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December 21, 2014

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Economists project rebound in gaming but disagree about how much

CARSON CITY — Economists project Nevada’s gaming business will rebound from the recession over the next two years, but they can’t agree on the strength of the recovery.

Economists with Moody’s Analytics see more visitors, conventions and international flights coming into Las Vegas to boost the tourism business.

Dan White, assistant director of Moody’s, told the Economic Forum on Friday that as profits grow nationally, the casino business will see more players. Moody’s projects a 9.3 percent increase in the percentage of gaming fees next fiscal year and 13.1 percent in fiscal 2013.

On the other side was the prediction of the state Budget Division of a gain in the casino business of 2.7 percent next year and 2.8 percent in fiscal 2013.

Janet Rogers, an economist in the budget office, foresees a dramatic shift in people’s attitudes toward spending their discretionary income. She suggests spending will be “very cautious.”

The Economic Forum was bombarded with a multitude of estimates of how much the state will collect in taxes in the next two years. It will then make its own estimate that the governor and Legislature will follow in building the state budget.

The Forum returns Dec. 1 to make its projections.

Michael Lawton, senior research analyst for the state Gaming Control Board, predicts growth on the Las Vegas Strip but flat or a continued decline in growth in other casino markets in the state.

“Growth comes from one place — the Strip,” Lawton said. “The balance of the state will lag behind.”

Lawton is forecasting a growth of 4.2 percent in fees paid in fiscal 2012 and 6.3 percent the following year.

There is also a correlation between the growth of gaming in Macao and growth in Las Vegas, he said. Once gamblers visit Macao, they will want to come to Las Vegas, Lawton said.

Moody’s sees future strong employment growth nationally, which should bring more visitors to Las Vegas.

Augustine Faucher, director at Moody’s, told the Economic Forum that it is more optimistic than the other economists in the national growth. Unemployment will come down faster and business will have cash to hire, he said.

Matthew Maddox, a member of the forum and an officer in the Wynn group, said there has been an increase in the hotel occupancy rate recently.

He said baccarat players and nightclubs are spurring the business. There has been a major shift into food and beverage in the hotel-casinos, he said.

The state agencies have a combined $4.27 billion estimate of tax revenues in the coming two fiscal years. The budget office is predicting $4.18 billion ,and the fiscal division of the Legislature is forecasting $4.15 billion for 2012-2013.

There have been estimates the state will fall short $2.5 billion to $3 billion to fund the upcoming biennial budget.

Alan Schlottmann, professor of economics at UNLV, suggested a “very conservative estimate” in making the forecasts. He told the forum he has a deep concern that Nevada’s economy will lag in achieving positive gains.

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  1. The core of the growth will be spurred by the Wynn, the Venetian properties, Belliago, and City Center. The other gaming properties on the strip will have to rethink their approach to the quality of their product offerings. If anyone has notice we are seeing more and more of the 25 to 35 age group. This group is not the traditional gaming day schedule of eating at 5 pm and gambling after dinner. They play any hour of the day or night and eat on their schedule. Plus, you will see them drinking anytime, no matter the hour of the day or night. They spend money freely, without the emotion of losing, mainly expecting a quality product and willing interaction with staff and other patrons. The above mentioned casino properties offer all of this and more.

  2. ...a budget that is several hundred million dollars larger than our current one.