Lower Casino Revenues Lead To Moody's 'Negative' Outlook For U.S. Gaming Industry
Gaming
revenues are down at casinos down across the U.S., including Connecticut, and
on Monday the industry received a
"negative" outlook in a report released by Moody's
Investors Service.
Moody's updated its outlook of the U.S. gaming
industry to "negative" from "stable." The change is a forecast that
reflects recent declines in comparable monthly gaming revenue for most states
and jurisdictions that allow gambling.
"We now estimate that total US
gaming revenues reported by state gaming authorities will decrease between 3.0%
and 5.0% during the next 12 to 18 months, causing overall industry
[earnings before interest and tax] to decline between 4.5% and 7.5%,"
Moody's analyst and Senior Vice President Keith Foley wrote in the report.
Moody's
had previously forecast that gaming revenue would grow between 0 percent and a 2
percent while earnings before interest and tax was expected to increase between
0 percent and 4 percent.
Connecticut was among the
states suffering the biggest percent decline in gaming revenue, comparing
monthly revenue to the same month a year earlier. In Connecticut, total gaming
revenue was down 10.9 percent in March to $96.5 million; down 11 percent in
April to $86.5 million; down 7.6 percent in May to $95.4 million.
The Moody's report offers a broader look at
the casino and gambling market, which is becoming diluted with new and
expanded gaming facilities in the Northeast and elsewhere.
Connecticut had the second biggest drop in
gaming revenue for March after Indiana, and the largest drop in April.
Many other states also had declines in
gaming revenue for at least two of the three months that Moody's looked
at: Colorado, Delaware, New Jersey,
Illinois, Kansas, Indiana, Iowa, Michigan, Louisiana, NewYork, Missouri and Pennsylvania, for
example.
The
report also illustrates that casino revenues in Connecticut are dwarfed by those
in at least a dozen other states. With gaming revenues in the $86.5
million-to-$96.5 million range for March through May, Connecticut casinos bring
in less than their counterparts in New Jersey, Illinois, Indiana, Iowa,
Michigan, Louisiana, New York, Missouri, Pennsylvania, Ohio, Mississippi and
Nevada.
In
New Jersey, the total monthly gaming revenue at casinos ranged from $221.5
million to $232.4 million between March and May. Rhode Island casinos reported
revenues totaling $42.7 million in April and $47.9 million in March. May figures
were not available.
"We
continue to believe gaming revenues reported by state gaming authorities on a
monthly basis serve as a strong leading indicator of near- and long-term
earnings trends for two primary reasons. First, gaming revenues typically
account for a substantial majority of net revenues for US regional gaming
companies, in some cases up to 85%," Foley wrote.
Maryland
and Ohio each posted big gains in gaming revenue. Maryland casino revenues were
up 8.9 percent to 34.1 percent from March through May, for a total of $71.4
million to $77.8 million.
Despite
weaknesses in regional markets, the Las Vegas strip is doing relatively well in
terms of gaming revenue, Foley wrote in the report. Gaming revenue at the strip
was up 10.5 percent to $560.8 million in March and up 3.2 percent to $462.9
million in April.
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