Market Spotlight: Economic conditions weigh on gaming cos.

Consumers have curbed spending lately due to the continued housing downturn, escalating food and fuel costs, diminishing credit and recession worries. While gaming companies were considered pretty resilient during previous economic downturns, the current environment has started to pressure their operations.

Analysts point to increased supply and housing problems as two primary contributors to gaming weakness.

Goldman Sachs analyst Steven Kent sees Boyd Gaming Corp. reporting a difficult quarter due to gaming revenue slowdown in most of its markets, including Las Vegas locals, Atlantic City, N.J. and the Midwest.

"The local Las Vegas market is likely working through a difficult housing market and will see two new competitor properties delivered to the market over the next seven months," he wrote in a client note.

Analysts have noticed a slowdown in the once booming Las Vegas market, as consumers scale back on the pricey meals, expensive hotel rooms and shows the city has to offer. To that end, Brian McGill of Wachovia Capital Markets favors regional gaming operators such as Pinnacle Entertainment Inc.

"While many markets have seen a slowdown, we believe the regional operators are likely to see a more stable year than the destination market of Las Vegas," he said. "Overall it has been a rather disappointing quarter for the gaming operators."

Companies with operations in Las Vegas include Las Vegas Sands Corp., MGM Mirage, Wynn Resorts Ltd. and Harrah's Entertainment, which was recently taken private.

Investors are also likely to focus on development projects when quarterly results come out, in light of concerns over funding.

Kent expects investors to hone in on the financing status of MGM Mirage's CityCenter joint venture project.