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Analysts Projecting a Brighter 2012 for Nevada Casino Industry

By Steve Green, Las Vegas SunMcClatchy-Tribune Regional News

Dec. 06, 2011--Analysts at accounting firm PwC have boosted their growth projection for Nevada's casino industry.

In the PwC (PricewaterhouseCoopers LLP) annual gaming forecast distributed this week, the firm projected Nevada gaming win of $10.4 billion in 2010 to reach $10.7 billion this year and then expand to just shy of $13 billion by 2015.

The 2015 projection would about equal the level reached in 2007 -- the high-water mark for Nevada casinos before the recession.

That figure represents an annual growth rate of 4.9 percent. By comparison, PwC a year ago projected an annual growth of 4.1 percent over five years.

"The momentum generated in 2010 (a 0.1 percent increase) is carrying over in 2011 and we project that the market will increase by 2.8 percent for 2011 as a whole," PwC said in its report.

The PwC forecast for Nevada gaming revenue in the next few years is aggressive, with its analysts expecting growth of 4.1 percent in 2012 and 4.6 percent in 2013. Projections for gaming taxes in the state budget, in comparison, are for growth of 2.5 percent in fiscal year 2012 and 2.7 percent in fiscal year 2013.

Despite the higher projected growth rate in Nevada casino revenue, PwC expects Nevada's share of the $57.5 billion U.S. gaming market to decline slightly through 2015 because of competition from Asia and as regional casinos pop up in populous U.S. markets such as Massachusetts and potentially Florida.

PwC numbers show Nevada's market share declining from 18 percent in 2010 to 17.66 percent in 2015.

"The steel skeletons of uncompleted developments still scar the Las Vegas skyline, and operators are facing the residual effects of high unemployment in California," PwC said in the report.

"The emergence of major resort casinos in Asia Pacific -- often (as in Macau) operated by U.S.-based companies -- will divert some of the U.S.'s overseas-derived business to that region. As the U.S.'s major international casino gaming center, Nevada will be disproportionately affected. Consequently, even when the economy returns to healthy growth, we do not expect Nevada to record increases comparable to prior gains achieved during periods of economic expansion," this week's report said.

On other issues, PwC said it expects the U.S. casino market, currently the world's largest, to be overtaken by Asia in 2013.

And the "elephant in the room" is online gaming, said PwC, which didn't offer an estimate for the size of that market.

"The fog of uncertainty that surrounds the size, scope, and often the legal basis of online gaming makes it hard to assess its current and future impacts, or to plan strategies around it," PwC commented. "What is clear is that the elephant in the room is not going to go away. Governments and regulators have an absolute need to create certainty and consumer protection around online gaming, while ensuring this activity is fairly taxed. This may take years, but it must eventually happen."


(c)2011 the Las Vegas Sun (Las Vegas, Nev.)

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