Credit Crunch Hits Vegas HardPublished October 6, 2008 by OCR Editor
As economic disaster sweeps across the US, the online gaming industry is booming as casino gambling costs continue to soar.
The American credit-crunch has hit hard. It's not only Wall Street that's feeling the repercussions of falling profits, job-losses and declining real wages - it's Main Street too. Americans across the board are being hit harder than ever before - with major corporate companies laying off workers and filing for Chapter 11 Bankruptcy. This negative spiral has eaten deep into the pockets of everyday citizens. Personal disposable incomes are lower, credit availability has all but dried up and casinos are feeling the pinch.
When the MGM Mirage reports drops in revenue of 10% from tables and 11% from slots, and four other casinos have filed for bankruptcy protection, Vegas is staring down the barrel. Jobs are being shed left, right and center as hotels and casinos tighten their belts. The problems are compounded by the sheer number of rooms available for rent which means that operating and maintenance costs are high, with decreasing revenues from clientele. In addition the city is a virtual energy vampire - guzzling up thousands of megawatts of power, much of which the Hoover Dam won't be able to provide by 2015. Half of the city's visitors come by air, the others by car and coach.
Gambling magnate Sheldon Adelson (net worth $26.5 billion) has pumped $475 million of his family wealth into his casino empire to stay afloat, but not all players in the industry are as lucky. The Tropicana Entertainment bombed on $2.67 billion of bank debt while Boyd Gaming dumped Echelon - an ambitious $4.8 billion project on the Las Vegas Strip. The planned Plaza Hotel in Vegas - a $5 billion development by Elad and IDB, has also been set back a year. Financing is simply too hard to come by.
The costs of Vegas gambling tourism are prohibitive so gamblers are increasingly opting to stay home and try their luck at online gambling - despite its still illegal nature in the USA - it offers a cheap ticket to cash in on big winnings.