Here at S&G, we don’t begrudge anyone their right to build casinos. But, in the larger picture, the evidence suggests that Massachusetts and New York State are sailing into the wind. Moody’s Investors Service surveyed casinos in 15 states and, despite an improving economy, found revenues to be down in all but one state between during April (-2%) and May (-1%). This has inspired Moody’s to downgrade its rating on the casino sector to “negative.”
We knew this day had to come, didn’t we? At some point, America was going to get so soaked with casinos that it couldn’t absorb any more. This, of course, flew in the face of the mythology that “gambling is recession-proof,” later downgraded to 
“recession resistant.” Now we know it’s as subject to recessionary forces as any other industry. That other shibboleth, “pent-up demand” also went by the wayside. There’s plenty of supply to meet demand and yet revenue continues to incrementally decline (outside of Las Vegas, anyway).
Moody’s senior veep Keith Foley speaks of a ““a strong indication that U.S. consumers will continue to limit their spending to items more essential than gaming, even as the U.S. economy continues to improve.” Those spring downturns are projected to worsen …3%-5% by the end of 2015. According to Vernon Downs Casino & Hotel minority owner Gary Greenberg, New York casinos and racinos are already slumping.
Faced with a recessionary economy, some casino companies have become 
more selective (Wynn Resorts, Penn National Gaming). Others, like Caesars Entertainment pursue a saturation model, trying to get as much revenue as possible through sheer preponderance. It’s no coincidence that CEO Gary Loveman‘s role model is McDonalds: Caesars had four casinos in Atlantic City (and would have owned still more were it not for antitrust constraints) but has added ones in Philadelphia, Baltimore and now covets upstate New York. If there’s a stray dollar out there, Caesars wants to be in position to vacuum it up. It’s an understandable business model but it seems to be in danger of having run its course.
However, it’s difficult to be restrained with state legislators treat gaming taxes as nose candy. More casinos = more revenue, right? Well, not always, as we’ve seen. But there’s no casino junkie like a state government. Expect Moody’s abundance of caution to fall on deaf ears in state houses around the country,
