Big casino stocks plunged on fears of a recession, and Circa’s CEO has noted the impact of inflation on Las Vegas’ spending habits. [Image: Shutterstock.com]
Although the US saw record gross gaming revenue (GGR) of $5.31 billion for the month of March, recession fears led to a loss of investor confidence in major casino companies. The uncertainty in the market caused the shares of casino companies to fall.
Bally’s stock is down 40%.
according to CNBC In the report, shares in Caesars Entertainment are down 50% so far this quarter. Bally’s Corporation stock is down 40% over the same period, a quarter that has also been unpleasant for MGM Resorts and Penn National Gaming, both of which are down 35%.
While April’s US GGR of $4.99 billion didn’t beat March’s total, it was still the second best month in American gaming history, up 12% year over year. In recent earnings calls, some casino executives emphasized that inflation was not hurting customer demand, but other operators expressed concerns about the industry.
In a note released this week, Jefferies gaming analyst David Katz said earnings meetings with management teams in Sin City provided “evidence of the split between current operating strength and markets anticipation of a recession.”
Variable consumer spending
The casino king in downtown Las Vegas, Derek Stevens, recently expressed his concerns about the repercussions of inflation. Stevens said back in April CNBC He noticed the effect of inflation on the amount of money withdrawn from casino ATMs.
Late last week, Edwards — whose Vegas properties include the Circa Resort and Casino — Tell CNBC That the decline of withdrawal has exacerbated. “It’s really accelerating,” Stevens said. “Every weekend was worse than the previous weekend.”
Circa CEO highlighted bars as bearing the worst percentage drop. According to Stevens, guests keep an eye on their money, spending less on meals, discretionary items, and additional resort amenities.
Despite changes in spending behaviour, casino bosses like Stevens maintain that the demand for travel to Vegas remains strong with a steady influx of bookings.
Prepare for the worst
Casino operators have never survived for long, they are already preparing for a possible recession. The Federal Reserve’s decision last week to raise interest rates by 0.75%, with another possible increase in July, has accelerated the need for casino companies to prepare for all contingencies.
Possible scenarios for cost reconsideration”
As Katz mentioned, all of the meetings held by the major casino companies “addressed the possibility of a recession and possible scenarios for reconsidering costs in the event of a slowdown in demand.”
Amid falling stock prices, rising interest rates, and rampant inflation with rising gas and food costs, the Las Vegas casino industry understandably fears a repeat of 2008 – when the Great Recession first hit Sinn City and left behind scars that are still palpable today.