It's been a wild week so far for local casino companies. Scary declines in stock prices were followed Wednesday by an unexpected rally in the casino sector. News 3's Steve Crupi is watching out for your investment dollar because the struggles on the Strip are far from over.
The facts are painfully obvious at the biggest eyesore on the Strip, the partially finished Echelon casino project. Boyd Gaming halted construction earlier this year, and now it looks like the delay will extend into the year 2010.
It's unfinished, unsightly, and unknown when construction at Echelon will resume. Executives at Boyd Gaming say their multi-billion dollar gamble on the Strip will likely not start up again next year due to the credit crisis.
Boyd quarterly profits are down 73 percent, but the company insists it's not giving up on Echelon.
The property is not up for sale and they say new ideas are being explored for a more gradual construction plan, along with a search for new investment partners.
On Wall Street and on the financial news networks, no one seems to know how low things could go. And the casino sector is very dependant upon customers having money to spend on a Vegas vacation.
Quarterly profits at MGM-Mirage are down 67 percent, and some cost-cutting has been announced at the company's huge CityCenter Project on the Strip.
The stock prices of MGM, Wynn, and the Las Vegas Sands are down to just a small fraction of their highs from last year. But some investors believe these companies now represent incredible bargains.
And here's the surprising burst of good news: The casino sector shot up dramatically in Wednesday's trading. Wynn Resorts went up 25 percent. Shares of the Las Vegas Sands climbed 80 percent. MGM-Mirage jumped 33 percent.
And even Boyd Gaming, with it's grim outlook for Echelon, saw a bump Wednesday of 14 percent.
Even when these stocks have a good day though, they are only making up a tiny fraction of the value that has been lost in recent months. The decline in casino revenues has had a ripple-effect on the state budget here in Nevada.
This means less money in gaming taxes for the state, which has already led to massive budget cuts in key areas like education and transportation.
