Fitch: U.S. Gaming Challenged by REIT Transactions, Secular Changes in 2016

NEW YORK--(BUSINESS WIRE)-- U.S. regional gaming revenues will be flat in 2016, providing a benign operating environment for casino operators, according to Fitch Ratings. Fitch's 2016 outlooks for the sector and its ratings are stable, with employment growth and the one-year anniversary of Caesar's bankruptcy offsetting long-term secular challenges such as the aging Baby Boomer population.

"The proliferation of gambling alternatives like instant lottery tickets, social casino games and online gaming has created a challenging environment in which slots-oriented casinos outside the Las Vegas Strip and their suppliers will have a hard time accelerating growth," says Alex Bumazhny, Director of Gaming, Lodging and Leisure.

Some casino operators also face the additional burden of REIT leases. Casinos are not well suited to be long-term triple-net lease tenants and many proposed operating companies will have little margin for error after all of their fixed costs are accounted for.

For suppliers, recent consolidation has created better-diversified but highly leveraged companies. Larger suppliers may miss delivering targets in the near term given weak gaming fundamentals, the dearth of new casinos coming online, and increased competition from smaller suppliers.

The full report, "2016 Outlook: U.S. Gaming," is available at www.fitchratings.com or by clicking on the link.

Additional information is available at www.fitchratings.com

2016 Outlook: U.S. Gaming (Outlook Stable, but REIT Transactions and Secular Challenges Pose Concerns)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=874526

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View source version on businesswire.com: http://www.businesswire.com/news/home/20151207006300/en/

Fitch Ratings
Alex Bumazhny, CFA
Director
+1-212-908-9179
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Media Relations:
Alyssa Castelli, New York, +1 212-908-0540
Email: [email protected]

Source: Fitch Ratings

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