With the sour economy, tourism has slowed down everywhere, even in Sin City, leaving exchange traded funds (ETFs) that track the gambling industry damaged.

Las Vegas has seen dramatic declines in housing values, abnormally high unemployment rates, frozen construction cranes, halted construction and development projects, leveled dirt roads and uncompleted slabs of concrete. At one point, all Vegas casinos from the Wynn (WYNN) to the MGM Grand (MGM) were trying to one up each other, making jobs plentiful and expansion boundless, states the Associated Press.

Sin City is not the only one being hammered by this economic downturn. Smaller cities banking on gambling revenue are being slaughtered as well. In fact, Mesquite, NV, a small city Northeast of Las Vegas, has been hit even harder, seeing gambling revenue drop by 11%, visitor volume fall by 7.4% and the average daily room rate plummeting 35.4%. It was caused devastation in the once prosperous small city, states Joanna Lin of The Los Angeles Times.

What will it take to get people back to Las Vegas and other gambling hotbeds? In short, they’ll need to feel comfortable. Most consumers are feeling risk-averse, and when they are ready to spend a few bucks, it’s usually going to be where they can get value. As fun as Las Vegas can be, when your pocketbook is hurting, losing a hand at blackjack can be extra painful.

Hopefully, 2009 will be a bit more optimistic for the gaming industry. Market Vectors Gaming ETF (BJK) was down 56.9% for 2008, but has started to show prosperity by crossing its 50-day moving average.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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