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Hotel casinos to decline 2.9 percent
Gambling may have spiked over the holidays, but overall, hotel- casino revenue is forecasted to decline 2.9 percent by December 2009 as rising unemployment figures further erode household earnings.

With this year's disposable income expected to decline by 0.8 percent, and first-quarter national unemployment figures expected to reach 7.6 percent, before climbing to 8.7 percent by the end of 2009, the gaming industry will feel the pain. Although slot machines will fare better than gaming tables, the lack of high rollers will affect bottom lines.

"Players who have incurred major losses from financial investments over the past 12 months may pass on the high-stakes tables for the next couple of years," explained George Van Horn, senior analyst with IBISWorld. "The current 'stay-at-home' mentality and low consumer confidence will hit casinos particularly hard, making some Las Vegas gambling establishments likely casualties."

In 2008, gross gaming revenue for Nevada was $12.85 billion, representing relatively flat growth - 1.8 percent from the previous year. This figure is expected to decline by 3.2 percent in 2009 due to fewer international and domestic visitors, as well as tightening corporate-sector spending.

While Las Vegas has historically attracted high-stake gamblers from around the world, it is now facing tougher competition from the U.K., Hong Kong and Macau China, Eastern Europe, and developing areas in the Middle East. The financial and operating risks associated with pursuing the high-roller market will persist, but some U.S. casinos may opt out of chasing high-end players altogether as the costs and incentives to attract these players increase significantly.

Forecasted to decline by 2.1 percent over the next year, non-hotel casinos will be affected by the global financial crisis as well. While racetrack casinos (racinos) have been on a growth trend in recent years - because they are relatively inexpensive to build compared to traditional casinos - a number of plans for future development have now been shelved in response to the economic climate.

Another sector expected to decline moderately is state lotteries. A certain level of demand from core customers will remain, but the instant gratification offered by poker machines is more attractive to many gamblers, despite the higher prize pool. With events like the upcoming Super Bowl in Tampa Bay, sports betting will also challenge the lotto dollar.

One area forecasted to grow is slot machine gambling on Native American Reservations. IBISWorld anticipates that large casino operators will continue pursuing agreements with tribal leaders to open more establishments in these areas. Theodore Koumelis - Wednesday, January 14, 2009