May 9, 2003
The Nevada and Asian gaming markets have suffered more than regional markets because of fears of terrorism and SARS and an airline industry downturn, gaming research analysts say.
"It's been a very challenging 18 months for the gaming industry," Christa Short, vice president of Bear, Stearns & Co., said Thursday at the Southern Gaming Summit. Revenue for the Nevada market, which relies on people flying in from across the United States and around the world, fell more than 7 percent from July 2001 to July 2002, investment banking firm Jeffries & Co. reports.
An entertainment company which owns casinos in Las Vegas and in regional markets such as Biloxi-Gulfport, said its Las Vegas revenues were hurt by the economic uncertainty in the weeks before the U.S. invasion of Iraq. While the war didn't cause as sharp a drop-off in U.S. bookings as expected, the war and the severe acute respiratory syndrome outbreak took a sizable bite out of international tourism, analysts said.
Many markets that depend on drive-in traffic thrived: West Virginia grew 35.3 percent. Others had more modest growth, including Mississippi's Gulf Coast, where revenues rose 4 percent.
"Mississippi used the Nevada model, letting casino operators decide how many to build, and there was a supply shock with Beau Rivage," said Jacque Cornet, managing director of Leveraged Finance Research, CIBC World Markets. "It took a few years, but the market has absorbed that capacity. Now the market will continue to grow slowly."
Analysts say consolidation should continue in the gaming industry but they expect companies to invest in potential new markets. Analyst Larry Klatzkin said talk of gaming spreading to other states is "much ado about nothing."
Since the initial quick and massive expansion of Mississippi gaming between 1990 and 1995, the industry has spread much more slowly, Klatzkin said. Anti-gaming activists are more organized, and it takes time to get expanded gaming opportunities approved by state regulators, he said.
Though states such as Texas, Arkansas, Tennessee, Alabama and Florida have considered allowing gambling, industry analysts say expansion of existing gambling is more likelier than development of new projects. The Northeast could get more slot machines, judging from proposals to add slots to existing race tracks in states like New York, analysts say.
Illinois is increasing capacity by allowing slots at racetracks and a casino in downtown Chicago. States that raise gaming taxes hurt themselves, analysts said. !!!
The Nevada and Asian gaming markets have suffered more than regional markets because of fears of terrorism and SARS and an airline industry downturn, gaming research analysts say.
"It's been a very challenging 18 months for the gaming industry," Christa Short, vice president of Bear, Stearns & Co., said Thursday at the Southern Gaming Summit. Revenue for the Nevada market, which relies on people flying in from across the United States and around the world, fell more than 7 percent from July 2001 to July 2002, investment banking firm Jeffries & Co. reports.
An entertainment company which owns casinos in Las Vegas and in regional markets such as Biloxi-Gulfport, said its Las Vegas revenues were hurt by the economic uncertainty in the weeks before the U.S. invasion of Iraq. While the war didn't cause as sharp a drop-off in U.S. bookings as expected, the war and the severe acute respiratory syndrome outbreak took a sizable bite out of international tourism, analysts said.
Many markets that depend on drive-in traffic thrived: West Virginia grew 35.3 percent. Others had more modest growth, including Mississippi's Gulf Coast, where revenues rose 4 percent.
"Mississippi used the Nevada model, letting casino operators decide how many to build, and there was a supply shock with Beau Rivage," said Jacque Cornet, managing director of Leveraged Finance Research, CIBC World Markets. "It took a few years, but the market has absorbed that capacity. Now the market will continue to grow slowly."
Analysts say consolidation should continue in the gaming industry but they expect companies to invest in potential new markets. Analyst Larry Klatzkin said talk of gaming spreading to other states is "much ado about nothing."
Since the initial quick and massive expansion of Mississippi gaming between 1990 and 1995, the industry has spread much more slowly, Klatzkin said. Anti-gaming activists are more organized, and it takes time to get expanded gaming opportunities approved by state regulators, he said.
Though states such as Texas, Arkansas, Tennessee, Alabama and Florida have considered allowing gambling, industry analysts say expansion of existing gambling is more likelier than development of new projects. The Northeast could get more slot machines, judging from proposals to add slots to existing race tracks in states like New York, analysts say.
Illinois is increasing capacity by allowing slots at racetracks and a casino in downtown Chicago. States that raise gaming taxes hurt themselves, analysts said. !!!
