Casinos; Savior And Drainer?
This was an interesting week as it pertained to stories about casinos. Each story had a different take on the topic; one was good, the other not so good.
First we have the grand opening of the Sands Casino Resort Bethlehem, a $743 million dollar resort built where the old Bethlehem Steel Company used to be; they even left some of what used to be there as a tribute and reminder to a past that used to define the city. The people of Bethlehem, those who believe in gambling and those that don’t, have high hopes that this will help to reverse their economic fortunes, since Bethlehem Steel went bankrupt in 2003.
The city is hoping it generates at least $9 million for the city every year, if not more. The mayor, John Callahan, understands that there is competition with Atlantic City and the Poconos, which at this point offers some table games that this casino doesn’t.
The other interested party in the success of the casino is the builder and owner, the Sands Corporation, really wants it to succeed also, because of two reasons, one being the “drainer” part of the casino business. Casinos in areas whose life depends on them have been losing big sums of money lately, and they’ve had to stop construction on their casinos in Las Vegas and Macao because of the economic downturn. Their stock price has dropped drastically, down around $9 a share now when it used to be $148 in October of 2007.
The cities of Las Vegas and Reno are suffering some major hits. Everyone always wondered if casinos were recession proof; nope. It seems that free parking isn’t enough of a draw to bring people to casinos. When I was out in Reno in December of 2008, it was amazing how empty the casinos were, even on the weekend. Poker rooms which used to be full were operating at 35% of capacity. Hotel rooms were, and still are, being given away at ridiculously low prices.
It’s not that people don’t want to gamble. It’s that the cost of getting there has gone up. That, plus the high unemployment rates, which means people are holding onto their money more. Nevada’s unemployment rate is 10.4%, higher than the national average. And convention’s, which have always been a staple of the city, have dropped, mainly because of the fallout of the economy and the perception of Las Vegas as more of a fun city than a city where people can do business, and usually for less than many other cities.
Still, if a casino can survive this bad period, the future looks bright. When people have more disposable cash, they can’t wait to find ways to get rid of it, and casinos still offer the image of lots of fun and activities. As long as the dream stays alive, casinos will have a place in our lives.