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Rising Energy Costs a Bad Deal for Casinos

NEW YORK CITY-The cost of expensive power may prove bad luck for the gaming industry, and a slowing economy could keep the players away from the tables. Gaming firms with diversified portfolios should fare best.

By John Howe | Updated on May 18, 2001

NEW YORK CITY-Odds are that Las Vegas casinos may feel the effect of rising utility prices starting in the next quarter and continuing throughout the rest of the year, according to a new report from Bear Stearns, Utilities Update: Smoking Gun or Just a Lot of Smoke? On the other hand, most casino operators think they weathered the worst effects of rising energy prices during the first quarter.

Location, location location: casinos are no exception to this rule for success, especially now that utility costs vary so widely. Because they have more facilities in Nevada, Bear Stearns believes that Mandalay Resort Group, MGM Mirage and Station Casinos could suffer most from escalating energy prices. Harrah’s, Park Place Entertainment, Aztar and Boyd Gaming may also feel the impact of heftier energy bills, although it expects them to be mitigated by their more diverse portfolios.

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