Anyone who thought that the casino industry was immune to the economic problems of the rest of the US had better think again. Fitch Ratings believes it will take until at least 2010 before the casino industry will fully recover.
Several companies are already getting creative with ways to raise money to keep their businesses going. Now, the prospects are even worse and these companies will have to get even more creative if they are going to survive.
The main concern for many of these casino companies are loans that have already been taken out. The loans are now starting to come due and the companies are not making enough to satisfy their loan debts.
That is going to leave many companies in default of their loans, which could lead to bankruptcy. Once they near the bankruptcy stage, it will be a matter of survival, something industry insiders believe will not happen to all.
“There is no doubt that with the economy still worsening, many casino companies are going to have to downsize not only their employee base, but also their properties. It could be a complete reshaping of the casino industry in the US,” said Leon Grutersky.
The expectation is that things are going to get worse before they get better. that will leave these casino companies struggling for all of 2009 and possibly into the summer of 2010.
MGM this week has made the move to sell Treasure Island for a proposed $775 million. That plan will help in the short term, but Fitch points out that it will not help the company in the long run.