The down-turn of the American economy in 2008 had a significant negative effect in the gaming industry. Many people lost their source of income due to layoffs but now there are some good news for the global gaming industry in Las Vegas. Naturally, people became wary of spending their hard earned money, and such luxuries such as gambling took a back seat. The number of gamblers dropped significantly, and cities such as Las Vegas witnessed an unprecedented drop in the number of visitors visiting the city. The dark cloud over the gaming industry is, however, receding based on the fourth quarter 2011 financial results on the gambling industry.
There is an upsurge of visitors visiting Las Vegas, and the casino industry that was in the receiving end of the global financial crisis is slowly gaining ground, and is stabilizing. A classical example of the recovery efforts is the Station Casino LLC whose net revenue rose to $1.18 billion representing an increase of 5.7%, this is a marked improvement compared to the decline in revenue by 10.5% in 2010.
This news comes as a relief to the city of Las Vegas whose economy is intractably linked to the gambling industry. Economy experts are of the opinion that the improvement of the casino industry will result in the improvement of Las Vegas economic fortunes. According to hotel expert Mike Mixer,
“The improvement in the fortunes of the casino industry will spark job creation in many sectors of the economy.”
This report collaborates a report that established that 41 casinos posted a combined loss of $2.2 billion; this loss was lower compared to the loss of $2.5 billion in2010. This represented an increase of a profit of 9.3% percent for the fiscal year 2011. Analysts are debating whether the local economy will carry-on and, if so, what are its implication to the casino industry. This debate is well captured in a March 19th report released by the Moody’s Investor services. The report was titled “las Vegas strip gaming recovery brightens”. The report noted that the number of visitors has been increasing and with the new megastores about to open its doors to the public, existing casino establishments will have more pricing power. The reports also included the possibility that the upsurge of visitors in Las Vegas might be dampened by the increase in the price of gas.
According to John Restrepo, an analyst for RCG Economics, the returns to profitability in the casino is very important for the local economy.
“Casinos returning to profitability is very important as it has the effect of driving investment in capital, shareholder returns, and debt repayment. Without, casinos realizing profits, all this things are not feasible.”
Restrepo continues to explain on the psychological benefits of the gaming industry returning to profitability.
“Investors in the gaming industry will respond positively when improvement is this industry is reported. This will have the additional benefit of attracting more investors that will propel the hotel and gambling industry to new frontiers. “
Restrepo, however, had some caution on the rate of vigorous rate of the turn-around fortune of the casino industry.
“The fundamental question should not be how the recovery is moving forward, but rather on the strength of the recovery.” He, further indentified the potential threats that can affect the increase in the recovery efforts such as the rising gas prices, the yet to recover housing market turmoil, food prices, local budgeting issues by the local government and the limited credit availability by both the micro and small businesses.
If the trend continues, perhaps, the word- Profits will return back to the casino lingos, as it had been years prior to the recession.