About this time last year, I was looking forward to 2009 and saying things like, “It can’t be much worse than 2008.”
Well, of course, I was wrong. It was worse. Much worse.
So here we go again. It’s now 2010 and another decade has passed. Where did it go!? Frank Fahrenkopf reminds us of some of the things that happened in the past 10 years in his article on page 14. It’s been a long, strange trip, hasn’t it?
So as we enter the second decade of the 21st century, the gaming industry is truly in flux. While I don’t want to say 2010 will not be as bad as 2009 (fool me once…), I see signs of hope and glimmers of light amongst the gloom.
Let’s start in Las Vegas, my home and probably the epicenter of the gaming industry. I have to say, I had my doubts about MGM Mirage’s CityCenter (see Dateline USA, page 6) early on for many reasons. Even when the economy was good, I questioned whether the “post-modern” architecture would be the huge attraction that executives thought it would be.
Well, now that I’ve seen it in all its glory, I’m cautiously optimistic that it will indeed bring new customers to town and possibly be the transformative presence we’re all hoping it will be.
Other aspects of Las Vegas also are showing improvement. Visitation to the city is picking up, and the all-important drive-in market from Southern California was up nearly 5 percent toward the end of last year. Now, if we can get them to spend a little more money…
In Asia, new casinos keep rolling out. In the first few months of this year, the two integrated resorts in Singapore will open. Genting’s Resorts World and Marina Bay Sands from Las Vegas Sands Corp. should be just as transformative for Asian gaming as CityCenter will be for Las Vegas. They will be the blueprint-more than any Macau casino-of how countries like Japan, Taiwan, Vietnam and others can attract more tourism, business meetings and tax revenue by permitting limited amounts of gaming.
Macau has certainly rebounded, but the most interesting aspect of that market is not the flat revenues, but the Chinese government’s best efforts to rein in uncontrolled growth. Because of the better prospects for the SAR, Las Vegas Sands and Galaxy Entertainment have resumed construction on their latest properties.
In Atlantic City, possibly the hardest-hit gaming jurisdiction in the U.S., 2010 should bring news of whether the funding for the remaining construction on Revel Entertainment’s $2 billion project will come through. And participants in a recent round of meetings between all the stakeholders in Atlantic City on what to do about the future of the city and its casinos will establish an aggressive plan.
The impact of the economy on tribal gaming has been quite uneven because of the vastly different set of circumstances that faces each Indian gaming operation. But most concerning has been the difficulty of paying back loans made to many tribes. What was already a somewhat confusing set of legal issues has become even more murky. But the good news is that most tribes have committed to repaying and/or renegotiating the loans so they don’t have to navigate those legal waters.
European gaming took several hits late last year after the mid-year elimination of legal gaming in Russia and Ukraine. When Poland and Bulgaria tightened restrictions on gaming and raised taxes on their gaming establishments, one could not help but wonder when this tidal wave of negativity could be reversed. What these events highlight, however, are the many jurisdictions in Europe where gaming is a good partner with the national government, and how those countries can capitalize on the bans and difficulties faced by the industry in other countries.
Probably the most optimistic area in gaming is the online space. Whether we’re talking about full-blown online casinos or simply using the internet to market your land-based facilities, the industry is finally beginning to grasp how cyberspace will be an important tool in the second decade of the 21st century.
So while we can’t definitively says things are looking good in 2010, there are enough opportunities to intrigue even the most casual observer of the gaming industry. And for the investor, now is shaping up to the be the best time to invest in an industry that has hopefully seen its worst times.
