Canaries in the coal mine, casinos in the slums

Stocks nose-dived yesterday after “an odd bond market phenomenon that has been a reliable indicator of economic recessions. Investors, worried about the state of the economy, rushed to long-term safe haven assets, pushing the yield on the benchmark 30-year Treasury bond to a new record low on Wednesday.” While the economy outwardly appears to be performing well, it should remembered that the Great Recession seemingly came out of nowhere in 2008, at the apex of the casino industry, and caught Big Gaming with its pants down. In a related move, Donald Trump tried to prop up consumer demand for China-made products by stalling new tariffs until mid-December.

I won’t pretend to know what inverted yield curves are but Wall Street says we’re experiencing one and that they’re usually harbingers of a recession, albeit on a delay of 22 months or so. If that’s the case, then the gaming industry has plenty of time to batten down the hatches, although another round of mergers and acquisitions would seem ill-timed. “Historically speaking the inversion of that benchmark yield curve measure means that we now must expect a recession anywhere from six-to-18 months from today,” dissented analyst Tom Essaye. Adding to the concerns are a slowdown in China’s economic output and a proto-recessionary economy in Europe. “July’s activity data was woeful,’’ Moody’s Analytics boffin Katrina Ell said of China, where unemployment is creeping upwards, as new graduates hit the job market. U.S. companies with casinos in Macao must be viewing the struggles of the Chinese economy with some trepidation. If Beijing sends tanks into Hong Kong, as seems imminent, matters will go from bad to worse in a trice.

* Chicago Mayor Lori Lightfoot is of the mindset that if you plop a casino in any one of five slums, instant prosperity will ensue. (“[H]igh crime rates, poverty, and gun violence”—what’s not to like?) The mayor is soliciting citizen input on such things as casino amenities but the fix appears to be in that middle- or upper-class neighborhoods are to be casino-free. Global Market Advisors warns against Lightfoot’s school of thinking: “urban casinos developed in the latter part of the 20th century failed to integrate themselves into their host communities, did not stimulate economic and commercial activity in their host neighborhoods, and essentially became islands within the greater urban landscape.” Odds are that history will repeat itself in the Windy City.

* Iowa‘s sports-betting legalization was a Trojan horse that snuck through a bad idea once proposed by the Bill Clinton administration—withholding casino winnings as a means of collecting child support from deadbeat dads. Casinos have asked for, and received, a postponement. This is not because it’s an excessive intrusion of Big Brother but because they want lawmakers to write a bill the clarifies how they’re to dun their delinquent patrons. Look for copycat laws to crop up in Indiana and Maine. If you win $1,200 and go into “IRS lockdown,” you’ll be asked for your Social Security number, which will then be checked against a registry of back-tax debtors and child-support delinquents, making casinos agents of the state. Iowa has supposedly collected $34 million from these shenanigans, which doesn’t make them right.

* The count of Beantown brawls taking place at Encore Boston Harbor keeps climbing. While nightclubbers and others where duking it out in the early hours of Monday, a third fracas took place on the casino floor. Police “were able to quell the disturbance and disperse a group of people.” A charge of assault and battery was the outcome. A Lynn resident was also taken into protective custody after the cops saw him “highly intoxicated and yelling.” Wynn Resorts tried to spin the events as a win for its security team but the Massachusetts Gaming Commission has vowed to look into the matter to evaluate “regulatory compliance with the required internal controls, policies and procedures.” Casino prexy Robert DeSalvio has his work cut out for him.

* A set-to between two men outside an illegal Chilean casino spilled inside. Seventy-some bullets later, five people were dead and the gunman remained on the loose. Deplorable as this latest mass shooting is, we have enough confidence in the security measures at U.S. casinos to believe it couldn’t happen here … could it?

* Setting out to dominate the Pennsylvania sports-betting market, Parx Casino has unveiled a 156-foot-tall video wall that allows for as many as 36 sporting events to be shown simultaneously. The sports book, which can hold 400 patrons, debuted in “george” fashion, as the first thousand patrons were given a free bet worth $25 … if they deposited $25 at the book. In addition to six walk-up windows, Parx has 18 self-service kiosks. As far as marketing the new amenity, Parx is keeping its powder dry until NFL season.