Four years after the Great Recession officially ended the Nevada gaming industry has still not recovered and demographics suggest that it will be a long time before it will comeback to the heady days of the 2000’s
According to last week’s report from the Nevada Gaming Control Board the state’s gaming industry reported a total gaming win of $10.9 billion for the fiscal year that ended in June. That is just under $2 billion less than what was collected during 2007 just before the Great Recession and since 2009 the total gaming win has never exceeded $11 billion annually.
It is considered extremely unlikely that the Nevada casino industry will in the near future again average a $1 billion a month and not just because of the economy but rather demographics. According to US Census data there were about three million less people in the prime gambling age bracket of 25 to 44 year olds from 2000 and 2010 and the deficit is expected only to grow as baby boomers retire or begin dieing off in larger and larger numbers.
Not only are there fewer prime gamblers, those in the prime demographic have on average less disposable income than a decade ago and much less than 20 years ago. In 2000 the average college graduate had less than $20,000 in student debt today that number is fast approaching $40,000. Not only is the debt growing in individual amounts but the number of college graduates is also expanding. In other words while there are more people with degrees there are more people with higher individual debt than ever before in the history of America.
In addition job prospects have fallen dramatically to the point that well over 30 percent of the population under 30 has moved back in with their parents. And while the younger generation has less money to spend, their parents have less of an inclination to do so. According to study after study once past middle age people are less likely to gamble and when they do the gamble smaller sums for a shorter period of time.
Not only is the younger generation poorer than their parents were at the same age, they are also different socially than even the generation of the 60’s than the one that fought World War II.
While Archie Bunker and Mike Stiveck didn’t have much to talk about, both still talked most often loudly. Today’s youth text; lower case in normal conversation, all caps when shouting.
The jury is still out whether they will gamble but so far indications are that even if the do they do it differently than any generation before them.
“You can tell immediately if the people you are playing do it on line,” said Idaho Attorney and once avid poker player Brad Frazer. “They are mostly younger, they don’t talk, no table chatter, no tells and they play really fast. They are just different.”
For years the casino industry has fought on line gambling until last year when the Nevada Legislature drafted legislation to regulate it.
But to a generation that pioneered pirating movies and television, illegal especially in regards to internet restrictions means very little to the info generation. When internet gambling was banned in the United states five years ago the action on the web was barely dented. On line casinos merely went off shore or sometimes just bought foreign IP addresses as did their American players.
The question for the Nevada gaming industry can some how lure enough of these new gamblers off their smart phones and into casinos.
So far the answer appears to be no.
The gaming industry may be hampered in attracting the new market at least in part by the baby boomer generation which still makes up the lion’s share of the decreasing market.
What casinos have done at least in Las Vegas is to develop a totally new market of baccarat playing Asian high rollers.
According to the most recent gaming figures baccarat play accounted for slightly over 25 percent of the states total January gaming win. Given the fact that well over half the profits generated by baccarat come from just six Las Vegas Strip casinos and fewer than 10,000 Asian high rollers it is understandable that any notion of some kind of disruption in flight traffic from Asia to Las Vegas is enough to cause casino execs, gaming commissioners and state and county assessors to reach for either anxiety meds, heart burn pills or both.
“It goes without saying the income generated by baccarat is very important,” said Michael Lawton chief analyst for the Nevada Gaming Control Board.
Not only did China and the so called little tigers of Vietnam, Laos, Taiwan and Singapore weather the world wide economic down turn better than the rest of the world, their economies have also rebounded much faster and so has the demand for baccarat.
But while the new source of revenue is welcomed in the Silver State it is still very fragile which is why any hint of a disruption to flights from Asia to the United States makes everyone very, very nervous.
According to analyst a short term bump would be significant turning a monthly report from a plus to a minus, a long term disruption could be disastrous to the Nevada Gaming Industry as Asian gamblers seek and find action closer to home and possibly deciding to stay there.
