Gambling Venues Starting to Hurt Economically

Gambling Venues Starting to Hurt Economically

Just a few months after the news that some gambling venues were starting to do quite well for themselves as a result of the downturn comes some sobering news that a lot of larger gambling venues have started to shut down on a level that is quite astonishing at this point in time. The disparity between larger gambling establishments and smaller gambling establishments is quite interesting and it seems to show that establishments that stick to gambling appear to be doing better than establishments that have branched out into other areas of the hospitality and tourism industry.

A good example of a large casino that is having problems is the Las Vegas Sands Casino located in Las Vegas, Nevada. This is one of the giants of the world casino industry. In a city that measures itself by the number of large gambling operations it contains, the Las Vegas Sands has been one of the biggest, best and brightest for a number of different years. The gambling venues to a large part have been supplanted by accommodations and other inclusions that would be associated with a resort casino and for that reason the Las Vegas Sands is associated far more with being a full-featured operation inside the city of Las Vegas than it is with the casino operations it still runs.

In 2005 the Las Vegas Sands Casino was on top of the world financially. They had around $600 million in free cash flow to report at the end of that year and because things looked nothing but good for them they started to get into the business of expansion. They collected almost $9 billion in long term debt in order to start expanding their facilities which at the time were being booked faster than the people running the resort could create new ones. The gambling tables were beginning to get crowded and there were massive waiting lists for rooms during the peak periods of the year at the Las Vegas Sands Casino. $9 billion may seem like a large amount of money but when you go through your entire budget at the end of a fiscal year and still have $600 million left to play with it is by no means a poor financial transaction to make.

As the song says however, that was then and this is now. The $600 million in free cash in 2005 has plummeted to nothing in 2008. As of the first half of the fiscal year in 2008 the Las Vegas Sands Corporation was in fact running a deficit of $80 million which suggests of course that by the end of the year they will be running a deficit in the nine figure range. The credit crunch came at a time when they were overextended and it hit them right in the gut with a sucker punch. If the Las Vegas Sands Corporation continues to run deficits in 2009 and 2010 then it is very questionable indeed whether they will be able to continue making the minimum payments on their nearly $9 billion in loaned money.

July 7, 2011 by : posted in Industry and Economy No Comments