Experts, lawmakers react to slight gain in 1996 casino win

Wednesday, Feb. 12, 1997 | 4:23 a.m.

The slight gain is the smallest percentage increase since 1970 and that's "certainly a matter for concern," said William Thompson, a University of Nevada, Las Vegas professor who analyzes the gambling industry.

Thompson pointed out the rate of increase last year was even lower than during 1981, the year following the tragic fire at the MGM Grand Hotel in which more than 80 people died.

The December 1996 win was 5.8 percent lower than in December 1995 - the fourth decline in the last five months - and Senate Majority Leader Bill Raggio, R-Reno, said that calls or caution in state spending.

The state levies a 6.25 percent tax on casino winnings and since July has taken in $241.9 million in casino taxes - down $11 million, or 4.2 percent from the same period in the previous fiscal year.

About 35 percent of the state budget comes from casino taxes. The state originally had expected a 4.5 percent increase in such taxes during the current fiscal year, followed by a 5.4 percent increase next year.

If casino tax collections continue at the same rate, then collections will fall $45 million short of estimates during fiscal 1996-97.

"It will be an issue for the Economic Forum," Raggio added. The Economic Forum, a group of independent business leaders, calculates the revenues the state has available to spend. It must make a determination in May how much will be available in the 1997-99 period.

The stagnation occurred even though casinos throughout the state added more than 8,000 slot machines and 200 table games during the year. The Stratosphere, Monte Carlo and Main Street Station in Las Vgeas all opened during 1996.

Thompson said there's more and more talk in Las Vegas about gambling reaching the saturation point.

Gary Horton, economic analyst for Comstock Bank in northern Nevada, believes Las Vegas has reached that point. But unlike other times Las Vegas endured slow periods before the demand for gambling increased, Horton figures a rebound this time is unlikely.

"The world has changed dramatically," he said. "Today we have Atlantic City and Indian gaming. The game is going to get tougher."

Instead of opening new megaresorts, the future of gambling may be in tearing down old hotels and replacing them with plush ones of a similar size, Horton said.

"I think there are going to be major shakeouts. The industry cannot absorb this much capacity," he added.

But countering the slowdown in casino winnings are the continual reports of big increases in non-casino business sales and record numbers of visitors in Las Vegas.

The Las Vegas Convention and Visitors Authority reported Tuesday that 27.4 million people had visited Las Vegas through November, up 2.5 percent for the same period in 1995.

And despite the opening of more than 6,000 new hotel rooms, the hotel occupancy rate through November was 91.4 percent, up from 88.8 percent during the same period in 1995.

"We may be bringing in a poorer clientele who are paying more for hotel rooms and adjusting their gambling budget," Thompson said.

While casino revenues have fallen 2.5 percent since July compared with the previous year, retail sales by all Nevada businesses continue to skyrocket, recording double-digit increases every month in 1996 except for one when the increase was 9 percent.

"We are certainly busy in Las Vegas," Thompson said. "Maybe the visitor is turning to ancillary products. If we can still get the money, fine."