Gas or Gamble? Economy Forces Some to Choose

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.

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.

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