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CR75-p54-55-comment:SJC-Casino Review 21/12/08 01:28 Page 1
“We believe market
conditions will worsen for GAMING OFFICIAL PUBLICATION
some time to come as credit AWARDS
standards continue to tighten
and consumers deleverage
by need or want.”
Harrah’s CEO Gary
Loveman on the outlook
for 2009
What every operator wants for Christmas
Following a turbulent
newyearfear duction of casinos. Vietnam, And then there’s Macau remote gambling zones.
2008, casino
COMMENT Japan, Taiwan and parts of with its Visa restrictions. I Interest could once again
Eastern Europe all spring to heard a conspiracy theory fall on the ongoing but
operators will be
Even those who saw the credit mind. Even in such tight recently that Macau had painfully slow developments
leaving the festive crunch coming didn’t really lending markets, new casino merely been looking for in the United Kingdom
season behind
think it would reach such jurisdictions would remain international operators to where movement on the
hoping they can strip
recession-esque proportions. top of any wish list certainly build casinos before crunch- sixteen new style licences is
If they had then why the con- for some of the big interna- ing them out of the market promised. Given the tax
themselves of some tinued borrowing to finance tional operators. Elsewhere a with various restrictions returns from a super casino
of the excess
new projects? Undoubtedly loosening on borrowing and then buying their devel- though, one can’t help but
baggage hampering
these developments take years agreements would be heaven opments at discount prices. wonder whether the British
to see the light of day and once sent as would a return to Whilst such speculation government has privately
their bottom dollar
having embarked down the greater consumer spending. remains wild at best, all regretted its policy.
throughout the
route of financing many have The fact that casinos are no operators involved will be So a tough 2008 will be
year just gone.
opted to pull the plug now longer resilient to recession looking for a more pre- replaced by an even tougher
Phil Martin
and lose a little rather than risk has come as a shock for some dictable future regarding 2009 but in the words of
a lotto further down the line. but even when consumers do the introduction of such Harrah’s CEO Gary
reviews the But it’s not all delays, post- The failing economy could have more leisure spend at restrictions. Loveman: “The business is
Christmas wish list
ponements and cancellations even help open up new inter- their disposal, newly formed The stubbornness over remarkably resilient and it’s
and the optimism for
as the smattering of new proj- national jurisdictions where spending habits may take a the Russian situation shows very profitable. It’s funda-
ects reported in this issue of traditionally the odds have while longer to be broken. little sign of thawing but the mentally a strong enterprise
the New Year. Casino Review prove. been stacked against the intro- 2009 should also see wish would remain for when you think about other
smokers accepting the home Moscow, St Petersburg et al consumer franchises. We will
truth that times have to hold on to their legitimate have to do a lot of unpleas-
changed. Experience in those casino sectors rather than ant things during the down-
jurisdictions at the front end see new underground, turn but there will be a
of the no-smoking cycle indi- unscrupulous opportunists significant sea change in the
cates a two to three year spring up much quicker than way in which the balance
recovery period. developments in the four sheets are structured.”
Casinos must
not cry wolf
As the results graphs come to represent ski slopes, it is tempting to
demand government action. However, says Hugh Sorrill, while
the industry is clearly struggling, it is not yet dead or even nearly
dead. Some years you make less money.
stillkicking recession added to the trou- losses are possible. But
COMMENT bles and is not the only casino closures remain
cause of them. very rare.
You may have noticed a little So how bad is it? The Most of them are still
trouble on stock markets. It published results, almost all making a profit.
probably hasn’t escaped of them large operators, Which is why cries for
your attention that banks all show that attendance and help from casinos are likely
over the world are experi- revenues have dropped sig- to fall on deaf ears. Tax
encing some existential nificantly, as have profits. reductions are being
angst. You are unlikely to The global operators that demanded in several juris-
have missed how almost all have taken on huge debt dictions and in many cases,
the world’s major economies obligations for developing especially in Germany, they
are in, or almost in, reces- new venues and markets are are even necessary. But
sion. The predictions for feeling particular pressure casino operators must not
2009, you will be aware, are from creditors to meet the confuse making less money
uniformly depressing. payments, especially given with making no money. To
Like every other sector, the lower takings. As profits demand action to prop up
the casino industry is suffer- fall, shareholders press them still profitable businesses,
ing. The sounds of pain and from the other side. especially while using the
anguish are heard across the But most of them are still recession as a reason to
globe. The famed resilience making a profit. lay-off staff, will not go
of the gaming industry to Smaller and independent down well with politicians
recession seems to have or small-chain casinos, of who are generally not well
evaporated. The reason? which there are very many disposed to the industry
Casinos were being in Europe, may be suffering anyway. It’s bad, but not so
squeezed before the more: margins are lower, bad yet that we should use
economy began to melt; the taxes are higher and real up our goodwill.
54 January 2009 • comment
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