Gambling to be Hit Hard by Fiscal Cliff
If it turns out that the fiscal cliff cannot be avoided then it is thought that the gambling industry will be among those that suffer the most.
According to Moody’s Investors Service the gambling, motor, newspaper and hospitality industries will suffer disproportionately.
The report said that the spending cuts and tax increases set to begin in January could undercut US economic growth and shrink the economy.
This would lead to a reduction in disposable income amongst consumers.
It is thought that casinos could see a drop in profits of up to 10% as gamblers chose to stay at home.
Las Vegas would suffer the most as it is hard to do destination gambling on the cheap.
The Director of the Centre for Gaming Research at the University of Nevada, David Schwartz, said that “For some markets like Las Vegas, there’s a much higher barrier to entry.
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 went on to say that it will be hard for the gambling industry to downsize as in “many markets, they have state mandated staffing levels” and many gambling companies are also heavily leveraged have debt obligations that must be met.