Lack of credit could affect casino expansion plans

Sep 30, 2008 6:55 PM

Industry Insider by Ray Poirier | Gaming may be a cash business but when these companies look to expand their businesses they need to go to the credit markets.

That’s why Monday’s vote in the House of Representatives that defeated the so-called "bailout" bill that was intended to make more credit available to America’s businesses impacted the gamers right in their pockets.

MGM MIRAGE Inc (MGM) and its partner Dubai World need a final credit commitment in order to complete the CityCenter project on the Las Vegas Strip.

Boyd Gaming Corp. (BYD), which recently rewrote its partnership agreement with Morgan Hotels Group Inc. (MHGC) for a pair of hotels in the Echelon complex, will need to go to the banks and financial institutions for help in funding the $4.8 billion needed to complete its Las Vegas Strip complex.

And Las Vegas Sands Corp. (LVS) is expected to seek some $5 billion-plus for its projects in Macau and Singapore.

With the Jewish holidays set to start, Congress adjourned Monday after the Paulson-Bernanke inspired legislation failed by a dozen votes or so. However, leaders of both political parties indicated efforts would be made to bring the lawmakers back in order to take action on some kind of modified legislation, possibly later this week.

Investors reacted badly to the bill’s failure, with the Dow Jones index falling some 777 points. And, the gaming stocks were not immune from the downward spiral.

Falling more than 13% each were Las Vegas Sands Corp. (LVS) whose shares finished the trading day at $33.10, down $5.15, and MGM MIRAGE Inc. (MGM) that closed at $25.99, down $4.02 each.

Other major companies affected were Wynn Resorts Ltd. (WYNN), down $7.04 at $77.93; Penn National Gaming Inc. (PENN), $25.24, down $3.05, and International Game Technology (IGT), $16.80, down $1.64.