do not have a gas guzzler car, but one that gets pretty decent mileage for it's size. If I could, I certainly would get a car with a smaller engine for better gas mileage but unfortunately, the car I have currently is going to have to last me for another 10 years or 125,000 miles, whichever comes first.

    The local news stations have been out interviewing people and all said they need to drive but are going to have to cut out other things from the budget just to fill their tanks up. That in turn hurts the economy when people are cutting back on groceries, or doing anything resembling entertainment such as going to a movie.

    As far as a "competitive transportation system", it depends where you live. People who live in large metro areas such as New York, Chicago - those cities DO have public transportation and many many people rely on that transportation to get to where they are going. Most city dwellers do not own cars. I never owned a car when I lived in Chicago beause I didn't need one. However, needed one in Vegas so I had to get one because there is NO viable public transportation system. I was in Vegas the last time gas hit over $4 a gallon and I didn't drive anywhere I didn't need to be. However - you GO where your job is - no matter how far away it is. And yes, we do have commuter trains that run from all metro area suburbs into the cities where the jobs are located.

    And as far as the taxes we pay on gas - that does go for road upkeep and other infrastructure. Trucking companies pay the most taxes because those taxes contribute to the upkeep of the interstate highway system which the trucks use all the time and do the most damage to.

    PS Quite a bit of our cars are fuel efficient. And please note I said "cars" NOT SUV's or your basic Ford and Chevy trucks. American car makers have always had the technology for fuel efficiency and it seems they are finally using it now in recent model cars, regardless of size.

    I always enjoy reading your posts but these here are way out of line. We are very aware of the shortcomings of certain things in our country. Some things we cannot control and that is the price of gas right now. You'll be feeling the pinch soon enough since the oil tht comes from Libya goes to European countries and not the U.S.

  7. By the way, Boris, the country of Switzerland is very small. Would you say the City of New York is bigger than Switzerland?? So you pay $8 for a gallon of gas - my guess is you can go on a tank of gas for a month because where would 50 miles take you? Around the country a few times?

  8. Det_Munch

    I appreciate your comment and went through it carefully. Perhaps you are indeed one type of person that makes sure that he's not driving a super size car. However, if you take an average US car on the road and compare it with "our cars" you will see the difference with one blink of an eye.

    Time will come when these big super sized cars, trucks, pickups or whatever you will call them, will disappear from the roads.
    Sorry, man, but I have seen too many Hummers and SUV's to believe that you can convince me. It's cool and definetely convenient driving in a big car, but who wants that luxury will have to pay for it.
    As for me, I ride a motobike as I don't need a car where I live. I know that even without the need of a car it would be more fun having a car as it's just more convenient, too. But, I am not a person that likes to throw out my money lavishly driving my axxxx from one place to the other. I save up my money and bring it to Las Vegas, which may definetely be to your liking :)

    Best wishes from Switzerland

    Boris

  9. I don't even comment ignorant critics about Switzerland. Knowing that I am fortunate living in one of the top countries based on income, lifestyle, employment, security , water quality, air quality and many other factors, I don't really care whatever people say about my country. It's true, as for gaming , Las Vegas and other Nevada cities are probably among the top places in the world, but, gaming isn't everything. And what good is a great state where the sun shines most of the time if it can't offer you a future?

    From Switzerland

  10. I believe NYC would fit in Lake Geneva...

  11. No wait, I'm wrong.

    Lake Geneva -- 224 sq miles
    NYC -- 469 sq miles, although 166 sq miles of that is water
    Switzerland -- 15,940 sq miles

    So yeah, NYC and Switzerland are close...

  12. Brian Johnson
    this comparison sucks. No matter how much bigger any city is than any other country, it's not the point. Are you saying that because NYC is bigger than our country you need a bigger car to commute? Are you fooling me or fooling yourself? The bigger a country, it doesn't mean the cars need to be bigger. Perhaps if the people driving the cars are super-sized and eat 7x/week hamburgers and fries and tons of sugar, they need a big car to get enough room on the chair. You should take this into comparison and then I might perhaps agree with you. You know that the U.S. has the most overweight people by comparison, more than any other country in the world. I wouldn't be too proud of being fat and therefore needing a big car, man.

    Greetings from Switzerland