Gas or Gamble? Economy Forces Some to Choose

In its 2007 fourth-quarter report, the company said the introduction of gaming in Pennsylvania, where slots were legalized in 2004, "had a more severe impact than had been anticipated."

Trump Entertainment Resorts said slot revenue for the fourth quarter dropped 7% to $13 million, compared with a 14% decline at other Atlantic City casinos. Table-game revenue at Trump fell 5% to $14 million.

As revenue decreases, casino workers are finding their jobs in jeopardy.

Last month, MGM Mirage, mgm Nevada's largest casino company, laid off about 400 managers. Most were part of a corporate restructuring already in the works, the company said, but the economic downturn increased the number of layoffs.

Wynn Resorts says it has reduced its staff by about 300 employees through attrition.

Tropicana Entertainment, which owns the Tropicana casinos in Las Vegas and Atlantic City, on Monday filed for Chapter 11 bankruptcy protection. The company ran into several problems after it took over the Atlantic City Tropicana last year: Unions were angered by a layoff of nearly 1,000 employees; gamblers began spending less money in a slowing national economy; and credit markets tightened. The bankruptcy filing will cover nine properties but not the Atlantic City Tropicana, which is being sold.

The weak economy may affect the growth of the gaming industry. Developers plan to add more than 40,000 hotel rooms to the Las Vegas Strip, but scarce credit and the slowing economy may make financing difficult and postpone other projects.

In March, Deutsche Bank, the senior lender to the partially built Cosmopolitan Resort & Casino, began foreclosure proceedings on a $760 million construction loan after developer 3700 Associates was unable to raise cash.

But plenty of construction projects are near completion or proceeding. Wynn expects to open its 2,034-suite Encore hotel, including 72,000 square feet of casino space, next year on 20 acres of the Las Vegas Strip. In Atlantic City, a new 782-room tower at the Trump Taj Mahal is scheduled to open in September.

Expanding operations

Historically, tough economic times have caused expansion in the gaming industry, LaFleur says.

"Budget-strapped states have looked to gambling for incremental revenue and an alternative to raising taxes," he says. If the economy remains weak, he says, there might be more pressure for states to establish or expand existing operations.

That's already happening in Rhode Island, where lawmakers are considering measures to reduce a $568 million budget deficit by increasing weekday hours at its two slot parlors and operating around the clock on weekends and holidays. Slot machines provide about 8% of the state's income.