ven as city leaders remain hopeful that gambling revenues will rebound with the nation’s economy, experts project that it will not be enough to make up for an even deeper realignment that has taken place in the course of this recession: the collapse of the construction industry, which was the other economic pillar of the city and the state.
Unemployment in Nevada is now 14.4 %, the highest in the nation and a stark contrast to the 3.8 % unemployment rate here just 10 years ago; in Las Vegas, it is 14.7 %. August was the 44th consecutive month in which Nevada led the nation in housing foreclosures.
The Plaza Hotel and Casino, which is downtown, recently announced that it was laying off 400 workers and closing its hotel and parts of its casino for eventual renovation, the latest high-profile hit to a city that has seen a steady parade of them.
“It’s been in bad shape before, but not this bad,” said David G. Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas. “If you look at the gaming revenues, they have declined and continue to decline over the past three years. “
“September 11 set off a two-year slowdown,” Schwartz said. “But nothing of this magnitude.”
Mayor Oscar B. Goodman said in a recent interview that he was “very bullish on our future,” offering as evidence the packed airplanes he encountered both ways on a recent trip east to appear on “The Colbert Report.”
But, he added: “Our daily room rate average is not what it was. Our hotel room rates are bargains now. People aren’t spending on gambling as they have in the past. Ordinarily Las Vegas was the last to go into a recession and the first to come out. This one is different. As soon as they feel secure in their financial position, then Las Vegas will come back stronger than ever.”
The drop in the city’s gambling revenues, at first glance, tracks historical trends: Americans cut back on recreational travel and gambling during a recession. There are some signs that gambling revenues, which are down to 2004 levels, have at least stabilized. After months of precipitous decline, revenues increased 3 % in the first quarter of 2010, but then dropped 5 % in the second quarter, according to the Center for Gaming Research.
“I think we are bumping along the bottom,” said Stephen P. A. Brown, the director of the Center for Business and Economic Research at the University of Nevada, Las Vegas, which has been tracking the downturn. “Expectations are that once the U.S. economy turns around, the gaming industry will begin to improve.”
What is worrisome now is the nature of this economic downturn, when many people saw the value of their retirement funds or homes collapse. Economists say people are less likely to gamble as freely as they have in the past, particularly baby boomers, who may now be rattled about their retirement years. In one sign of this, while there were more people coming to Las Vegas in recent months, gambling receipts have remained stagnant.
“The big players, the ones who gamble the big money, I’m not sure they have it anymore,” Goodman said. Gambling by Nevadans — itself a steady and critical stream of revenue — has also fallen off as a result of high unemployment, and analysts see no obvious way to turn that around anytime soon.
“Although gaming dropped with this economy, don’t automatically assume that when the economy comes back people will start gaming at the same level,” said Keith Foley, a senior vice president at Moody’s Investors Service who tracks the industry. “We put this in the grand scheme of things. This is a highly discretionary form of spending. People lost their savings.”
And in the midst of all of this, standing as a prime symbol of Las Vegas’s taste for extravagant risk — or perhaps of a fateful misreading of a changing landscape — is a huge new “urban community” called CityCenter, which opened next to the Bellagio on the Strip.