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Gaming Guru
Reports: Gaming revenue down, casino debt climbing2 February 2009
Fitch Ratings, a global credit ratings agency, said U.S. and Nevada commercial and racetrack casino revenues fell 3.5 percent in 2008 to an estimated $36.2 billion. Fitch said the rating would have been much worse if not for emerging markets like Pennsylvania and New York. The declines since September were notably worse than the full year, Fitch said. In Fitch's 2009 gaming outlook report released in December, the agency said the U.S. gaming industry will remain under significant pressure in 2009 and will likely recover in 2010. Fitch expects overall consumer spending to drop by 1.6 percent in 2009 and remain soft until 2010. Seven gaming companies defaulted on more than $13 billion of high yield principal in 2008 due to heavy debt loads, a difficult credit market and strained liquidity, Fitch said. Station Casinos may soon join that group as it is on the cusp of defaulting on an additional $2.3 billion after its failed debt exchange offer in December. Jefferies & Company, an investment bank and securities firm, said Las Vegas casino operators like Hooters, Fontainebleau, Black Gaming, Cosmopolitan and Herbst (owners of the Terribles chain) are at a higher risk for defaulting on loans. Harrah's and Station Casinos are at an even higher risk, Jefferies & Company says. Leverage in every Nevada gaming market is the highest it has been in 17 years, the firm said in its Friday report. Jefferies & Company reported in the Nevada fiscal year, average Strip casino net debt jumped from $391 million in 2007 to $773.4 million in 2008. Average Las Vegas Downtown casino debt rose to $92.9 million from $6.7 million in 2007. Jefferies & Company said debt significantly rose related to the building of CityCenter, Encore, Cosmopolitan, Fontainebleau and privatization of Harrah's. Copyright © Las Vegas Sun. Inc. Republished with permission. Related Links
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