Summary
Whilst the impact of the recession in the US is already being felt amongst casino businesses in Las Vegas and elsewhere, it appears that Europe's operators are so far largely unaffected. For the moment the jury is out on whether the worst is yet to come, or if the sector will react differently on the other side of the Atlantic. Thanks to the markedly different client demographics and gaming behaviour in Europe will the industry weather the storm? Or will the sector's weakened state following the introduction of smoking bans in many countries leave it susceptible to the effects of the downturn in customer spending when it begins in earnest?
Analysis
France's casino operators are feeling the pinch, particularly market leader Partouche, but this appears to be largely due to the effects of the smoking ban introduced in the country, and competition from online operators. In the UK Gala and Rank are in trouble primarily because of the same legislation's effect on its bingo halls rather than its casinos, but whilst the industry actually showed a growth in visitors in 2007 - up 6.6% to 16 million according to the Gambling Commission - new entrants such as Isle of Capri and Casinored have struggled to survive. Casinos bordering Italy are also seeing improved business and so far only the mass closures in Russia - political rather than economic - have cast any shadow on the gaming sector in Eastern Europe.
The health of the casino sector not only affects the operators themselves but also third party suppliers of slot machines and other related products, and in addition it serves as a weather vane for the effect on the broader gaming sector. The European equivalent of the slot machine client who is deserting US casinos is perhaps the bingo hall slot player or the frequenter of amusement arcades from Spain and Italy to the countries of Eastern Europe. Will it be the continent's AWP machine producers rather the casino operators who will bear the brunt of the downturn?
The betting business has shrugged off a number of recessions in the last two decades, but is this time different? Will the likes of Ladbrokes, William Hill and Gala Coral also suffer? And will a lighter pocket persuade punters that spending on lotteries is a waste of time or will it be seen as the only way of making money at the moment? The fortunes of the likes of GTech Lottomatica and Intralot will be depending on how lottery players react to the severest downturn in half a century.
They say that when the US sneezes Europe catches a cold but for the continent's casino sector the greater emphasis on table games - roulette in particular - rather than slots may make a difference to how the industry reacts. In the US too any trip to a casino normally starts with considerable outlay on travel before crossing the threshold, a substantial disincentive in present times. Predicting how Europe's casinos will react to the present economic woes is not for the faint hearted, but it is worth betting that for a number of reasons - primarily the differing make up of the casino client - they will fare better than those in the US whilst it could well be the slot machine sector that will suffer the most as the "soft" gambler's disposable income falls.
