So much for that notion that gaming companies are recession-proof. We've
seen particular gaming locales (see Atlantic City, N.J.) and particular
owners (see Donald Trump) have bankruptcy issues, but not the industry
as a whole. If 2008 has taught us one thing, however, it's that a
struggling economy can reach every sector.
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Already, casino owners such as Tropicana Entertainment LLC, Legends Gaming LLC and Greektown Holdings LLC have all gone bankrupt this year. Granted, Tropicana's situation, highlighted by an ugly squabble with its union that resulted in a loss of its gaming license in New Jersey, is somewhat novel. But the company also blamed its petition on problems common to other casino operators: sagging gaming revenues.
More casino companies are teetering on the brink, too. Herbst Gaming Inc. popped up on Bankruptcy Insider's Zombie Watch list three months ago. UTGR Inc., which operates the Twin River Racino gaming hall in Rhode Island, was reported Friday to have gotten an extension on a forbearance agreement with its lenders, enabling it to avoid a bankruptcy filing for now. Majestic HoldCo LLC, which operates three riverboat casinos, had its corporate family rating and probability of default rating cut to Caa2 on Thursday by Moody's Investors Service.
Even gaming giants Harrah's Entertainment Inc. and Station Casinos Inc. aren't immune. Moody's slashed the ratings for both on July 17 to B3, citing a deterioration in the Las Vegas gaming markets.
Interestingly enough, it wasn't even two years ago that acquirers were paying top dollar for gaming companies such as Tropicana, Harrah's and Station. - Ben Fidler
