Among gaming executives everywhere, no issue is more pressing than the global economic downturn. Once thought to be immune to economic fluctuations, the gaming industry, like countless other industries, has been severely impacted by the financial crisis. As markets in both hemispheres contract, gaming outlets from Las Vegas to Macau are struggling to navigate the treacherous economic terrain.
No U.S. gaming market has contracted more severely than Las Vegas. According to newly released data from State of the States: The AGA Survey of Casino Entertainment, gross gaming revenues from the Strip totaled $6.121 billion in 2008 – a 9.3 percent decrease from the previous year. Without a doubt, the sagging revenues are the result of a dramatic decline in consumer spending on gaming, as well as a steep drop in tourism. And, despite lawmakers’ efforts to thaw frozen capital markets and jump-start stalled spending, 2009 portends to be another extremely challenging year for America’s top gaming destination.
Fortunately, not all of the 2009 State of the States data is discouraging; the industry is not monolithic, and several U.S. gaming markets exhibited slight growth in revenues last year despite the recession. Also, new public opinion polling reveals casino acceptability in the U.S. remains very high. More than 80 percent of Americans say casino gambling is an acceptable recreational activity. Those numbers bode well for the future of the U.S. gaming industry, particularly once the economic storm subsides.
Macau, Las Vegas’ sister city overseas, enjoyed a much more prosperous 2008. Casino revenues surged 31 percent to $13.7 billion, a record high. However, when the global economic crisis reached the shores of Macau in late 2008 and early 2009, gaming revenues began to drop precipitously, and unemployment numbers soared. The decline was aggravated by an abrupt disintegration of available capital. Development projects throughout the city have been delayed or canceled, as evidenced by the construction cranes that clutter the city’s skyline.
Additionally, tourism to Macau has slowed, due in large part to tightened visa restrictions on travel from the mainland to Macau. As a result, the city’s efforts to attract greater numbers of middle-class, mainland Chinese tourists have been significantly hindered. Some market analysts predict that the restrictions will be lifted in the coming months; unfortunately, however, much damage already has been done.
These urgent economic issues will be on tongues of the world’s most influential gaming executives next month at G2E Asia, the largest gaming exhibition and conference in the region. The event will provide an opportunity for the industry to come together during this period of uncertainty. They will explore how current challenges can be used as a springboard for future growth and innovation.
Ultimately, industrywide cooperation is critical to the health and future prosperity of gaming in Las Vegas, Macau and elsewhere. Difficult times often encourage ingenuity and creativity, two traits essential to survival. This may be a time of apprehension, but gaming leaders must also view it as a time of tremendous opportunity. Working together – and armed with new ideas and renewed determination – they can ensure that the industry perseveres and, ultimately, recovers even stronger than before.