Gaming Future Looks Bleak for 2009

Financial researchers don't believe the gaming industry will see a revival in 2009.

This week, Moody's Investors Service downgraded MGM Mirage's $7.8 billion debt. Caustic stock forecaster Jim Cramer told his CNBC television audience to avoid investing with the gaming sector.

Now, Fitch Ratings has smacked the industry in a blistering report. The investors service said the nation's casinos, coming off the worst year the industry ever suffered, won't see any meaningful recovery until 2010.

Fitch analysts said gaming had its worst declines in the last four months of 2008. The operating trends are likely to remain weak throughout 2009.

"The global economy is experiencing a severe recession," Fitch analyst Michael Paladino wrote. "Fitch is forecasting the steepest gross domestic product decline in the major advanced economies since World War II."

The economy's effect on the casino industry surprised many investors. Fitch estimated gaming revenues from commercial casinos and racinos declined 3.5 percent in 2008. The figure would have been worse if not for slot-machine expansion in Pennsylvania and New York.

Fitch believes consumer spending will continue to decrease. There will be fewer dollars left behind in slot machine hoppers and in gambling table drop boxes.

"Gaming spend per visit has been affected more than visitation levels," Paladino said.

For the complete story, please see Howard Stutz, INSIDE GAMING: Expecting '09 recovery for gaming? Don't, Las Vegas Review-Journal, February 8, 2009.