Moody’s: Signs casino industry has hit bottom
June 24, 2010
LAS VEGAS (AP) – The casino industry may have hit bottom after more than two years of declines, but don’t expect it to become more profitable anytime soon, an analyst said Tuesday.
Analyst Keith Foley of Moody’s Investors Service said it’s unlikely things will get better for the country’s casinos in the next 12 to 18 months.
“We believe severe year-over-year declines in monthly U.S. gaming revenue are nearing an end,” Foley told investors in a research note. “As revenue bottoms out, we expect gaming company operating profits will stabilize by the end of 2010.”
Moody’s upgraded its outlook on the industry to stable from negative, saying credit conditions in the industry are unlikely to change soon.
Foley said the stable outlook doesn’t mean casino company profits will immediately improve. But he said casinos will benefit in the second half of this year from cost cuts made last year.
Foley said ratings of individual company debt won’t improve because of the outlook.
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Casinos need the U.S. economy to improve and consumers to spend more before people start gambling more, he said.
Gambling revenue in the United States was flat in March and April compared with the same months in 2009, Foley said. He said May’s revenue is expected to be flat, as well.
In Nevada, the largest gambling jurisdiction in the country because of Las Vegas, gambling revenues were $810.5 million in April, 5.7 percent less than in April 2009. Tax collections based on those winnings were $39.7 million in May – a 23.4 percent drop compared with taxed paid in May last year.