As thousands of gaming industry representatives begin arriving in Las Vegas for the eighth annual Global Gaming Expo, they will find the city much changed since last year’s conference and trade show.
The nation currently is facing a housing and financial crisis of historic proportions, and Southern Nevada could easily be considered ground zero. Or, at the very least, it is a microcosm of the nation’s economic woes: It is home to an industry devastated by decreased consumer spending, and its citizens struggle with the highest foreclosure rate in America.
This region, of course, reflects the challenges facing the entire gaming industry. Once thought to be impervious to economic fluctuations, the gaming industry has proved very vulnerable to the recent downturn. This is due, in large part, to the sheer magnitude of the economic crisis. Businesses of all stripes are affected. Still, there are two issues in particular that have combined to create the perfect storm our industry now faces.
First, consumer spending has dropped dramatically in recent months, and casino patrons have begun trimming their expenses. As is widely known, over the past several years, commercial casino companies across the country, from Atlantic City to Biloxi, Miss., have diversified their business plans to include dining, retail and entertainment. Today, roughly 60 percent of the Las Vegas Strip’s revenues come from nongaming activities.
By contrast, from 1991 to 1992 - during the most recent comparable economic slowdown - nongaming activities contributed to just 42 percent of total earnings along the Strip.
But now our patrons are spending less and less on luxury items and the high-end amenities our entertainment resorts provide, making these projects less of a boon than they once were.
The national credit crisis also has hit our industry hard, and the lack of available capital has forced many gaming companies to rethink timetables for new developments. Indeed, several major construction projects along the Strip have been delayed because of financing setbacks. As casino development projects stall, the prospect of new jobs and revenue sources that accompany them also dwindles.
But, as difficult as it is to believe, these challenges ultimately will make the gaming industry - and, by extension, the state of Nevada - stronger.
Diversification might hurt our industry now, but when the economy improves, it will only help us grow. The credit freeze may have temporarily suspended our projects, but when the markets thaw, the gaming industry’s development plans hold great promise for investors and communities.
And that’s what G2E 2008 is all about. This week, gaming industry representatives will come together to ensure that, when these economic troubles subside, the industry rebounds more successful than before. At G2E, we will share new ideas, innovations and best practices that will keep our industry exciting, fresh and vibrant in the coming years. G2E will be a chance to look ahead to a brighter future.
Difficult times often encourage creativity and ingenuity, traits that have long been hallmarks of the gaming industry. They have helped us overcome many difficult challenges in the past, from dealing with vocal opposition in new jurisdictions to recovering from natural disasters such as Hurricane Katrina. This may be a time of apprehension and uncertainty, but it also is a time of tremendous opportunity.
G2E also reflects the industry’s continued commitment to this city and other gaming communities across the country, as well as to the employees who are essential to our continued success. The gaming industry is determined to weather the current economic storm, and to use this challenge as a springboard for future growth and prosperity.
At its core, the gaming industry remains strong. Throughout all the recent economic turbulence, that fact has not changed. Armed with new ideas and renewed determination, the gaming industry will persevere and, in fact, emerge even better than before.