The Nations Casinos Feeling the effects of the Economic downturn

It was once believed that Casinos actually performed better in recessions than they did in properous times. The theory is that people down on their luck will roll the cube with their last money to try and make the mortgage payment. Lotteries tend to increase sales during joker gaming hard times for the same reason. Not this time around. Players are hanging onto their hard earned dollars, cheating casinos out of much needed revenues and impelling some to consider layoffs and worse.

The Sands Casino in Las vegas is in danger of violating terms of their loan covenants. In such a circumstance and they can’t work out terms with the lender, their loan could be called in and the Sands will have to create cash to pay off each of their loans. This could be a painful proposition simply because they have multi-billion dollar projects beginning all over the world.

This is the same fortune that has lowered on Bear Sterns, Lehman Bros, WaMu, AIG, Freddie Macintosh personal computer, Fannie Mae and many smaller firms.

Most Las vegas casinos rely heavily on transient traffic, meaning they need visitors to fly in from other parts of the country and world consistently day in and afternoon to support the huge infrastructures they have built. There is just not enough local traffic to support these the big players. People are not travelling as much as being out of work rate continues to climb and are cutting back on expenditures. To make matters worse airline carriers are increasing their rates to compensate for higher energy costs and lost revenues.

Casinos rely heavily on volume since occasionally they have winners and they operate on small margins. I know this doesn’t seem possible, since every time most people go into a casino they come out with nothing. Me and my juicer casinos hold 100% of the dollar that is dropped down the box, but in reality their hold proportions average around 14%. That means for every dollar that a player deals for chips the casino will keep 14 cents. That percentage is higher for slot machines, but still less than most people would think. In like manner make as much money as they do, a lot of volume (dollars) goes across the tables in return for chips.

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