Nevada Casinos at Risk according to Review
A new report conducted by Moody’s Investors Service has revealed the fragile state of Nevada’s gaming economy. The latest reports have indicated that even the smallest set back in national finances could have a catastrophic effect on several Las Vegas casino companies. The alarm bells arrive in the wake of fresh comments from the Federal Reserve which suggests a drop in consumer spending as well as a surge in unemployment rates. The survey has also revealed that the financial climate could trigger ratings downgrades which would impair the organisations’ chances of borrowing capital.
Commenting on the revelations, Moody’s Senior Vice President stressed the seriousness of the situation arguing that there was major cause for concern. “Consumers’ propensity to spend on gaming activities will not withstand another hit to their wallets”, said Keith Foley. He went on to allude to the Fed’s Open Market Committee report published in June of this year – a paper which brought to light the sheer scale of the federal deficit and well as high unemployment rates and the housing recession.
The report, which has already sent shock waves through the Nevada gaming community, singled out Caesars Entertainment Corp. and MGM Resorts International as two of the most vulnerable organisations under threat. MGM Resorts currently has $12 billion worth of debt. The privately held Caesars, meanwhile has long-term debts of $18.5 billion. Explaining their predicament, Foley said that these firms were especially “reliant on continued economic improvements” – particularly as MGM Resorts faces “significant near-term debt maturities”. Both look said to encounter “near-term risks that could be exacerbated if consumers decided to curb their gambling budgets”, Foley concluded.