SAN FRANCISCO - Citing an unprecedented and unexpected 12% forecast downturn in the state's key casino gambling business revenues, Moody's Investors Service Wednesday downgraded Nevada's general obligation bonds to Aa2 from Aa1.

The downturn in gambling, "a sector that was previously believed to be recession-proof," has hammered a state general fund that is heavily dependent on gambling revenue and sales taxes, which are highly correlated with tourism and gambling, Moody's said in a news release. The state is also experiencing high residential foreclosure rates and declining home values.

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