The 16 percent drop in Las Vegas Strip gambling revenue in May, the fifth straight monthly decrease, is a warning sign that companies exposed to the biggest U.S. casino market may face further declines, Moody's Investors Service Inc. analysts said yesterday.

Analysts Peter Abdill, Peggy Holloway and Keith Foley spoke on a call with investors. The credit-rating service last week downgraded Harrah's Entertainment Inc., Station Casinos Inc. and Station's unit Green Valley Ranch Gaming LLC, all of which were recently acquired by private-equity buyout firms.

Moody's placed MGM Mirage, Las Vegas Sands Corp. and Boyd Gaming Corp. on review for possible reductions, and lowered outlooks on Wynn Resorts Ltd., Riviera Holdings Corp. and Fontainebleau Las Vegas Holdings LLC to negative from stable.

"It's pretty clear evidence that the economic challenges that have pressured U.S. consumers have now begun to materially impact the discretionary spending that drives the Las Vegas gaming industry," said Abdill, a Moody's senior vice president.

"As we see really no near-term change in the bleak outlook for the American consumer, it translates into depressed expectations for earnings and cash flow for Las Vegas gaming companies."

Foley, a senior vice president, said the weak May numbers are something to take notice of.

"We do not expect Las Vegas numbers to get better in the near term. When you see a dramatic decline in one month after several months of other declines, it could very well be a warning sign, and we are taking it that way."

Holloway, a vice president, said past Las Vegas recessions don't bear on today's situation. "The volume of rooms on the Strip today is much larger, the industry has to attract a much larger number of visitors (than in 1992). ... Today, customers have much greater options in their local market, so if they need their gaming fix they don't necessarily have to come to Las Vegas."

That may lead to lower hotel prices as operators try to pull people into the market, Holloway said:

"If they sell the room at a lower rate but they get the head in the bed, then they do at least earn some revenue, albeit at a lower level."