At Wednesday’s Global Gaming Conference, industry big wigs revealed a bleaker-than-expected outlook for the land-based casino industry. According to a panel that included Harrah’s CEO Gary Loveman, IGT CEO TJ Matthews, Olympic Entertainment chairman Armin Karu and National Indian Gaming president Ernie Stevens, the current recession has many in the gambling world cutting back their expansion projects and concentrating on already-existing properties.

“The arms race that has characterized the business over the last several years might have to de-escalate,” Loveman said. “There will be a significant sea change in the way in which the balance sheets of these businesses are structured.”

Part of the problem, Loveman indicated, is that land-based operators cannot find expansion-fueling loans at reasonable interest rates due to the current credit crisis. His company, Harrah’s Corp., announced Monday that it is walking out on a $535 million contract with the state of Kansas to build a resort in Wichita.

“One of the challenges that has plagued the casino industry for a long time is that we spend money like drunken sailors,” Loveman continued. “I think the industry is going to have to get accustomed to the notion that not every project is a good project.”

Harrah’s isn’t alone in its newfound frugality. Other projects slated for 2009 that have landed on the backburner include Boyd Gaming Corp.’s $4.8 billion Echelon, a condominium tower connecting Las Vegas Sands Corp.’s Venetian and Palazzo resorts, and an additional high rise for Donald Trump’s Trump International Hotel & Tower. Analysts speculate that MGM Grand’s $9 billion CityCenter project will soon follow suit.

As for game producers like IGT, Matthews said that a cessation in casino expansion will certainly precipitate a similar shift in manufacturing and development plans. Although his company is already well on its way to introducing the next generation of server-based smart slots, Matthews noted that his Reno, Nev.-based company will instead concentrate on selling casinos on replacing old machines.

IGT has already made several deep cuts in the service of its new strategy, offering $21 million in early-retirement and severance packages to some 500 employees. The layoffs comprise a cut of nearly 8 percent of IGT’s total workforce.

Matthews said IGT would also concentrate on creating games that are more enjoyable and entertaining. But Loveman countered that such attempts would be moot in the current economic climate.

Loveman said that until casinos like Harrah’s manage to correct their balance sheets “it’s going to get very hard to get excited about the next new buffet, the next new food and beverage experience, the next new nightclub experience, the next new gaming experience.”