Bailout for Casinos? Unlikely

The debate over the proposed federal bailout of Detroit’s Big Three automakers raises some intriguing comparisons with the industry behind our own company town.

Las Vegas has been called the “last Detroit.” And the Strip is indeed a modern union success story.

The U.S. automakers say the failure of the country’s largest remaining manufacturing base could spark a depression.

Job cuts and lost wages mean less money to buy goods and services, which results in fewer car sales, continuing a vicious cycle, says the Center for Automotive Research, a Michigan-based nonprofit that receives taxpayer and industry funding.

The same could be said of gaming and Las Vegas, which, like Detroit, has been hard hit by the downturn. Casino layoffs and reduced work hours are affecting nearly every sector of the local economy, including forcing the state, with 50 percent of general fund tax revenue coming from casinos, to cut one-third of its budget.

Before the economic decline, both car and casino companies had a bigger-is-better mentality. When gas was cheap, Americans flocked to gas-guzzlers and carmakers responded with more SUVs and large trucks. In Las Vegas, developers loaded up on cheap debt from Wall Street to create larger, more elaborate properties preferred by well-to-do hordes.

For the complete story, please see Liz Benston, Bailout for casinos? Don’t bet on it, Las Vegas Sun, December 8, 2008.