Gambling Boom Goes Bust: Let The Good Times... Crap Out
by G-Rob
Good times are called a "boom" for a reason. The sudden explosion (a similar metaphor) of a new business, a burst onto the scene, is a shot heard 'round the world. A bust, metaphor notwithstanding, is sometimes more subtle. Like a slow leak in an old tire.
Gambling... is not booming anymore. But is this a bust?
To wit:
Who here can tell me when Texas Hold-em had its big bang?
Here are the numbers to back up your almost certainly correct guess:
2003 Chris Moneymaker wins the Main Event at the WSOP (entries: 839)
2004 Greg Raymer wins the Main Event at the WSOP (entries: 2576)
2005 Joe Hachem wins the Main Event at the WSOP (entries: 5619)
2006 Jamie Gold wins the Main Event at the WSOP (entries: 8773)
That, my friends, is a boom.
My BUST Evidence The Worm Is Turning
1. Tough times on the Las Vegas strip.
Once thought to be "recession proof," the Las Vegas strip is showing a decline in growth that was almost unheard of for the past few decades.
Newsweek reports gambling revenue has fallen just one time since 1970. That was immediately after the terrorist attacks in 2001. People were afraid of air travel and tourist desinations like Las Vegas weren't immune.
Now?
The Las Vegas Convention and Visitors Bureau says so far this year those same gambling revenues are DOWN 4 percent.
The number of Las Vegas conventions, by the way, is down too. So are daily room rates and average room occupancy.
2. Actual, honest to God, money problems at the casinos themselves.
First, there's the Tropicana. The Associated Press was among the first to report the company filing for Chapter 11 Bankrupcy protection.
That began when the New Jersey Tropicana lost its liscence because it "could no longer provide a first-class casino experience."
THAT was triggered by layoffs and lousy revenue in the previous year.
PROPERTIES INVOLVED:
_Tropicana Casino & Resort, Las Vegas.
_Bayou Caddy's Jubilee Casino, Greenville, Miss.
_Casino Aztar, Evansville, Ind.
_Horizon Casino Hotel, Vicksburg, Miss.
_Horizon Casino Resort, Lake Tahoe, Nev.
_MontBleu Resort Casino & Spa, Lake Tahoe, Nev.
_Tropicana Express Hotel & Casino, Laughlin, Nev.
_River Palms Resort & Casino, Laughlin, Nev.
_Sheraton Hotel and Belle of Baton Rogue Casino, Baton Rouge, La.
Meanwhile, many publicly traded casinos have also shown poor performance. The stock price of MGM Mirage, owner of Bellagio, Mirage and eight other Strip resorts, has halved, from $100.50 in October to about $49 on Friday. In recent weeks the company eliminated 440 middle management jobs to save $75 million annually. "We made a structural change in our company to become more efficient and provide the same level of service, but we did have to advance that effort because we were also seeing a softening in the marketplace," says MGM Mirage spokesman Alan Feldman. (source: Newsweek)
3. That WSOP Main Event.
Almost certainly as a result of several major online poker rooms pulling out of the US market and fewer online satellite tournaments, the numbers went back down in 2007.
2007 Jerry Yang wins the Main Event at the WSOP. (6358 entries... 20% fewer than the year before)
So What Gives?
Both Newsweek and this great article (and from a great site) from Slate make the case that as Las Vegas diversifies into more of an overall tourist trap with less emphasis on gambling, it becomes more vulnerable to swings in the overall economy.
I'd allow for that possibiliy, but it doesn't fully account for the decline of Tropicana's other properties.
Nor does it allow for the full fallout from the UIGEA.
Forty-eight different states allow some form of legal gambling. It would take more digging to discern whether that expanded access has decreased tourism in Vegas and Atlantic City as gamblers seek out legal options closer to home.
That may be the case.
Still, wouldn't the stock price and revenue firgures for the casino chains remain steady if the revenue were INCREASING in other places to compensate for Nevada problems.
Gambling may never be a bust.
But is this the steady hiss of a slow leak?
