Hindsight not Insight


The picture is Thunder Valley Casino, just outside Sacramento, California; a city once home to 25 or 30 percent of Reno’s customers; it is from an advertisement inviting 20 and 30-somethings out to play.

The first time a news outlet called me for an interview was in 1985 when the California lottery was just starting.  The question was one I have fielded many times since: “what impact will this have on Reno and Reno’s casinos.  My answer in 1985 was a vague; I thought the lottery would make a 10 percent hit on gaming revenues.  Somehow that number seemed painless to me, I certainly did not think that meant the Comstock, where I worked, would suffer any decline.  We never adjusted our budget to account for that or any other subsequent gaming expansion in our feeder markets.

The next watershed question time in the process of making public guesses on impacts came in 1992 when Don Cox wrote an article for the Reno Gazette Journal – the 1985 question came from a Sacramento television reporter – in his article Don fantasized about a world where Harrah’s and the other corporate gaming operators decided to concentrate on California casinos and ignore Reno.  In his fantasy Harrah’s closed its Reno casino and left town; Don goes on to describe the impact on the state budget and the local economy.  Most of his fantasy predictions have come true (except many more casinos have closed than he predicted – 10 since 1992).  Don theorized two non-Indian but full casino zones being legalized in California, one near Los Angeles and one near San Fransisco; he also predicted I would move my office to LA.  In his story I thought the plan was really clever and would be very successful.  No word on whether the imaginary me was at all sad about the Detroit-like Reno.  In fact he asked me about his theory, I thought he was exaggerating and the situation would never get that bad.

Although Harrah’s has not left Reno, it puts its money and attention in more profitable markets, as do the other major gaming corporations.  The story is frighteningly accurate, enough that the Gazette republished in this month 18 years after it appeared in print the first time.

And finally, another reporter wrote an article this week about buying and selling casinos in Reno; at least two are for sale and the reporter was wondering who potential buyers might be and why anyone would want to invest in gaming in Reno given the years of decline that have followed Indian gaming in California and the rest of the West Coast, the introduction of lotteries in all of the surrounding states, the highly successful card rooms in California and the miserable state of the economy in Nevada. Most people interviewed thought buyers would be hard to find, financing next to impossible and any significant improvement in conditions at least a couple of years away.  I had no greater insight and repeated what others said.

Unlike 1985, a 10 percent decline no longer seems meaningless or painless to me; add up all of the 10 percents, one from Indian casinos in Oregon, one from Indian casino in Washington, one from casinos in Canada, 30 or so from Indian casinos in California put them all together and you get something like the current level of gaming revenue in Reno.  Now, we are hoping for stabilization and no new competition – in those days (both 1985 and 1992) without really trying to understand long-term impact I had simple, pat answers; I had not, nor had anyone in Reno, even begun to understand the impact of Indian gaming.  In 1985 the California lottery was forecast to produce $2 billion in annual revenues; about 2000 I did a report for a Nevada client contemplating additional investment in the Reno area, at that point my estimates of gaming revenues – lottery, card rooms, racing and Indian casinos – in Washington, Oregon and California were about $25 billion a year.

As I so blithely said in 1985, not all of that money would have come to Reno, but some of it would have; and more importantly that number represents a very large percentage of the total disposable income in those states – the money that is spent in the entertainment category, the money that is allotted to gaming.  Simply, Reno’s customers have spent their gaming money at home for years and have very little, if any money left over for Reno.  But this is all hindsight, not something I could see in 1985 or 1992.



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