It was once believed that Casinos actually performed better in recessions than they did in properous times. The theory is that people down on their luck will roll the cube with their last money to try and make the mortgage payment. Lotteries tend to joker gaming increase sales during hard times for the same reason. Not this time around. Players are hanging onto their hard earned dollars, cheating casinos out of much needed revenues and pressuring some to consider layoffs and worse.
The Sands Casino in Nevada is in danger of violating terms of their loan covenants. In such a circumstance and they can’t work out terms with the lender, their loan could be called in and the Sands will have to create cash to pay off each of their loans. This could be a hard task simply because they have multi-billion dollar projects beginning all over the world.
This is the same fortune that has downed on Bear Sterns, Lehman Bros, WaMu, AIG, Freddie Macintosh, Fannie Mae and many smaller firms.
Most Nevada casinos rely heavily on transient traffic, meaning they need visitors to fly in from other places and world consistently day in and time out to support the huge infrastructures they have built. There is just not enough local traffic to support these titans. People are not travelling as much as joblessness rate continues to climb and are lowering on expenditures. To make matters worse airline carriers are increasing their rates to compensate for higher energy costs and lost revenues.
Casinos rely heavily on volume since occasionally they have winners and they operate on small margins. I know this doesn’t seem possible, since every time most people go into a casino they come out with nothing. It appears like casinos hold 100% of each and every dollar that is dropped down the box, but in reality their hold proportions average around 14%. That means for every dollar that a player deals for chips the casino will keep 14 cents. That percentage is higher for slot machines, but still less than most people would think. In like manner make as much money as they do, a lot of volume (dollars) goes across the tables as a swap for chips.