Don't bet on the casino industry

Roulette table at a casino

TEXT OF STORY

Scott Jagow: I don't know about you, but several times a day, I worry about Donald Trump's fortune. This morning, I can rest easy -- his company's latest profits will be revealed. A good bit of Trump's business is, of course, roulette wheels and blackjack tables. But the casino industry isn't having such a good year. Rico Gagliano reports.


Rico Gagliano: Frank Fahrenkopf heads the American Gaming Association in Washington, D.C. He says recession-weary investors who placed their bets on gambling companies may be holding a losing hand.

Frank Fahrenkopf: For a long time, people were saying that the gaming industry -- particularly in Las Vegas -- was recession-proof. I've never agreed. I always thought we were recession-resistant. The numbers that we're seeing so far this year would reflect that.

One example: MGM Mirage profits are down 69 percent. But Fahrenkopf says the problem isn't only that gamblers don't have as much income to lose -- I mean, "wager." They also aren't flying to big gaming destinations like they used to.

Fahrenkopf: The drive-in markets are not hit as hard as the fly-in markets. Iowa, Louisiana, Michigan, Missouri, South Dakota -- all posted, actually, single-digit gains in the second quarter.

The good news: Resorts in fly-in markets have long split their hands by diversifying into dining, retail shopping and convention travel. The bad news: In this economy, those aren't exactly good places to hedge your bets.

In Los Angeles, I'm Rico Gagliano for Marketplace.

About the author

Rico Gagliano is the host of Dinner Party Download.

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