Don't bet on the casino industry
Recession is hurting profits across the board in the casino industry, with a particularly bad effect on fly-in markets. Rico Gagliano reports these days, gamblers aren't as much about flying into big gaming destinations.
Roulette table at a casino (Jeff J Mitchell/Getty Images)
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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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