A Profitable Company With a Liquidity Problem

May 30, 2008

Detroit’s Greektown Casino is in bankruptcy proceedings! (permalink PDF) Huh? Of course, the Casino management argues that they’re not really bankrupt, they just can’t pay the bills. I wonder if I could get away with that argument?

Casinos have license from the State, which grants them (for all intents and purposes) a monopoly on gaming. Hell, if you have a big enough Casino, you even get to exempt yourself from smoking bans! After all, they wouldn’t want to give back any of Casino Windsor’s customers! Detroit’s Casinos have (essentially) no competitors. Their business model, like that of any other Casino or gaming establishment, consists almost entirely of “games of chance” on which, over any appreciable length of time, they are guaranteed to profit, and to a lesser extent, “games of skill”, the display of which by any patron or group thereof will result in their being asked to leave, forthwith, never to return.

Generally speaking, there is one, and only one rule to Casino economics: the only way for a casino to lose money is through inept management.

I suppose all bets are off, when you decide to locate your casino in the heart of a dying industrial-era relic of a city, and economic quagmire.


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