Recession on the horizon?

We live in a risk-on environment with lots of indicators pointing to a near-term recession. What does this mean for regional casinos?

Unfortunately, the data surrounding the last recession is limited and significantly variable. Through our research, we identified 25 casinos that were operating in reasonably stable competitive conditions and which had no significant expansion during the Great Recession in 2008-2010:

• The mean decline in revenues from 2007-2010 was 4.8% but the median decline was only 2.1%.

• Variability was significant. The range of results included a worst case 22.6% decline, but a best case increase of 17.2%.

• 17 of the 25 casinos experienced declines in revenues over the three-year period ranging from 0.6% to 22.6%.

• 8 of the 25 experienced increases in revenues ranging from 3.9% to 17.2%.

• 68% of the casinos experienced declines.

It’s all about the experience.

Lots of folks these days are talking about the growth of online gaming and the demise of brick and mortar casinos. But hold your horses.

A comparison of the retail and movie industries might be instructive. While online retail revenues have grown to a $1.4 trillion industry, brick and mortar retail continues to chug along, managing to grow every year (except 2020) despite the spectacular growth of online channels. That is likely because successful retailers have innovated, created omni-channel distribution and provided reasons to come into the store.

Tourism from western Europe plummeted  in March of 2025. Travelers from Asia, Oceania and Africa also declined. Eastern Europe had a small increase and the Middle East saw a significant increase. The large decline in Western Europe could reflect the current level of uncertainty around trade policy and changes in the relationships between the US and its allies. Overall, travel from these overseas regions declined by over 208,000 or 10.2%.

The biggest decliners were Germany, the UK and Spain with declines of 54,580 (28.2%), 47.673 (14.33%), and 20,687 (24.6%) respectively. The average percentage decline among these top 20 decliners was 19.3%.

One month is not a trend but if these declines persist, this could spell trouble for the tourism and gaming industry in several U.S. destinations.

The Smoot Hawley era trade wars and their aftermath look similar to present day. After the enactment of the Smoot Hawley tariff regime, GDP and consumption both declined by a cumulative 35% over a two-year period and the Dow Jones industrial average decline from a peak of over $380 in mid-1929 to a trough of $41 in mid-1932. It took the stock market 29 years to recover, and GDP and personal consumption did not recover fully until the U.S. entry into World War II in 1941.