Casino shares plummet amid debt default fears

This Friday saw U.S casino shares plummet dramatically following fears of a potential debt default at Dubai World ul. Concerns regarding the default are mounting and many are anxious that the situation will damage the fresh wave of investments in developing casino markets. Dubai World ul is a state owned conglomerate and was hoping to maintain its share value on the path to economic recovery. MGM Mirage, a partner of the firm in its $8.5 billion CityCenter Las Vegas project, witnessed its shares drop a significant 9%. Later that morning, the stock showed some signs of recovery and was down 3.3% by midday.

The events represent just some the latest disturbances in what has been a turbulent few months for the company. Last year saw Dubai World sue MGM Mirage as credit began to show signs of drying up bringing the CityCenter project to the brink of bankruptcy. In addition, the ambitious project has suffered a number construction difficulties along the way including the tragic death of several of its workers.

Susquehanna Financial Group analyst Robert LaFleur commented on Dubai's status as a significant holder of MGM shares. "If they're in a position where they're seeking liquidity, you have to wonder whether they'll look to those shares as a source of potential liquidity." Meanwhile Dubai said it was pursuing a new deal which would see creditors of Dubai World and Nakheel agree to a standstill on billions of dollars worth of debt to aid with the economic recovery. With so many interests at stake, many members of the industry will be monitoring developments closely to see how the new deal unfolds.