A Stern Glance

Moody’s 2009 outlook for gambling sector is negative due to ongoing weakness in demand

Moody’s Investors Service said Tuesday that its 2009 outlook for the gambling sector is negative, as ongoing weakness in demand will hurt profitability, liquidity and cash flow.

“Demand is down across domestic gaming markets and there is no sign of a rebound,” Moody’s Senior Vice President Keith Foley said in a statement.

Casino operators have been pressured as consumers continue to tighten discretionary spending due to the ongoing housing slowdown, diminishing credit, escalating food costs and unemployment concerns. Many analysts have predicted that a recovery will not occur until 2010.

Moody’s said its outlook will be affected by the length of the recession and how well companies handle near-term liquidity concerns and operating expenses.

Businesses that manage to survive the downturn might be able to capitalize long term on the increased acceptance of gambling and a transition toward age groups that are more likely to gamble, Moody’s said.