The Recession’s Impact on the Gaming Industry

People in the gaming industry being of sound mind can all agree that this recession has some mighty long legs. We might disagree on the hows, whys, and the what-to-do-about-it-alls, but it’s sinking in that we are all in the same boat. Megabanks, AIG, Fannie Mae, Freddie Mac, automobile manufacturers, our current and past president, and Congress —especially Congress, all led us into this recession. Small businesses and individuals are who will lead us out. They might be able to do it faster if it weren’t for a few rather sticky issues.

There are many factors at play here. National unemployment is up to 9.5 percent, and is likely to hit 12 percent before it starts going the other way. As I wrote this, I received a press release announcing that Las Vegas unemployment has reached 12.3 percent. Getting the economy back on track demands job creation.

The U.S. now has a trillion dollar budget deficit for the first time in history, and the bad news is Congress is just getting warmed up. I gotta wonder why our senators and representatives don’t seem at all bothered by the fact we now have an $11.6 trillion debt.

While interest rates are at historic lows, credit is tight and not readily available for most. That combined with government printing presses that apparently have no off switch, Americans will now be saddled with never before seen debt obligations, growing unemployment and will soon have to contend with staggering inflation.

Small businesses have been, and will continue to be, on the sharp edge of the recession sword. According to the Small Business Administration, about 60 million Americans, or 51 percent of us, work for private firms with fewer than 500 employees. Already struggling to survive, many small businesses will be forced to cut their work force, reduce salaries or simply shut their doors.

This directly impacts the gaming industry in that the same 51 percent of those who work for small businesses are our customers. The squeeze on small business affects a good many of the folks who are trying to budget for a quick gaming getaway and driving them to make different decisions.

Regional gaming markets and tribal gaming are faring the recession better. The ace they are playing is their close geographic proximity to the customer. It’s a practicality matter. Destination markets like Atlantic City, Las Vegas and Macau are much more inelastic than regional markets. Players are substituting their preference for Las Vegas style gambling with less expensive gaming adventures. This will come back, but only after the economy improves.  A good indicator of this trend will be a full quarter of rising employment numbers, and I think we’re a couple of quarters if not more away from that.

There is also an uptick in states looking at gaming as a way to ease the pain of budget shortfalls. I predict we’ll see a substantial increase in public/private sector alliances on gaming projects in the years ahead. Video lottery suppliers and states will reap these benefits. My only question is, “What took ya so long?” We are also likely to see a clear and straightforward pathway to a regulatory framework for Internet gambling. Never thought I’d say this, but go Barney go!

This economic mess will turn around, but a lot less soon than has been predicted. After Congress recesses and goes back home, it’s likely to get an earful, and justifiably so. The only thing it likes more than other people’s money is being in office. When it sees that the American public isn’t buying into its antics any more, it’ll run scared.

And so, I want to leave you with a little computer trick, sent to me by a friend, that is guaranteed to make you feel better.

How to start each day with a positive economic outlook:

1. Open a new file on your computer.
2. Name it “House of Representatives.”
3. Send it to the Recycle Bin.
4. Empty the Recycle Bin.
5. Your PC will ask you: “Do you really want to get rid of House of Representatives?”
6. Firmly click “Yes.”
7. Feel better?

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