California casino slump to continue through 2010

Aug 25, 2009 7:37 PM
Staff & Wire Reports |

California’s $7.4 billion Indian gaming industry will continue to languish through the first half of 2010 in many regional markets, a Fitch Ratings report released Monday says.

Ongoing weakness in real estate, unemployment and a strain on consumer spending were cited for diminished revenue returns for many Native American gaming operators.

Fitch director Megan Neuburger said in the report that turmoil in the credit markets and limited access to capital for gaming operators prompted Fitch Ratings to detect a significant slowdown in the industry and to predict:

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• The near-term outlook for gaming operating trends as being poor.

• Gaming revenues at most properties, especially in regional markets hit hardest by recession, will post another year-over-year decline in 2009.

"California’s regional gaming markets have not been immune to the many negative factors affecting the industry during this economic recession," the report said.

Fitch Ratings noted in its report that the rapid expansion had been supported by several factors, including easy access to external capital, the view that gaming was recession-resistant and political acceptance of gaming as a revenue source for state government budgets.

After predicting the industry will lag until housing markets, consumer spending and employment experience a turnaround, Fitch Ratings predicted the:

• Temporary lull in expansion in maturing markets should benefit existing operations as the gaming supply added during the past decade is absorbed.

• Recovery will begin in the second half of 2010.

Fitch estimated there are 32,465 Class III slots operating in 15 properties across Southern California.

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