Gaming recovery may be slow
Gaming professionals responding to a survey on the economic health of the casino industry believe recovery will take much longer than they previously hoped.
However gaming’s top Washington, D.C., lobbyist said there are slight indications that the recession’s 2-year-old grip on the commercial casino industry might be loosening.
Gaming revenues nationwide were up 1.3 percent in the third quarter, American Gaming Association President Frank Fahrenkopf Jr. said as Global Gaming Expo, the industry’s largest conference and trade show, opened Tuesday in Las Vegas.
For the first nine months of the year, gaming revenues from the 13 states with commercial casinos are flat compared with 2009. On the downside, 2009 was one of the worst years ever for the gaming industry.
"I hope this is the beginning of things bottoming out and looking up," Fahrenkopf said during his opening media briefing on the state of the gaming industry.
He said the increases in Nevada in August and September were a positive sign.
Five states have experienced gaming revenue increases, led by Pennsylvania, which legalized table games earlier this year and saw gaming revenues jump 27 percent in the third quarter. However, Pennsylvania’s increase came at the detriment of Atlantic City, where gaming revenues have declined 26 straight months.
Fahrenkopf hopes the positive news will translate into increased attendance at G2E, which runs through Thursday at the Las Vegas Convention Center. The show is closed to the general public. Last year’s show attracted almost 26,000 attendees and exhibit personnel.
Major slot machine manufacturers typically use G2E to unveil new gaming advancements for the coming year. Gambling equipment sales have sagged for several years because of the recession and moves by casino operators to slice budgets for purchases.
"That’s the big question going into the show," Fahrenkopf said. "The slot companies are all asking if folks are ready to refresh their floors and buy new games. That’s what we’re waiting to see."
While exhibitors and show producers hope the economic recovery has begun, a survey sponsored by the American Gaming Association Smart Brief found gaming professionals believe a rebound is a ways off.
This was the second year the association sponsored the survey.
People gave similar responses to last year when asked to compare their business activity from the previous year — 48 percent thought business conditions were getting somewhat better compared with 47 percent in 2009.
Respondents were less optimistic about the length of the recovery and how long it would take for the casino industry to return to pre-2008 levels.
Only 11 percent thought the industry would bounce back in one or two years. In the 2009 survey, 23 percent thought the industry would have a quick recovery. The bulk of the 2010 survey respondents, 44 percent, said it would take the gaming industry three to four years to rebound.
"The recovery that we had hoped for last year has yet to take hold, and that has tempered some of last year’s optimism," Fahrenkopf said. "We still have a long way to go until the gaming industry is back to where things were before the recession."
The survey’s varied results mirrored other opinions of the casino industry’s health. Fahrenkopf cited two recent reports by Wall Street investment firms; one proclaiming Las Vegas was on the road to recovery and another stating that the market was still troubled.
Hotel room rates were starting to slowly climb in the past year.
"We’re still dealing with depressed consumer confidence," Fahrenkopf said. "The outlook is decidedly mixed."
Gaming is healthy in Asia. Macau gaming revenues were up 60 percent in the third quarter while Singapore, which opened two casinos earlier this year, is on track to exceed Las Vegas’ gaming revenues.
"Singapore is an amazing success story," Fahrenkopf said.
The gaming industry fared well in the recent midterm elections, Fahrenkopf said. Casino referendums passed in Missouri, Maine and Maryland, while residents in Iowa counties with casinos voted by overwhelming margins to keep their riverboat operations open.
It’s unclear, Fahrenkopf said, what the change in Republican control in the House of Representatives will mean to the potential of Internet gaming gaining support for legalization. Rep. Barney Frank, D-Mass., one of the biggest proponents for Internet gaming, will no longer lead the House Committee on Financial Services.
The American Gaming Association believes technology is available to regulate online gaming, but Fahrenkopf said he would be surprised if the issue came up during the current lame duck session.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.
