Gaming decline offset by key industries
November 15, 2011
A report on the dire state of gaming in Northern Nevada was countered by two areas of positive growth during a business meeting Nov. 8 at Carson Valley Inn in Minden.
The annual joint membership breakfast brought together the Carson Valley Chamber of Commerce, the Business Council of Douglas County, and the Northern Nevada Development Authority.
“Nevada’s largest export the last 60 yeas has been gaming services,” said William Eadington, professor of economics and director of the Institute for the Study of Gambling and Commercial Gaming at University of Nevada, Reno. “The rest of the world has discovered that gaming is not at all a bad tool.”
With increased competition, however, Northern Nevada has seen a huge loss of market share over the last two decades.
“There has been a long-term decline in gaming since the 1990s both in tourism visits and gaming revenue,” Eadington said.
South Lake Tahoe has been hit especially hard. Eadington said tourism gaming spend has fallen two-thirds since 1990 – from $556 million of real gross gaming revenue in 1990 to $214 million in 2010.
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The decline was accelerated in 2008 when the Red Hawk Casino opened off Highway 50 in Placerville. Eadington said the Red Hawk now produces more gaming revenue than all the South Shore casinos combined.
Gaming employment at the Lake has also diminished.
“Employment is now at 32 percent of 1990 levels,” Eadington said. “There is no significant locals market at South Lake Tahoe to sustain gaming activity.”
Carson City and Carson Valley casinos are different, he said. They share a highly competitive locals market with a small amount of tourism. He warned that there currently is an oversupply of casinos in the market.
“The emphasis is on value for money,” he said.
The biggest challenge going forward, Eadington said, is forming a new tax structure that does not rely on gaming.
“Businesses looking to relocate here see the tax structure as inherently unstable,” he said. “Tax reform is more important now than ever before.”
Nevada is by no means empty-handed when it comes to building a new economy.
“Exports are up 25 percent the first six months of this year,” said Alan DiStefano, director of Global Business Development, Nevada Commission on Economic Development.
With federal grants and new state programs, businesses should be expanding their reach and capitalizing on emerging markets, DiStefano said.
“Seventy percent of the world’s GDP or purchasing power is outside the U.S.,” he said. “If you’re not outside the U.S., your competitors will be, and you will fall behind.”
The U.S. Small Business Administration recently awarded Nevada a $240,000 match grant, DiStefano said. The state will use the funds as part of a new program called NITRO, which stands for Nevada Investment and Trade Revenue Opportunities. Approximately $160,000 of the grant will go directly to companies ready to enter foreign markets. The money will cover promotional costs, such as translation fees.
“Right now, exports infuse $6 billion into the Nevada economy,” DiStefano said.
Another area showing positive growth is skiing.
“We want to take Lake Tahoe and its majestic environment to a level above everyone else,” said Carl Ribaudo, principal of Strategic Marketing Group and executive director of Ski Lake Tahoe.
Ribaudo reported that skiing and snowboarding at the Lake is up from a low of 2.9 million skier days in the 2008-09 season to 3.6 million skier days in the 2010-11 season.
“That’s roughly equal to the state of Utah,” he said. “You may wonder how ruthless competitors work together in a cooperative relationship. We work together when the competition is Colorado, Utah or Canada.”
Ribaudo said the goal of Ski Lake Tahoe, which represents several private resorts, and the Sierra Ski Marketing Council, which represents several visitors bureaus and other public entities, is to attract skiers from outside the Northern California market. He said that means focusing on over-night stays instead of day trips, and casting marketing nets as close as Southern California and as far away as Australia.
“Our goal is to attract destination skiers or boarders who come, stay longer, spend more money and have a greater economic impact,” he said. “We have to create awareness for this region as a premier destination for skiing and boarding. Then we have to clearly differentiate the destination. What makes us different, and does that difference matter to consumers? Third, we have to cause people to take a trip.”
Ribaudo said the lake itself is a key factor.
“We want people to see this not just as a place, but ‘the place,'” he said. “We need to innovate as a destination region. For too long we’ve been stagnant. We’re really looking at a transition into a much more recreation-based economy.”
Lisa Granahan, Douglas County economic vitality manager, said the county has been working with community partners on that very transition. She said the Lake Tahoe Basin Prosperity Plan takes into account the decline in gaming as well as potential growth in recreational industries.
“Tahoe Revitalization is one of 12 Douglas County projects,” she said. “It takes some of the suggestions from the Lake Tahoe Basin Prosperity Plan and begins to implement them – mainly transforming the South Shore from a gaming-based economy model to an outdoor recreation-based tourism destination.”
Mike Bradford, owner of Lakeside Inn and Casino, is championing the county’s South Shore Vision Plan, which focuses on creating new commercial areas from Kahle Drive to Ski Run Boulevard, Granahan said.
“The initial work on the vision plan was funded by a $50,000 contribution from the South Tahoe Alliance of Resorts,” she said.
The contribution means that despite losses in gaming, community stake-holders are still willing to bet on the future.