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A 'recession-proof' Vegas is being tested

March 26, 2008|From the Associated Press

LAS VEGAS — Robbie Hamilton, 27, typically spends at least $40 a week betting on games at the Hooters and Orleans hotel-casinos. But with gas prices near record highs, he expects that to change.

"Gas and gambling kind of come out of the same pocket," said the student at the University of Nevada Las Vegas. "I'll have to have less action because my gas tank needs it."

In Sin City, the old conventional wisdom that gambling is recession-proof is being tested.

With the housing market tanking and gasoline and food prices rising, operators are seeing the effects of consumers' pockets being emptier now.

The number of visitors to Las Vegas fell slightly in January compared with a year ago. Daily drive-in traffic has slowed compared with last winter, according to the Las Vegas Convention and Visitors Authority.

A survey of 19 states with casino or racetrack gambling found that 12 -- including Nevada -- saw gross gambling revenue drop in January from the year before.

The state's gambling revenue fell nearly 5% from a year earlier, to $1.06 billion.

Harrah's Entertainment Inc., the world's largest gambling company by revenue, noted several soft patches in its fourth-quarter earnings report.

Because companies have started to cut budgets for employee travel and conventions, booking cancellations have increased and attendance has dropped at major conventions, Harrah's Chief Executive Gary Loveman said.

Room rates are "off a bit," he said.

MGM Mirage Chief Financial Officer Dan D'Arrigo said his company sees no difference between the way consumers manage their gambling dollars and the entertainment and lodging spending that has grown to make up the majority of casino companies' revenue.

"They're all in one bucket," he said.

Experts say that years ago, -- when gamblers' options were limited to horse racing and a handful of Nevada resorts -- the tight supply ensured a steady demand for gambling.

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