A new study released by the UNLV Center for Gaming Research, made public over the weekend, says that Nevada casinos owe more in long-term debt than they earn in revenue every year. The study shows that since 1984, Nevada casino liabilities have grown 18 times to $52 billion dollars last year. Casino revenues, however, have only grown 5-fold since that date. “This says that the growth that we saw and the investment that we saw in the middle of the decade was quite different from what we saw in the middle of the 90’s,” said Dave Schwartz, the director for Gaming Research at UNLV. Contributing to the debt increase were the privatizations of Harrah’s Entertainment and Station Casinos Inc. Another factor was the financing needed for the creation of CityCenter by MGM Resorts International.
The years before the economic downturn saw casinos explode in the number of projects they were building. But since the recession hit, debt has continued to rise and the money coming in hasn’t kept pace. Now the debt is so great that even if casino workers worked for free and casinos put all their money towards paying the off debt, it would still take several years to pay the debt down.
Schwartz also said that these numbers will have a significant effect on the casinos as employers. “They already have laid a lot of people off with the recession, so now they are finding that they have to build back up again, and then the key is to not get even more heavily indebted going forward so they can get those interest payments down so they can invest more back into the business and back in the employees,” Schwartz said.
