Tax rebates may be a roll of the dice
Gaming analysts expect many consumers will gamble their rebates, and casinos want in on the action.
NEW YORK (CNNMoney.com) -- Kevin Warren, a New York City doorman, knows what he's going to do with his tax rebate check: "I'm going to try to double it."
With the U.S. government getting ready to return $600 to individuals and $1,200 to couples as part of an economic stimulus plan, many analysts expect a jackpot payout for casinos as consumers try to turn their checks into much more.
"What else am I going to do with $600?" Warren asked.
With the threat of rising inflation, Warren believes he can get more bang for his buck by trying his luck on the horses than on food or new clothes.
"Things are so expensive now. What - [$600] will buy me one bag of stuff at the Gap?"
He spent his 2001 rebate check on bills, but this year Warren says he will try to make "more" with his money.
Casinos and gaming analysts believe there are many more consumers like Kevin Warren who are willing to use their rebates for gambling.
"For those who can use their checks for disposable income, that's a likely scenario," said Stuart Mann, Dean of the College of Hotel Administration at UNLV and partner at Globalysis, a firm that researches the gaming industry.
Mann sees a short-term spike in lottery ticket sales and gambling just after the checks start showing up at homes across America. As a result, casinos and state lotteries may see a momentary rise in revenues.
A contributing factor will be the money added to the pockets of five million compulsive or "problem" gamblers.
About two percent of U.S adults are compulsive gamblers, according to the National Council on Problem Gambling. "This will be like giving more booze to an alcoholic," said Keith White, the council's executive director.
Problem gambling is a behavioral illness, and its sufferers attempt to recover losses despite escalating, uncontrollable debt.
But White believes the allure of gambling does not rest with the minority of Americans who are gambling addicts. 85% of U.S. adults have gambled at least once in their lives, according to White, and he believes many taxpayers will try their luck at casinos and with lottery tickets.
"Americans will treat these checks like gambling winnings," said White. "We know that gamblers view money that's free differently than money that they earned."
The gaming industry will be ready to cash in. James Hardiman, an analyst at FTN Midwest Securities Corp., expects casinos to launch promotions during the rebate season to capitalize on the new flow of spending money.
"You could see some impact at casinos," said Hardiman. "If casinos have been paying attention to the news, they're going to want their fair share of that money."
But the gaming industry seems more interested in long-term economic improvement than the short-term bump of rebate checks on its casinos.
"The best thing for our industry is to have a better economy," said Mitchell Etess, chief executive of Mohegan Sun casino in Connecticut. "Checks may help us in the short term, but when people feel better about their economic position, they'll feel better about spending money at the casino."
Casinos are worried that a one-time trip to gamble $600 may not turn into repeat visits. "It would be great if they came and spent their check at our casino, but once they spent their money and leave, they may be back in the same situation that they started in," said Saverio Mancini, Public Relations Director at Foxwoods Casino.
"We want people to feel good about the way the economy is moving, so they will want to come again."
Casino gamblers come out to play when they feel they have money to spend, according to Rob Stillwell, Vice President of Corporate Communications for Boyd Gaming Corp. By putting more money in Americans' pockets, Stillwell hopes, gamblers' emotions will change for the positive and the casino business will reap long-term rewards.