With the economy going down the tubes, Casino properties are being badly squeezed. Publicly traded casino operators MGM Grand (MGM) and Las Vegas Sands (LVS) are down 90% and 96% from their highs just 1 year ago! These things also look like they are already pricing in a severe recession - or even a depression. It suggests investors are worried they will even be able to survive.
Privately held Harrah’s only had about $12 billion in debt at the end of 2007 and $800 million in interest expense that year. Interest expense for the first half of 2008 was more than $900 million. That extra interest expense is going to eat up most of their operating cash flow and the slowing economy will likely eat up the rest.