Detroit Could Lose Casinos Due to Population Plunge (MGM)
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Price: $40.77 -1.43%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 1.3%
Revenue Growth %: -0.2%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 1.3%
Revenue Growth %: -0.2%
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Detroit's population plunge has made sensational headlines, but the news could also have big business implications.
According to reports from Fox 2 News Detroit, by state law casinos can only exist in Detroit if the city has 800,000 people or more. The latest census pegged Detroit with just 714,000 people, down 25 percent in the latest decade, and below the threshold.
If the casinos in Detroit were to close that would add a $150 million hole in the city budget, not to mention thousands of lost jobs.
This would also be a blow to casino operators like MGM (NYSE: MGM) which operates the MGM Grand Detroit. MGM's Detroit casino is its second most profitable unit in 2010, generating $115 million in operating income. Only the Bellagio had more at $174 million.
Other Detroit casinos include Motor City Casino, and Greektown Casino, both privately held.
City leaders were shocked to hear that the casinos may have to close, but said the laws would have to be rewritten. "I didn't know that," said Detroit City Council President Charles Pugh. "That's scary. I mean, clearly we're going to have to rewrite it."
According to reports from Fox 2 News Detroit, by state law casinos can only exist in Detroit if the city has 800,000 people or more. The latest census pegged Detroit with just 714,000 people, down 25 percent in the latest decade, and below the threshold.
If the casinos in Detroit were to close that would add a $150 million hole in the city budget, not to mention thousands of lost jobs.
This would also be a blow to casino operators like MGM (NYSE: MGM) which operates the MGM Grand Detroit. MGM's Detroit casino is its second most profitable unit in 2010, generating $115 million in operating income. Only the Bellagio had more at $174 million.
Other Detroit casinos include Motor City Casino, and Greektown Casino, both privately held.
City leaders were shocked to hear that the casinos may have to close, but said the laws would have to be rewritten. "I didn't know that," said Detroit City Council President Charles Pugh. "That's scary. I mean, clearly we're going to have to rewrite it."
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