With the United States largely being blamed for the present global credit crisis and accused of having had a ‘casino’ mentality and fostering ‘casino capitalism’ through greed – a greed shared by financiers not only in America – it is less than surprising that actual casinos are affected by the fallout. New casinos and casino expansion plans are more and more frequently put on hold and casinos around North America have started cutting down on staffing levels.

An Associated Press journalist writing from Brazil quotes President Lula as commenting bitterly that the US ‘spent the last three decades saying we needed to do our chores. They didn't.” Colombian President Uribe put it more bluntly, "The whole world has financed the United States, and I believe that they have a reciprocal debt with the planet." But, as Spengler writes in the Asian Times, “To bankers and politicians who insist that the world will come to an end if the US Congress does not approve the proposed US$700 billion bailout package, I wish to say: "It is not the end of the world. It is just the end of you." Sadly, it won't be: America's financier caste will live to fleece another day.”

In Connecticut the economic problems affecting the US and the rest of the world have caused the Mohegan Sun to delay and re-evaluate the final phase of its expansion plan and Foxwoods Resort to cut its workforce by 6%. Four months ago Foxwoods opened its MGM Grand expansion but one month later said 200 jobs were to go. It has now announced a further 700 job losses as it ‘aligns payroll costs with current revenue levels.’ Nearly 600 positions at Mohegan Sun have gone although the company has not needed to layoff people.

The Wall Street Journal reports that Sheldon Adelson is loaning his company Las Vegas Sands US$475 million of his own money, another sign that borrowing money to fund projects is getting increasingly difficult. The loan is expected to allow the company to meet the terms of a US$5 billion credit facility tied to cash flow requirements. "My family and I are pleased to make an additional investment in Las Vegas Sands Corp. as the company advances its development plans both domestically and around the globe," said Mr. Adelson. "While the credit markets are experiencing turbulence, our strategy remains alive and well and our business continues to march forward. Little of our fundamental business strategy has changed and this investment will strengthen our capitalization and liquidity position as we continue to execute our plans."

Gaming equipment manufacturers are seeing declining share values as casinos put off ordering new machines due to a downturn in consumer spending as food and energy prices rise. Over the last three months IGT stock has fallen over 32%, Bally Technologies by 22% and Elixir a massive 77.5%. At present no-one is claiming to see the light at the end of the tunnel, better times just around the corner, or the silver lining that every cloud is reputed to have. The gambling industry, like many others, will have to make adjustments and take difficult decisions in order to weather the financial storm. (E-10.01.08)

© Copyright 2008 CasinoCompendium



>>> return to archives
>>> return to frontpage