Boyd Gaming abandons new Vegas casino project

07.29.2008 | 4:45 am | casinos

Leading casino development firm Boyd Gaming announced on Friday that they will suspend work for nine months to a year on a mega-development with an estimated cost of $4.8 billion dollars. It is thought that the decision has resulted from the increasing number of signs that the gambling industry is declining, such as the steep drop in revenue from casinos seen in the last quarter. This drop is a direct effect of things like the credit crunch, rising unemployment figures and soaring fuel prices, which have decreased the tourist flow to Las Vegas dramatically in the past year.

The development, provisionally named as ‘The Echelon’, was set to include a 140,000 square foot casino, almost 5,000 guest rooms spread over five hotels, two theatres and 87 acres’ worth of meeting and exhibit space. Construction was to have begun this summer.

Whilst the frozen construction site has been slated as “an eyesore” and “an embarrassment for sure” by several Las Vegas tycoons, many market analysts see Boyd Gaming’s decision as a wise one, with Jeffrey Longsdon, the BMO Capital Markets analyst, saying that “the decision to stop work removes both the company’s financial burden and the project’s risk of failure”. He also said that the decision shows the “financial discipline” of the leading corporation. Boyd Gaming stated that their decision would stabilise their business by giving them time “to focus on restoring momentum in our core business and for consumers in general to regain their footing and confidence”.

The news also heralded a more positive outlook for the stock value of Boyd Gaming, with investors driving its value up as much as 34 percent after Friday’s announcement. The delay also has wider benefits for the Las Vegas casino community as a whole, as it will reduce competition within the market. Whilst the delay has been a blow to the expansion and modernisation of the Vegas strip, in a time of economic difficulty it has proved a wise decision.