News - October 12, 2021 - by Ray Hagar
Nevada's gaming industry is on an historic run, tallying $1 billion or more in gaming win in each of the last six months.
Gaming's good fortune caught experts by surprise. Nevada's No. 1 industry was coming off of a drastic slowdown in 2020 because of the covid pandemic -- including a 78-day span when all casinos were closed by mandate from Gov. Steve Sisolak.
"I was shocked," Michael Lawton, a senior economic analyst for the Gaming Control Board, said on Nevada Newsmakers. "If you would have told me at the end of 2020 or even at the beginning of 2021, that we would be here today talking about this streak of $1 billion in gaming win, I would have laughed at you."
"I didn't see it coming," Lawton told host Sam Shad.
Nevada is now nearing the record for consecutive months with the gaming win at or above $1 billion.
"The all-time record is eight, so this is the second longest record, all time," Lawton said. "The longest streak was back in November of '07 through May of 2008. So we are at an historic rate of gaming win.
"If we finish the year with that average continuing, we'll hit $12 billion, obviously," Lawton said. "That has only happened three times, 2006, 2007 and 2019. So we are really on a historic run."
The current record-run is unique since the state's main economic engine -- The Las Vegas Strip -- is still struggling to get to pre-pandemic levels, Lawton said.
The current streak is being driven by the locals market and drive-in customers from nearby states, Lawton said. Those markets were probably juiced up by federal stimulus money, Lawton said. The total federal government payout to citizens through the American Rescue Plan Act has been more than $390 billion, according to reports.
"There was a lot of Federal stimulus in the market, too, that was pumping up the economy," Lawton said.
Slot machines, very popular with the domestic market, has been the driving factor in the current run.
"When you look at the gaming numbers in this historic run that we're on, they are pretty much being driven by slot play," Lawton said. "The slot play is 11 percent over 2019 levels. It is setting all sorts of records. So that is what is really driving these numbers.
The gaming industry's big concern now is getting The Strip back to optimum levels, Lawton said.
However, The Strip's health is complicated. It needs three factors to improve -- international customers, domestic/foreign air travel and conventions, Lawton said.
All three factors are beginning to improve, although slowly.
This week's Global Gaming Expo (G2E), traditionally one of Las Vegas' top conventions or trade shows, drew 13,000, according to the Nevada Independent's gaming reporter, Howard Stutz. In 2019, the same event drew 27,000.
"Without those three levers (international visitors, air travel, conventions) being pressed, the Strip was going to lag," Lawton said. "Those markets that relied on locals and could have drive-in (customers), they were at pre-pandemic levels very quickly. Washoe County, the Las Vegas locals, South Lake Tahoe all got off to a strong start, Mesquite, Elko. too. That is how it was playing out."
Full employment at various levels of Nevada's overall resort industry probably won't return until the convention business comes back, Lawton said.
"In my opinion and what I've been told, the convention piece is the piece that will potentially get people back to work," Lawton said. "The conventions, in the middle of the week, have all those restaurants firing on all cylinders, all seven days a week.
"And shows," Lawton added. "In order for shows to operate seven days a week, they need to run at a certain capacity. And if you are not busy in the middle of the week, those shows are not profitable. The convention piece is the piece that is missing and could potentially bring employment numbers back up, bring more employees into the building."
In his job as an gaming analyst, conventions are hard to figure, Lawton said.
"You know, it is a moving target with conventions," he said. "Originally we heard that it (convention business comeback) was going to be the fourth quarter of 2021. But recently, we've had the cancellation of a pretty big convention, the National Association of Broadcasters. That was disappointing to hear. So I think that goal-line now of when it comes back is being pushed back to 2022."
"So I think that is the biggest piece we are missing," Lawton continued. "The second-biggest piece is international play. International travelers, they stay longer and they spend more. So those are the two levers that The Strip needs to get back. I know the numbers are incredible for The Strip but they really are not operating at their optimal mix. There's still some pieces they need to be operating at their best capacity."
Some factors may put the state's $1 billion gaming-win streak in jeopardy in the near future, Lawton said.
"There is not going to be federal stimulus being pumped into the economy," he said. "That could bring us back down. The Delta variant, we are still not out of the woods on that.
"I think there is a displacement with money," Lawton added. "The traditional spending patterns are not back yet because everything is not yet back on line.
"The displacement, when things get back to normal, I think you will be seeing more money spent on food and shopping and all the other things that Las Vegas has to offer," Lawton said.