The Atlantic City casino industry is in the midst of its worst downturn in its more than 30 years, but it's easy to overestimate the depth and persistence of its troubles.
To begin with, the notion that the gaming industry is recession-proof was exaggerated to begin with. Recession-resistant is more like it.
Even so, the effect was mainly seen during mild recessions in which wealthier customers were largely unaffected and maintained their resort patronage.
This time, the plunging real estate and stock markets have spared few - and they have dragged down in particular those with property and equity assets.
Look at data on Nevada gaming and visitors, and you'll see which part of the gaming market has been hurt the most in this severe downturn.
Traffic at McCarran International Airport in Las Vegas was down 15.2 percent in February, according to figures reported by the Las Vegas-Review Journal. Vehicles going in and out of Nevada during the same month were down only 1.9 percent. On the main highway from California to Las Vegas, traffic fell just a tenth of 1 percent.
Gaming revenue in Nevada plunged 18 percent in February, and dropped 23 percent on the Las Vegas Strip.
Wachovia gaming analyst Dennis Farrell Jr. told investors, "We continue to believe that 2009 could be one of the most agonizing years Las Vegas Strip operators have ever experienced with regard to year-over-year declines."
Atlantic City's numbers have been terrible, too. In March, gaming revenue continued its decline with a drop of 19.4 percent over the prior year's period.
But note that the industry is still profitable. Earlier this month, it reported gross-operating profits for 2008 down 25 percent from the prior year, but still positive at $940 million.
Atlantic City has some advantage in this downturn, since it's a more convenient gaming destination - and convenience gaming has held up better than travel gaming.
But the competition in Pennsylvania is pure convenience gaming, so it's grabbing a bigger share of the gaming market than it would in a normal economy.
That makes me think that, when the economy turns around, the convenience-gaming locations in the periphery around Atlantic City will return to their normal, more ambivalent nature.
Slot parlors with few amenities and nongaming attractions will continue to take some convenience gaming, but they'll also develop customers for the full resort experience available only in Atlantic City and Las Vegas.
Once the economy rights itself and people feel more confident about their financial future, Atlantic City will again be the irresistible gaming destination on this side of the Mississippi.
Credit markets will unfreeze, new casino hotels will get built and we'll find something else to worry about.
Investing lesson
Ruth Bandoroff of Egg Harbor Township wanted to teach her granddaughter about investing, so she put $5,000 into stocks for her.
That was two years ago.
Now, her granddaughter wants to use the money to buy a car ... but the value of the investment has fallen to $3,000, Bandoroff said this week.
Fortunately, Grandmom is able to make good on the investment. Bandoroff said she'll give the granddaughter her $5,000 plus a couple hundred dollars in interest.
Quite a lesson in how the stock market really works.
And if you substitute the federal government for Bandoroff and a Wall Street banker for the granddaughter, you've got a pretty good model for how the system is working now.
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