Gaming executives say timing of industry’s recovery still unclear

By Amanda Finnegan

Published Tuesday, Nov. 16, 2010 | 11:34 a.m.

Updated Tuesday, Nov. 16, 2010 | 3:39 p.m.

Despite revenue increases in some markets, gaming professionals are unsure about the industry's recovery, according to a recent survey by the American Gaming Association.

AGA President and Chief Executive Frank Fahrenkopf said today during the first day of the Global Gaming Expo at the Las Vegas Convention Center that 47 percent of those polled believe it will take the gaming industry three or four years to return to pre-recession levels.

Only 11 percent said they see the industry recovering in one or two years, compared to 23 percent who gave that answer in 2009. About 27 percent of respondents said they see a prolonged recovery of five to nine years.

"Last year I stood here and told you that while the recession was technically over, according to economists, but that Main Street was still suffering. Unfortunately, I think the same is true today. The impact of the recession has been deeper and the recovery has been slower than nearly everyone predicted," Fahrenkopf said.

At the national level, Fahrenkopf said gross gaming revenue was up 1.3 percent for the third quarter compared to the third quarter of 2009. Gaming revenue for the year across the country is flat with last year, Fahrenkopf said.

But he noted the gaming industry isn't monolithic. Revenue figures vary greatly from market to market.

Based on year-to-date statistics, Fahrenkopf said five of 13 states with commercial casinos saw revenue increases in the past year, particularity states like Pennsylvania and Delaware, where table games were introduced recently.

With the opening of the SugarHouse Casino in Philadelphia, combined with the addition of table games, Fahrenkopf lauded Pennsylvania as the most successful commercial casino state in the recession with revenue up nearly 27 percent through the third quarter.

Fahrenkopf noted Philadelphia is now the largest city in the country with casino gaming, but could be surpassed by New York City when the Aqueduct racino opens.

But growth in states like Pennsylvania, Delaware and New York have come at the expense of the Atlantic City market, Fahrenkopf said.

In Asia, gaming revenue continues to soar. Fahrenkopf said through the third quarter, gaming revenue in Macau is up 60 percent. Work on the Cotai Strip, where Las Vegas Sands operates and Wynn Resorts is building, has started up again as a result of the market demand, Fahrenkopf said.

"I think it's fair to say that optimism is very high in Macau for the future of the continued development of the gaming industry in that region," Fahrenkopf said.

Fahrenkopf said another success story is coming out of Singapore. Revenue from the two casinos in Singapore, one operated by Las Vegas Sands and the other by Genting, may exceed total revenue in Las Vegas, Fahrenkopf said.

"Those U.S. companies with properties in Asia have been able to ride out the economic storm of this recession far better than those who are not in Asia," Fahrenkopf said.

On the online gaming front, Fahrenkopf said because of leadership changes in the U.S. House, including Massachusetts Rep. Barney Frank no longer serving as chairman of the Committee of Financial Services, he doesn't see online gaming passing during the lame duck session.

But if it were to pass, Fahrenkopf said it would create jobs and tax revenue in the licensing jurisdictions where online gaming exists.

The AGA shifted its position on online gambling last March. The lobbying organization is now supportive of the concept with certain regulations, Fahrenkopf said.

"The industry now recognizes the opportunity that online gaming could provide. It presents a different experience than visiting a casino, and in our view, it would not cannibalize brick-and-mortar, particularly if it was poker-only legislation," Fahrenkopf said.

The Global Gaming Expo is celebrating its 10-year anniversary this year, as well as its last year at the Las Vegas Convention Center. Next year it will move to the Sands Expo and will move its dates up to Oct. 4-6.

The annual trade show will run through Thursday and is expecting about 520 exhibitors and more than 26,000 attendees.