Las Vegas no longer the only game in town

The data also suggest the balance of power is tilting away from Las Vegas.

While the West Coast of the United States — and Las Vegas in particular — still accounts for more casino visits than any other region, the data show its share of casino visitors fell for the first time in three years in 2004, declining from 38 percent in 2003 to 35 percent. Visitors to gaming regions in the Northeast, north central and southern parts of the nation saw a slight increase in their share of casino visits during the same period.

Similarly, although Nevada’s gross gaming revenue continues to grow, with the state’s takings topping $10 billion for the first time in 2004, states like Missouri and South Dakota also showed revenue increases, rising 10.8 percent and 10.9 percent respectively from 2003 levels. Year-over-year, revenue growth in Nevada was 9.7 percent.

Also making significant gains are Indian casinos, notes Whittier Law School Prof. I. Nelson Rose, a gaming law expert. These tribally-operated casinos were formed after a 1987 U.S. Supreme Court decision to allow federally-recognized Native American tribal entities to operate gaming facilities free of state regulation.

“The third-biggest market for gaming after Las Vegas and Atlantic City could actually be Connecticut — that’s where the Mohegan Sun and Foxwoods casinos are,” Rose said. “These casinos are probably the largest in the world, but we don’t have good numbers for them.”

The Racino boom
Another fast-growing segment of the gaming business is the “Racino,” a combination horseracing facility and casino.

Racinos are growing rapidly because companies do not have to seek out new gambling permits for them — as racetracks they are already licensed betting establishments, notes the AGA’s Fahrenkopf. And Racinos are lucrative for local governments. In Delaware, for example, the taxes paid by the state’s three Racinos amounts to just under 10 percent of the state’s budget. Similarly, taxes paid by four Racinos in West Virginia make up 12 percent of that state’s budget, he said.

“This is the route states have taken over the last few yeas to help deal with their budget problems,” said Fahrenkopf.

But although gaming in locations outside Las Vegas are growing, the capability of the city’s gaming industry to reinvent itself in the face of increased competition should not be underestimated notes Fahrenkopf.

Ten years ago, a Vegas casino like MGM Mirage would have derived about 65 percent of its bottom line from gaming, and the rest from food and lodging Fahrenkopf said. Today, only about 45 percent of the revenue comes from gaming; the rest comes from restaurants, lodging and entertainment, he added.

“People are going to Vegas not just to gamble, but to shop in the stores you’d find on Fifth Avenue or Rodeo Drive, and they are eating at gourmet restaurants and playing golf at the best golf courses,” Fahrenkopf said. “So we are seeing a dramatic change in the industry, especially in Nevada, and I think venues like Atlantic City are trying to make that move too.”

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