Fiscal Cliff Puts Gaming Industry At Risk

December 28, 2012

The Associated Press reported that the potential fiscal cliff could hit the gaming industry the hardest, Moody's Investor Service said. Other industries that stand to suffer if Congress and the White House fail to reach a budget decision today are automobile, newspaper and lodging.

Consumers are expected to tighten their wallet strings if spending cuts and tax increases kick in January 1, which could cause casinos to lose as much as 10 percent in profits.

"The sector's economic health depends entirely on customers' discretionary spending habits," the report said.

Travel-destination casinos may experience the brunt of it. "For some markets like Las Vegas, there's a much higher barrier to entry," David Schwartz, director of the Center for Gaming Research at the University of Nevada at Las Vegas, told the AP. "You can see how someone would scale back from buying six movies to five, whereas you either go or you don't go when it's something like Vegas."

Schwartz added many gaming corporations are heavily leveraged and need to meet debt obligations.

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