"I am likely breaking some sort of gaming taboo discussing the topic of bankruptcy, however, with the current state of the economy, struggling to recover from the collapse of the financial markets, the bankruptcy filings of the Trump, Tropicana, Fontainebleau casinos, and the recent bankruptcy filing of gaming powerhouse Station Casinos, a discussion of bankruptcy law seems timely.
The gaming industry, once thought of as “recession proof,” is showing cracks in its armor, as gaming revenues have fallen in local hubs, like Las Vegas and New Jersey, and in distant places like Macau. Indian gaming has not been unscathed; gaming revenues for Indian casinos, while presently stable, have experienced a reduction over the past couple of years, causing significant belt tightening in Indian country.
The causes are as abundant as bad business decisions. Typically, a bankruptcy filing occurs when business expenses and other liabilities exceed cash flow or assets, and creditors come banging at the doors to demand collateral. In the gaming industry, it’s easy to exceed available cash flow. This can occur prior to a casino’s opening if construction or development costs unexpectedly escalate.
Similarly, it may arise after opening if an expansion project suddenly goes sideways. As most casinos are heavily leveraged at the outset, for obvious reasons, a number of causes, whether it be an economic downturn or poor marketing and management, can result in lower revenues and a redlined EBITDA.
Additionally, missing a single debt payment can trigger a loan agreement’s immediate repayment clause or, in certain cases, gaming license suitability issues. Either of these can result in a parade of financial repercussions. Finally, casino operators and management groups may also over-extend themselves by purchasing competitors or expanding gaming holdings in untapped domestic or foreign markets."
Get the Story:
Jack Duran: A bankruptcy primer
(Indian Country Today 8/28)
Stay Connected
Contact Us
indianz@indianz.com202 630 8439 (THEZ)
Search
Top Indian Gaming Stories
Trending in Gaming
1 Catawba Nation continues work on controversial casino in North Carolina
2 Cheyenne and Arapaho Tribes move forward with casino expansion
3 Poarch Band of Creek Indians said to be on Trump's radar
4 Hopi Tribe officially joins Indian gaming industry with approved compact
5 Seminole Tribe paid just $50M for casino Donald Trump built for $1.2B
2 Cheyenne and Arapaho Tribes move forward with casino expansion
3 Poarch Band of Creek Indians said to be on Trump's radar
4 Hopi Tribe officially joins Indian gaming industry with approved compact
5 Seminole Tribe paid just $50M for casino Donald Trump built for $1.2B
More Stories
New York governor for off-reservation casinos Column: Ping-pong on Seminole gaming compact
Indian Gaming Archive