President Obama’s $775 billion economic stimulus plan may not be perfect, but it’s clear action must happen and happen quickly to have any hope of staving off a much deeper and more prolonged recession.
A worsening recession would be bad news for a gaming industry already reeling from the double whammy of buttoned-up credit markets and too few casino visitors playing too few dollars.
When he announced his plan a couple weeks before taking office, Obama began pressing Congress to act fast on a two-year economic stimulus plan of some $775 billion that includes money for new government spending and tax cuts.
“I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible,” Obama said in announcing his plan. â¨“If nothing is done, this recession could linger. The unemployment rate could reach double digits.”
For gaming, the news hasn’t been good, as casino companies scrambled to find their footing, slashing room and amenity prices try to get players in the door. In the process, they’ve learned a painful lesson – that the industry once thought nearly recession-proof clearly isn’t.
In December, the unemployment rate rose to 7.2 percent, the highest rate since 1993 and up from 6.8 percent in November.â¨ Nationwide, job losses have been widespread, totaling 2.6 million jobs, and those people with jobs are clutching tightly to wallets and purse strings.
In Nevada, the gaming capital suffered its 11th straight monthly gaming revenue decline in November, falling nearly 15 percent. For the first 11 months of 2008, gaming revenues statewide are down almost 9 percent.
And that downturn came on the heels of a 22.3 percent decrease in statewide gaming revenues in October, the largest single-month decline in state history.
People without jobs, fearful of losing theirs or just uncertain about what bad news tomorrow’s paper may bring aren’t easily induced to pull out wads of cash in a casino. And what Las Vegas and other jurisdictions have discovered is that when the players do come, it’s only because of a rock-bottom room rate, and once here, they're opting for the buffet over a gourmet and skipping the show.
So an Obama stimulus plan that will cut taxes and put more people back to work should be a good thing for the gaming industry. Of course, though, these are uncharted waters, and no one knows exactly how well this will play out, or whether it will even be effective at all. Some say it’s too little, others too much. Still more fear the final version will be loaded with pork.
But action is still better than no action, and Obama has shown he plans to push the envelope during his first 30 days and beyond. He’s also stressed that the nation, including its citizens and businesses, faces a long road ahead. Nowhere is that more clear than in gaming.