After the events on September 11, 2001, Las Vegas suffered a drop in gambling revenues of one per cent - the only time in recorded history that these figures went down - but the resort recovered very quickly. So far this year, the city has suffered a downturn in the same figures by four per cent.
The economic depression is biting deep in the US and casino owners are reported to be very concerned that its traditional boast that Las Vegas is ‘recession-proof’ may come back to haunt the city.
A combination of increasing petrol prices, a crisis in the housing market and the reduction in flights as airlines cut back their services, has conspired to create a situation which is new for Las Vegas.
Shops and restaurants are the main victims of the economic slowdown, but the casinos rely upon those sectors for most of their profits rather than gambling itself. The quieter summer months are now bringing about an income squeeze.
Many of the casinos have borrowed heavily to finance plans for expansion but four casino companies have already hit the financial buffers.
Tropicana Entertainment was the biggest, defaulting on US$2.7bn debts. The biggest of them all, Harrah’s Entertainment, which owns eight casinos on the Strip, including Caesars Palace showed a fourth-quarter loss recently.
Other signs that the recession is biting in Vegas are that some big building projects have been stalled because of financial difficulties. These include the second tower of Donald Trump’s new hotel and the plan to build a $6bn copy of New York’s Plaza Hotel.
The source of the finances, the banks, are getting tougher. Where they once happily financed Las Vegas casino gambling, they are now much more choosey and are even demanding that borrowers maintain minimum levels of cashflow.
