Gas or Gamble? Economy Forces Some to Choose

•In Colorado, the state gaming division said last month that revenue at casinos took its biggest hit since a statewide smoking ban was implemented in January. March revenue fell 10%, compared with March 2007.

•A smoking ban also affected gaming operators in Illinois, where business declined for the first two months of 2008. The economy and bad winter weather were other contributing factors.

Bill Lerner, senior gaming and lodging analyst at Deutsche Bank Securities, says the weak economy has affected gaming industry revenue and profits more than anticipated. Las Vegas gaming and hotel revenues "are seemingly worsening," and regional casino markets "are faring a bit worse," he says.

No casino "has been immune," but upscale ones such as Wynn, wynn Bellagio and the Venetian in Las Vegas have been less affected, Lerner says.

Casinos in Lake Charles, La., have "fared well," he says, because they depend on customers from Houston, where the oil industry is healthy.

But even the upscale markets are feeling the pinch. At the Wynn Las Vegas, first-quarter revenue was $125 million, down from $173 million in last year's first quarter.

Occupancy at the Venetian in Las Vegas, owned by Las Vegas Sands, lvs dropped from 99% in last year's first quarter to 91% in this year's first quarter.

Dropping hotel and motel occupancy

The weak economy caused Las Vegas hotel and motel occupancy to drop from 88% during the first two months last year to 87% during the same months this year, says Kevin Bagger of the Las Vegas Convention and Visitors Authority. Average daily room rates in January and February 2008 fell nearly 4%, compared with the same months last year, he says.

Boyd Gaming byd owns 16 casinos in six states. The company reported last week that 2008 first-quarter revenue declined 5% to 6% at its nine Las Vegas properties. Revenue at its casinos in Indiana, Illinois, Mississippi and Louisiana fell 13%, and revenue at Atlantic City's Borgata was flat.

"There's no question our customers are feeling the difficult economy," Vice President Rob Stillwell says. "Every time they go to the gas station or the grocery store, it's right there in front of them."

Atlantic City gaming operators have other troubles besides the economy: Smoking will be banned in casinos beginning Oct. 15. A partial ban already restricts smoking to 25% of the casino floor. Many gamblers who smoke have taken their business to slot parlors in the Philadelphia area.

Donald Trump, chairman of Trump Entertainment Resorts, trmp which operates three Atlantic City casinos, has called on casinos to file a lawsuit against the ban.