Why Casinos are not Recession Proof: An Business Cycle Econometric Case Study of the Las Vegas Region

The gaming industry has long been considered recession proof. However, as the gaming industry has expanded it has increased its exposure to the lodging and convention industries. This is evidenced by the fact that the gaming industry is struggling alongside these industries. This study uses the Las Vegas region to investigate gaming revenues’ exposures to the economy from the most recent recession (2007/2010) in comparison to the previous recession (2001) and the sources of the change in the exposure to the economy. Through logarithmic OLS-HAC regressions and rolling-correlations, the findings show that casinos were more exposed to economic conditions in the latest recession when compared with the previous recession. Furthermore, the increasing reliance on the lodging industry is found to contribute to this increasing exposure to economic downturns. With the gaming industry reaching a potential saturation point, casinos need to push for better understanding of economic conditions.