Don’t bet on the casino industry

Rico Gagliano Aug 7, 2008
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Don’t bet on the casino industry

Rico Gagliano Aug 7, 2008
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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.

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