If The Recession Is Over, Where Are The Gamblers?

By now, everyone has read the stories of gaming communities struggling under the weight of the Great Recession and increased competition. The economy is improving, so gaming’s struggles must be related to competition, right? Economic downturns affect every business, but they pass and things get better. The impact of added competition is usually worse and longer lasting. The impact of competition is an old story in Reno. From my perspective it started in 1986 when California legalized the state lottery. That was the first crack in the damn because until then, Reno enjoyed a monopoly on casino gaming. Granted, casinos had existed in Atlantic City for a few years, but Reno and Atlantic City did not compete for the same customers.

However, anything that took gambling dollars from Californians had a direct, immediate and adverse impact on Reno. The California lottery took dollars that in previous years might have gone to Reno and kept them at home. But the lottery was not the only gambling that came to California; it was followed by card rooms and Indian casinos. And California was not the only state legalizing gambling; Canada, Oregon and Washington all gave their citizens options to stay at home and gamble. Since California first started selling lottery tickets, those states added lotteries too. Now there are lotteries, casinos, race tracks, card rooms and video lottery terminals in all of Reno’s traditional markets. All of that homegrown gaming significantly impacted Reno. The number of tourists visiting Reno is about half what it once was and gaming revenues are down 34 percent since the peak in 2000. The decreasing revenue has forced many changes in Reno’s casino industry, including the closing of over 20 casinos.

Reno is not alone in its misery; many other jurisdictions are beginning to experience the woes of competition. Atlantic City gaming revenue is down 45 percent since 2006. To one degree or another, the same trend is evident in Indiana, Pennsylvania, Mississippi, West Virginia, Michigan and other states; it is a national trend. It is not always caused by competition, sometimes it is caused by economic downturn and in some jurisdictions it is caused by a combination of the two factors.

Recently, I found an interesting story about the effects of the recession and competition on Las Vegas. It was a travel story about the Pechanga Resort in Southern California. The writer, Scott Bridges in the L. A. Biz publication describes his experience playing golf and eating dinner at the resort. According to the story, the casino is doing very well, in part because of the recession. Citing a spokesperson for Pechanga, Bridges says when money got tight in the recession, gamblers stayed closer to home. They chose to stay in Southern California rather than drive to Las Vegas. The spokesperson says that while people still go to Las Vegas to gamble, they go less often. Between trips to Vegas they stay home and go to an Indian casino.

“People who used to go to Las Vegas six times a year, maybe they’d just go two or three times a year,” Green says, and visit Pechanga the other times. Credit the down economy. That’s what Ciara Green tells me. Green is the public relations manager for Pechanga Resort & Casino in Temecula…Fiscally speaking, things appear to be improving, and for the gamblers and resort-goers who discovered Pechanga during the recession, they continue to return anyway. With a casino floor bigger than even Vegas’ MGM Grand, a stunning smoke-free bingo room and everything-you-could-ask-for poker room, a dozen on-site restaurants, fitness center and spa, and an acclaimed golf course on site, it’s no wonder why…The first thing that makes Pechanga different is the location. Temecula, off the 15 Freeway, is convenient to Riverside, San Diego, Orange and Los Angeles and San Bernardino counties, and is home to the most impressive wine country south of Santa Barbara. – Scott Bridges, L. A. Biz, 4-8-14

When money gets tight, people change their spending habits. They change how and where they spend it. They stay closer to home for one thing, like those people going to Pechanga in California. But, they also learn to spend their money and time on other things, such as eating out, movies and the internet which includes shopping and maybe even some gambling. By all accounts the Great Recession is pretty much over. The economy is not completely recovered, but things are better. We are no longer spiraling downward; consumers are regaining confidence and spending money once again. However, even when no new competition is present, many gaming jurisdictions are still struggling. It seems that the gaming customer is still hesitant to spend as freely as before. Or maybe that customer is going someplace else and doing something different. Nobody seems to know. We do know that gaming is not recovering at the same rate as the rest of the economy. It is a subject much discussed today around the conference tables in the gaming industry. Where are those customers? Have they found some place else to spend their money?


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