Casinos Won't Recover in 2010: Report

NEW YORK (TheStreet) -- The casino sector is unlikely to recover in 2010, according to a new report by Standard & Poor's.

And while MGM Mirage's(MGM) CityCenter could fuel modest growth in Las Vegas visitation, according to the note by credit analyst Ben Bubeck, it's unclear whether this will translate into a meaningful boost in gaming revenue.

S&P said it expects gaming revenue will be flat to slightly down in 2010, following a 10.6% drop in 2008 and a 12.3% decline for the 10 months ended Oct. 31, 2009.

MGM, which relies heavily on the Las Vegas Strip, has the biggest credit risk, according to S&P. The report said Las Vegas Sands(LVS) and Wynn Resorts(WYNN), which have a more diversified portfolio and significant opportunities in the booming Macau enclave, are less of a risk.

S&P believes the Macau market will grow between 10% and 15% in 2010.

Currently, Pennsylvania is the most relevant market to focus on, according tot he report, especially after it approved table games last week. Penn National Gaming(PENN), for one, operates a casino in the area.

S&P also noted that the expansion in gambling in Pennsylvania has put pressure on nearby Atlantic City. Slot revenue in Atlantic City has declined 10% every year since slot machines came to Pennsylvania in 2006.

-- Reported by Jeanine Poggi in New York.

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