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Howard Stutz

Oil spill will hurt Gulf casinos

23 June 2010

LAS VEGAS, Nevada -- Moody's Investors Service gave the U.S. gaming industry a boost Tuesday when it revised its Industry Sector Outlook from negative to stable.

But not all areas of gaming are viewed as healthy.

Moody's Senior Vice President Keith Foley said in an interview he has concerns about casino operations in Louisiana and Mississippi in the wake of nearly two-month-old BP oil spill in the Gulf of Mexico.

There is no question that tourism to the region is going to be negatively impacted as summer tourists avoid oil-stained beaches.

"It's pretty clear that the region is going to face some challenges," Foley said.

Morgan Joseph gaming analyst Justin Sebastiano recently visited the Gulf Coast to ascertain potential financial impact the BP oil spill could have on the gaming markets.

"The tone from most of the Louisiana and Mississippi gaming personnel was cautious but far from what we would call alarmed," Sebastiano told investors. "On the other hand, the locals were extremely concerned about their livelihoods. We actually were somewhat impressed with the volume of people that we saw in the casinos in all of the markets."

Sebastiano thought the New Orleans and Mississippi Gulf Coast gaming markets would be more affected because of their close proximity to the oil spill. Casinos in the Louisiana communities of Lake Charles and Baton Rouge would be less impacted.

While he didn't see oil on any of the beaches he visited, Sebastiano said he smelled the oil.

"Imagine melted crayons. That's what it smelled like," Sebastiano said.