Making the News

Pittsburgh Tribune-Review

Originally Published:Wednesday, May 7, 2008

"Gambling is not a recession-proof industry," said Michael Pollock, managing director of Spectrum Gaming Group, a consulting firm near Atlantic City. Casinos once drew customers from a narrow demographic: older, wealthier people who had disposable income even as the economy faltered, he said.
"But the nature of casinos is changing. (They're) appealing to a much broader slice of the country that reflects the economy at large. As you do that, you become vulnerable to economic trends," Pollock said.

Economy deals losing hand for gambling nationwide

By Mike Wereschagin
Pittsburgh Tribune-Review

As it continues to get more expensive to fill up a gas tank, buy an ear of corn or pay off that subprime mortgage, less is left over for gambling -- and casinos are starting to feel the pinch.

Pennsylvania's gambling industry continues to grow as casinos open, but gambling in other states -- an industry once thought to be insulated from tough times -- is stumbling along with the rest of the nation's economy.

Profits at Nevada casinos dropped 4 percent in February, compared to the same period in 2007, and Atlantic City casino earnings plunged almost 10 percent in March compared to the same month a year ago. Tropicana Entertainment, owner of an iconic Las Vegas casino, filed for bankruptcy Monday.

"Gambling is not a recession-proof industry," said Michael Pollock, managing director of Spectrum Gaming Group, a consulting firm near Atlantic City. Casinos once drew customers from a narrow demographic: older, wealthier people who had disposable income even as the economy faltered, he said.

"But the nature of casinos is changing. (They're) appealing to a much broader slice of the country that reflects the economy at large. As you do that, you become vulnerable to economic trends," Pollock said.

Those trends are pointing down. The country lost about 80,000 jobs a month during the first quarter of 2008, according to the U.S. Bureau of Labor Statistics. Foreclosure rates increased 23 percent in the first quarter of this year compared to the last quarter of 2007, according to RealtyTrac, which tracks foreclosures. Gas prices have risen about 50 cents a gallon since Jan. 1, according to the U.S. Department of Energy.

"People are curbing their discretionary spending during the current economic climate, and overall travel will begin to decrease as a result of the record high gas prices," said Amy Schein, an editor at the research firm Hoover's.

That might be good news for local casinos, as frugal vacationers opt against going to places like Las Vegas.

"Pennsylvania's gaming industry might benefit from a weak economy," she said.

Weekly wagering at Pennsylvania casinos increased more than 16 percent -- $67 million -- from the first week of the year to last week, according to the state Gaming Control Board. Most of that is because of Penn National casino, which opened in February.

The industry's novelty might get it through this economic downturn, Pollock said.

"To some degree, when a new property opens, that momentum is going to carry it," he said. "Atlantic City opened a casino in the teeth of the 1990 recession, the Trump Taj Mahal. It really helped Atlantic City weather that downturn."

A group of gambling opponents wants to use these tough times against Pittsburgh's casino, under construction on the North Shore.

No Dice, an anti-gambling group started in 1994, announced yesterday it will be distributing bumper stickers and static-cling window decals declaring "Winners avoid casinos." Bruce Barron, the group's president, said he wants to complement that with presentations to churches and community groups about the dangers of gambling.

"The economy is bad. People are reconsidering their expenditures. Casino revenues across the country are down already. I hope I can add to that trend," Barron said.

In an effort to sink the $770 million North Shore casino, No Dice spent $605 on the stickers and decals, enough for 1,000 of each. Barron said he plans to ask for a $1 donation in exchange for the white-and-red rectangles. Group members are considering printing T-shirts, if there's enough interest in the stickers.

"I think it's probably for naught," said Nancy Todd Tyner, a Las Vegas-based political consultant who works on gambling-related issues. "It's just too popular a form of entertainment these days."

Barron's foe, Majestic Star Casino owner Don Barden, is still trying to put together an $800 million financing package for the project. The casino is scheduled to open in May 2009, and Barden spokesman Bob Oltmanns said the country's economic downturn is "not even an issue."

 

 

Mike Wereschagin can be reached at [email protected] or 412-320-7900.

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