Global Economic Crisis Devestating Worldwide Gaming Interests

Posted on | December 16, 2008 | 2 Comments

by: Rich Bergeron

Over the past few months the economic crisis gripping our nation hit with full fury and is promising to only get worse. From corporate giants to Casino barons, everyone is feeling the pinch. The Fight Industry and Sports in general will no doubt be a hard hit sector of the economy as we lapse into 2009, even if Barack Obama turns out to be a miracle worker.

Lately, some of the main culprits and corporate crooks behind the economic collapse have reared their ugly heads. As these individuals and business enterprises emerge as the forces behind the culture of corruption, they always seem to have the same strategy. They grease the wheels, they make powerful friends, and they step on the toes of everyone they can to make themselves a buck. The recent revelation that Bernie Madoff bilked tens of billions from investors and financial institutions around the world should be no surprise in this vulture capitalist economy. Guys like Madoff should have been busted years ago but managed to breeze through previous investigations on cruise control.

And should we really be so shocked that a governor would resort to selling a senate seat? We live in a nation built by pork barrel projects and fat cat capitalists, and influence peddling is the number one sport of those who want to shape their position in the scheme of things.

The worst aspects of the Bush Administration nation have ultimately resulted in the bailouts of gargantuan investment firms, banks, and foreclosure-strapped mortgage brokers. Business as usual in Washington quickly tried to show it was fixing the problem but only scratched the surface of the massive fraud that made it all happen.

In the throes of this economic landslide, it is important to look at some of the characters the major news networks don’t normally focus on but perhaps should. The collapse of global gambling and casino interests ranks among the most intriguing untold stories of the financial crisis we face right now. Hundreds of billions change hands in casino deals, and it’s not just Mobsters behind the glitz and glamor anymore. Gaming interests and income can be so substantial that they have the power and juice to fuel massive money laundering efforts, counterfeiting, and even terrorism:

Gambling in Macau has a rich history, but it only recently became wide open to outside investors, and those wanting to branch out beyond Vegas came with their billions to develop the next big boom town:

The world’s financial picture has changed drastically from the time when the above reports were produced: May of 2007. Macau’s casinos are now dealing with a Chinese government crackdown on visitation to the island.The stress being felt by international markets, the high debt to capital ratios of many of the world’s casinos conglomerates, and the smash and grab corruption schemes all helped ravage Macau in addition to the Chinese Government’s moves. The future does not look bright for the Eastern gaming enclave according to this Washington Post piece.

Still, Macau is an imposing and formidable force in the worldwide casino picture. There are more than just a handful of casinos there, and not just one or two are owned by American casino corporations. Vegas East will no doubt continue to see declining numbers as the worldwide gaming sector suffers, and the original article City of Sin may be in for an even more profound fall from grace.

Las Vegas, Nevada is one of the hardest hit cities in the nation due to the ongoing housing crisis. While banks and big businesses get the bailout money first, there’s still a long delay getting relief to cash-strapped homeowners who can no longer afford their overblown mortgages. Las Vegas, which had experienced an overwhelming influx of new citizens in the last two decades, is now reeling as real estate prices plummet. So many property-owners there are either upside-down and stagnated by debt or on their way out, abandoning the dusty desert for other locales where the crisis isn’t so pronounced.

Yet, for the casino owners there is no easy way to pack up shop and leave town. Even the biggest of the bunch are facing a dismal 2009 outlook. There are different strategies being employed to weather the storm. Some casinos will have to sell off assets. This article outlines the details behind the recent sale of the Treasure Island Hotel and Casino.

Other casinos just might face an even worse fate. As we have been reporting here at Fight News Unlimited in recent weeks, Station Casinos may be the first big Vegas enterprise to declare bankruptcy in these troubled times. We have also reported that gaming interests in Australia were feeling the pinch already. Just today I stumbled across this article detailing Station Casinos’ ties to Australian Billionaire James Packer:

Crown’s $414m US investment ‘worthless’

Packer’s lost nearly a billion dollars in net worth in these lean times for gambling. Like the Fertitta Family in Vegas who partially owns Station Casinos and represents the managing partner of the Casino chain, Packer has friends in the media. The Fertittas are partners on some of their developments with the Greenspun family, which operates much of the local Vegas media scene from newspapers to television stations. Packer cut out the middle man in Australia by having a direct ownership position over much of the country’s media industry. Packer’s approach seems aimed at acquiring as much control as he can over his country’s media landscape.

James Packer’s had an incredibly rough year. His international gaming enterprise Crown Limited has been his albatross as the world’s financial picture transitions from bad to worse. Packer’s only big break of late was when his 25% interest in PBL Media was saved by a last minute rescue package, which was just announced overnight. Packer’s luck may not be as good as Station Casinos’ in their recently failed attempts to recapitalize. Hover, it seems that Packer’s personal fortune is not just tied to Vegas and Australia. Packer also coincidentally has interests in Macau that are also suffering:

Melco Crown Offers Macau Casino Staff Unpaid Leave (Update1)

One of Packer’s biggest competitors in Macau is Dorchester, Massachusetts Native Sheldon Adelson, chief executive of Las Vegas Sands. It is certainly a small world, as Dorchester is where I also spent my younger years growing up in Massachusetts. At any rate, Adelson’s ventures in Macau are still in motion and bolstered by the grand pomp and circumstance that surrounded the opening of the $2.4 billion Venetian Macau.

Though this recent report has shares in Las Vegas Sands losing 94 percent of their value this year, the company has a solid buy rating according to a Goldman Sachs analyst.

The rating was attributed to recent cost cutting measures including the elimination of hundreds of Vegas jobs.

Even Adelson’s home state of Massachusetts is reconsidering the expansion of state gambling interests as a remedy for its fiscal problems. The Boston Globe recently detailed how New England is by no means immune from the global casino collapse.

Perhaps in the long run if the casinos continue to suffer and the housing crisis continues to worsen along with the global economic picture, a perfect world scenario could emerge. The reeling casino hotels could be mandated to provide their rooms as affordable housing to all those put out by the mortgage mess. That would be fitting of course, but don’t bet on it.

What’s more likely is that there will be some real financial casualties, jobs will be lost, and people will lose their personal fortunes. The corrupt will survive somehow and go right on corrupting. But, unless enough Americans start to realize that the late local news isn’t covering all the bases and the 24-hour news networks are dropping the ball on all the stories behind the crisis, there is no end in sight to this “recession” that is looking more and more like it could become a depression each day.

As 2008 comes to a close in Las Vegas, it may just be up to Robbie Knievel to resurrect the hope and the spirit of the community when he does a death-defying jump of the brand new MGM Mirage Volcano as part of a New Year’s Eve special planned for The City of Sin. If not, maybe the planned $50 million Mob Museum will save the day. Either way, it’s going to be a while before Las Vegas really gets back on its feet again.