Hard times haven't dealt bad hand to "sin industries"

People may not be reaching for the top shelf quite so frequently these days, but that doesn't mean they're forgoing cocktails or nightcaps.

Liquor sales, which have grown year over year for at least a decade, show no signs of slowing despite an economic downturn that's causing penny-pinching and belt-tightening.

The illegal-drug trade also seems to be alive and well, though sales of marijuana and cocaine are obviously harder to quantify. Still, "it's business as usual" at the Seattle field office of the federal Drug Enforcement Administration (DEA), whose agents investigate drug-trafficking organizations.

"We haven't seen an increase or a decrease" in the number of investigations aimed at stemming the flow of drugs into the region, said Jodie Underwood, a spokeswoman for the field office.

While purveyors of pleasurable escapes aren't immune to market forces, so-called "sin industries" do seem better at resisting the economy's downward pull. Despite the country's bleak financial forecast — or maybe because of it — people who relax at the poker table, unwind with a martini and a cigar, find comfort in the arms of an online escort or thrill at cocaine's rock-star rush aren't exactly giving up their vices just because times are tough.

"It's just the way people self-medicate," said Dr. Victoria Zdork, a New Jersey psychologist and sex therapist. "Anything that gives quick dopamine rushes when you're feeling down, whether through gambling, the sex industry or cocaine. Anything that's going to make people feel better like that are more recession-proof."

For the state's Indian casinos, it's too early to tell how big an impact the recession will have on the discretionary spending habits of gamblers, said Ron Allen, president of the Washington Indian Gaming Association.

"The whole financial crisis is very current, so there's not enough data yet to discern if those [spending] patterns are shifting dramatically," he said.

Without numbers, it's hard to know if gaming activities simply are leveling off as casinos reach saturation in their respective markets, Allen said, noting too that casinos typically see a slowdown in business during the winter months.

With 70 percent of all net gambling receipts in the state, Indian casinos generated an estimated $1.48 billion in 2008 — up from a little more than $1.3 billion in 2007, according to statistics from the Washington State Gambling Commission.

Allen, who is also chairman of the Jamestown S'Klallam Tribe, said his tribe's casino — the 7 Cedars Casino in Sequim, Clallam County — is still posting gains of 5 to 6 percent year over year, a pattern that's remained consistent in recent years.

"The majority of casinos have tapered down 2 to 3 percent. The highest [drop] we've heard is 12 to 14 percent, but that's not the norm," said Allen, explaining that a range of factors — from location to competition — impacts a casino's bottom line. "Casinos and resorts are all in the entertainment or hospitality industries and are experiencing that same tightening of the market. But there are a few out there that are still holding their own."

At Goldie's Shoreline Casino, a local cardroom, one employee — who asked not to be named because he's not authorized to speak to the media — said gaming enterprises "tend to survive a little bit better than the store down the street."

But he said he's already noticed a shift in gambling habits: While the regulars still come, someone who wins $500 is now more likely to cash out and go home instead of sticking around to try to win another big pot.

In that way, a cardroom is kind of like a local tavern, he said: "A person can escape for an afternoon — maybe they can't afford their mortgage, but they can afford a glass of beer."

Liquor holds its own

Speaking of beer, a May survey by the Nielsen Co., the market-research firm, reported that 47 percent of 3,500 respondents said the economic slowdown hadn't affected their beer-buying habits, with an additional 40 percent saying they'd made small changes. Results for wine and liquor were even higher, with 49 percent and 48 percent, respectively, reporting no change in buying patterns.

The Beer Institute — a Washington, D.C., trade group — saw a 5 percent increase in domestic-brewer sales in September compared with September 2007, rising to 16.1 million barrels from 15.3 million barrels, according to the group's Web site.

"People will drink beer no matter what's going on with the economy or stock market," said Dan Ahrens, a Dallas-based investment adviser and author of the 2004 book "Investing in Vice: The Recession-Proof Portfolio of Booze, Bombs, Bets and Butts."

Ahrens no longer believes any industry is "recession-proof," and now uses the term "recession-resistant."

"We're seeing markets like we've never seen before," he said.

"A small luxury"

While Las Vegas casinos have suffered precipitous drops in their stock value, Ahrens said international sales of cigarettes remain strong — even though smoking bans in several states have impacted domestic sales. Of all the vice industries, alcohol is still a good investing bet, he said.

"It's just a fact that alcohol sales overall are steady and consistent, no matter what is going on," Ahrens said.

In Washington state, liquor sales remain strong — with gross sales of $824.6 million for the 2008 fiscal year that ended June 30, said Brian Smith, a spokesman for the state Liquor Control Board.

Tequila and vodka are still the biggest sellers, but people these days are more likely to spend $20 rather than reach for a $50 bottle, he said.

"People will still be expected to buy alcohol — they do during hard economic times, and we're seeing it across the country," said Smith, who added that conservative projections anticipate the state's gross liquor sales will approach $866 million during fiscal year 2009.

Just as folks seem to be opting for less-expensive spirits, those who enjoy cigars also seem to be moving from top-priced brands to more middle-of-the-road stogies, said Joe Arundel, co-owner of Rain City Cigar in Seattle's Georgetown neighborhood.

While cigarettes have lost social luster and the state's population of smokers continues to decline, premium cigars still are considered a small indulgence, Arundel said.

But instead of sparking up a Monte Cristo or Cohiba, Arundel said, cost-conscious customers are gravitating to less-expensive Macanudos or Romeo y Julietas. Still, sales are good and are even up a little over last year, he said.

"It's a small luxury and allows them a little bit of pleasure without breaking the bank," Arundel said. "People are stepping down a little bit, but ... they're not entirely stopping what they want to do."

An age-old industry

That also seems to hold true for men who pay for sex. Although a Seattle police spokesman declined to comment on the caseload of the department's vice unit, Faye Garneau, executive director of the Aurora Avenue Merchants Association, said drug dealers aren't so visible these days but there are still plenty of streetwalkers on the strip.

"Prostitution is an age-old industry, and it seems to be alive and well," Garneau said. "There are still prostitutes working the streets."

While a few sex workers who advertise their services on craigslist.orghung up when contacted by a reporter, one Tacoma escort said business is still good.

"I don't think our business really gets affected," the 27-year-old woman said. "Even when people are broke, they always seem to find the money to indulge in this kind of entertainment."

Zdork, the psychologist and sex therapist, said people do tend to have more sex in times of economic uncertainty. Sex is an inexpensive way to relieve stress, she said, explaining that oxytocin and other feel-good endorphins are released by the brain during sexual activity.

"The sex industry, I don't believe, will be affected quite as much as other industries," Zdork said. "In times of stress, people would rather have sex than shop."

Dealer in demand

But sex isn't the only way for people to boost their moods, she said, pointing to the rise in people abusing prescription drugs or illicit drugs.

A 31-year-old fast-food worker who supplements his income with the money he makes selling cocaine said he's not having trouble finding customers.

"Painkillers and cocaine — I can't have enough of them," said the man, who spoke on condition of anonymity. "Cocaine is the champagne of drugs, and people budget it into their monthly expenses."

Some of his best customers spend $600 a month on coke, and demand is so high that he's farmed out work to four other dealers.

"I pretty much double my money every two days," he said. "The other day, I made $545 in 45 minutes — profit. ... Without it, I'd be damn near homeless."

Sara Jean Green: 206-515-5654 or sgreen@seattletimes.com