Gambling regained its cachet in recent years as the bull market and housing boom filled the pockets of aspiring high rollers. Atlantic City, N.J., and even cities previously without slot machines started rolling the dice by adding casinos and video poker. Soon even amorous grandmothers were saying "What happens in Vegas stays in Vegas."
The roulette wheel has since been relegated to the realm of hard-core players and seniors on bus trips. Even if
and MTV took a gamble on another "Real World Las Vegas," it wouldn't be enough to save the former Sin City and other domestic gaming destinations from economic reality.
"The problem is the economy -- why wouldn't it be?" says Michael Bluejay, editor of industry site
. "Unemployment is up, disposable income is down, and casinos are funded almost entirely from disposable income."
U.S. consumers spent $32.5 billion on casino gambling last year, the lowest level in almost three years, according to the American Gaming Association. The public's perception of gambling as "perfectly acceptable for anyone" fell from 57% in 2003 to 43% last year.
This slump is personified in the faces, or lack thereof, around game tables in Vegas. Traffic at McCarran International Airport is down 12% this year from last. Meanwhile, room rates in town have dropped 27% from last year to a median price of $97 a night, according to the Las Vegas Convention and Visitors Authority. Vacancies climbed by 6% during the first five months of the year compared to last year, and 22% fewer conventions came to town during that period.
This hasn't stopped the
Morgans Hotel Group
from adding a 490-room addition to its Hard Rock Hotel & Casino or the
from forging ahead with its 6,000-room CityCenter, a development that will include luxury condominiums.
They're proceeding even as almost 50,000 rooms planned for Las Vegas projects have been either scrapped or delayed, according to Bill Lerner, a former
consultant who now co-chairs the Union Gaming Group research and advisory firm.
"From the perspective of fundamental development, the party was over a while ago," Lerner says. "One more room is one too many."
The party's over for publicly traded casino companies as well.
posted the only second-quarter earnings gain among major casino operators.
Las Vegas Sands
, MGM Mirage,
lost money. Local favorite
just filed for bankruptcy, while Atlantic City's perennial money pit
Trump Entertainment Resorts
was just bought out of
by its ill-coiffed namesake.
For those still banking on young World Series of Poker wannabes and the martini-gulping frat guys who fueled the mid-2000s poker boom, there's even more bad news. The 18% of Americans who said they played the sport in 2004 and 2005 has withered to 11%, with Vegas poker revenues off by more than $10 million between 2007 and 2008.
Attempts to lure this demographic through more extreme channels has proven costly as well. Planet Hollywood's Prive club closed after allegedly serving minors and allowing topless dancing, prostitution and drug use. A raid at the Rio's topless pool resulted in drug and prostitution arrests.
It's a cautionary tale for states still looking to gambling for revenue. Nevada and New Jersey's take took about a 10% hit from 2007 to 2008, which is collateral damage compared to Colorado's 23% slump and Illinois' whopping 32% dive. For Illinois, those losses eliminated almost $300 million from the state's coffers.
"The long-term trend in the U.S. has always been to expand gambling options," Bluejay says. "Just about every state now has some form of legalized gambling, which is very different than it was a few decades ago."
Just ask New Jersey, where casino revenues in Atlantic City took at 14% hit in June, a month after the Sands opened a casino in Bethlehem, Pa. In fact, Pennsylvania's 62% jump in gambling revenue seemed to come at the expense of its neighbor to the East, as Atlantic City casinos shed more than 2,000 jobs last year.
As racetrack betting and slot parlors take hold in Southeast Pennsylvania and outside New York City, Delaware threatens to open a sports book and Connecticut cements its position as the fourth-largest casino gambling market in the nation, Jersey faces the same problem as Vegas: There's only so much in the till.
"Regardless, more is coming," Lerner says. "It's tough to tell what the point of saturation is."
Or at what point a smart gambler cashes out.
-- Reported by Jason Notte in Boston
Jason Notte is a reporter for TheStreet.com. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, The Boston Herald, The Boston Phoenix, Metro newspaper and the Colorado Springs Independent.