Gambling IS a recession proof business.

It’s a statement that almost everyone in the gaming business has made at one time or another, but is it really true? Is gambling really immune to the ravages of the Great Recession or is this just an old wives tale?

Limited Supply Meets Big Demand

The idea that gambling is somehow a recession proof industry dates back the days when most countries offered little in the way of legalized gambling options besides horse and dog racing.

Remember, until gambling was legalized in Atlantic City in  1976, Las Vegas was the only city in the US offering legal gambling. It wasn’t until the late 1980′s that riverboat and Indian casinos brought slots and blackjack to the rest of the country.

Today, some form of gambling is legal in every state but Utah and Hawaii.That means there’s a lot more competition for gambling dollars than there once was.

As the Great Recession ravaged the US, Las Vegas and Atlantic City hardly felt recession proof. Both cities saw serious declines in gaming and hotel revenues as tourists kept their gaming dollars close to home, if they spent them at all. Increased competition killed the myth that gaming was immune to recession.

Across the Globe

Worldwide, the gaming industry saw steady growth thanks to increased demand in Asia and liberalization of gaming laws in Europe.

In Singapore alone, the two legal casinos raked in around $6.4 billion,  that’s more than all 40 Vegas casinos combined. The numbers associated with Asian gaming are truly staggering and look to get bigger, but will they come back down to earth? Remember, much of the action in Asian casinos is fueled by a relatively small number of high rollers who themselves seem recession proof.

European gaming growth is steady but, thanks to the Euro credit crisis, nowhere near as dramatic as the Asia-Pacific sector. What impact liberalization laws will have on Euro gaming is still up in the air. But it’s clear that governments play a big role in keeping gaming revenues high during a recession.

Gambling Equals Tax Revenue

One reason gambling revenues are soaring during a worldwide recession is that there are more legal gambling options than ever. Governments that once frowned on legal gaming are changing their tune when faced with decreased tax revenue from property and sales taxes.

Let’s be real, the impressive lobbying effort of the Poker Players Alliance are only part of the reason the Department of Justice re-evaluated their stance on online poker recently. Legal online poker will bring in billions of dollars in tax revenue and the Federal Government wants a share of that before state governments grab the whole pie.

In Europe, governments in countries like Belgium, Germany and Spain have long relied on lucrative gaming monopolies to fund expensive social welfare programs. That’s why they’re resisting competition from international gaming companies so desperately.

Final Call

Whether you think gambling is recession proof depends on where you’re sitting at the table. A horse track owner would likely tell you that it’s not. (Track betting is down worldwide thanks to an aging fan base.) But a casino owner like Shel Adelson would tell you that business is great thanks to major revenue from high end bacarrat players.

So what’s your opinion? Is gambling really recession proof, or is that just an old wives tale? Share your opinion with us on the CAP General Discussion Forum.


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