Tuesday, June 17, 2008

Lady Luck Can't Afford Gas to Go to Las Vegas?

A sign that high gasoline prices impact everyone can be seen by the impact on the Nevada gaming industry. Reuters reports that Nevada April 2008 gaming win was 5.1% less than April 2007's gaming win.

Now when the gambling industry talks about "win," they're not talking about YOU winning. They are referring to the money YOU leave with THEM. That said, they didn't take as much from you in April compared to April last year. Why? Well it could be that you got lucky, but the better answer is that less of you went to Nevada and if you did, gambled less.

The Las Vegas strip April gaming win only dropped 1.3% to $524 million. As Dr. Evil would say, "Yes, Mr. Bigglesworth, 524 MILLION DOLLARS." (That's enough money to build a factory that makes minature models of factories) The strip accounts for half of Nevada's gaming win, which tells you that Reno, Tahoe, Laughlin, Downtown Vegas, etc., are getting hit worse.

Does that mean that people are gambling less? Perhaps. But the Reno/Tahoe area in particular has been feeling the impact of Tribal casinos in California for a few years. Why travel all the way to Reno when you can stay close to home and play, especially if gas prices are over $4 per gallon?

Nevada's problem is that the large nearby population base (a few hours drive away) in California, has a great deal of Tribal casinos, which offer basically the same gaming experience, but much closer to San Francisco, Los Angeles and San Diego. The allure of the Las Vegas strip is being hampered a bit by high airline ticket prices and the price of gas in general, as well as increasing competition for Asian players from Macau.

So if you want to gamble in the era of high gasoline prices, you gamble closer. Gambling venues very close to large population centers should perform a bit better. That is borne out by the recent numbers from Atlantic City. Another Reuters report shows that May 2008 gaming win was up 1.6% year over year, to $415 million. Assuming that Atlantic City hasn't substantively added attractions, it is a fair hypothesis that gamblers may be sticking closer to home.

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