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Casinos Expected to be Slow to Rebound | Gaming News

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Casinos Expected to be Slow to Rebound
Gaming News

U.S. commercial casinos took in $7.94 billion in revenue during the third quarter, 5.5-percent less than a year earlier, the head of the American Gaming Association said Tuesday.

Frank Fahrenkopf Jr., president and CEO of the industry group, said that while economists believe the country is moving beyond one of the worst recessions in history, that's not a practical reality for many casinos or their customers.

"Main Street is still feeling the heart, in fact, of the economic downturn," Fahrenkopf said. "The same has to be said very clearly for the gaming industry.

"I don't think there's any doubt that this has been the most challenging year that the industry has faced," Fahrenkopf said. Fahrenkopf spoke at the Global Gaming Expo, a top industry conference in Las Vegas that itself is manifesting the industry's weakness. Fahrenkopf said exhibitors signed on for roughly 20 percent less space than last year. Attendance figures were not immediately available, though Fahrenkopf said organizers hoped 25,000 people would come to the four-day gathering, compared with 26,500 last year.

In all of 2009, there will be 25,000 new slot machines placed at casinos and racetracks in 37 states. Gaming has spread to more than a third of the country because the recession, according Fahrenkopf. “More states are looking for revenue because of the deep decline in the economy and casino gaming and racing gaming is also looking very popular,” he said.

Fahrenkopf says states can put higher taxes on gaming because it requires a privilege license.

Bally Technologies makes slot machines and is headquartered in Las Vegas. Chief Operating Officer Gavin Isaacs says gaming expansion into new states is creating a ripple effect. “When you have it in neighboring states, you don't want your state tax revenue going across the border and being spent elsewhere,” he said.

That means more equipment will be sold and more slot machines built here, but experts say that won't mean fewer visitors to Las Vegas. “I don't see states that are embracing gaming taking anything away from Las Vegas. I don't see that at all,” said Nick Khin, president of slot manufacturer Aristocrat.

Fahrenkopf agrees with him. “As new markets have opened and new states have introduced gaming, people have been exposed to it and they still want to come to Vegas because it's the place to go,” he said.

A nationwide drop in convention business has particularly hurt casinos, and especially in Las Vegas, where it fell 27.1 percent for the first nine months of the year. Fahrenkopf said there's optimism among industry leaders that things are no longer worsening but no consensus about the future. "We may be turning a corner. I use the word 'may' very advisedly," Fahrenkopf said.

Fahrenkopf said casinos would likely stay down until more people have jobs and more discretionary income. And he predicted that gambling's recovery will lag the general economic recovery by a few months.

The American Gaming Association represents private-sector casinos, including 445 riverboat and dockside casinos in 12 states in 2008, and 44 racetrack casinos in four states. The group's members do not include casinos run by American Indian tribal governments. There were 423 such casinos in 29 states at the end of 2008, according to the industry group.

(The Associated Press contributed to this report.)

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