Leaving Las Vegas But Devastating Atlantic City and Reno

Employment in casino hotels in the U.S. is on the decline.  Atlantic City, Las Vegas and Reno are seeing fewer visitors and lower revenues.  Part of this decline is due to the weak economy and stagnant middle class incomes.  The employment declines also reflect a long-term shift away from gaming in cities such as Atlantic City and Reno to other forms of gambling and entertainment.  Atlantic City casinos face competition from casinos in Pennsylvania, Delaware and Maryland, and Reno casinos have been hit hard by a very weak Nevada economy and increased competition from casinos in California and other western states.  As more states and cities allow casino gambling as a way to generate state and local government tax revenue, Atlantic City and Reno are likely to suffer even bigger declines in demand.  At one time these cities offered a relatively scarce commodity – legal casino gambling.  They now face sluggish demand because of a tepid economic recovery and increased competition.  Neither of these economic factors is likely to change soon.

The struggles of Atlantic City casinos have been well documented as earnings in the second quarter of 2013 are reportedly down 45% from the second quarter of 2012.  Employment in Atlantic City casino hotels in the second quarter of 2013 was nearly 35% below employment in 2000.  (For ease of exposition in what follows I use casinos to describe the industry group for “casino hotels”)  While employment in Las Vegas casinos is down only about 5% from 2000, casino employment in the rest of Nevada is down 43% from 2000.  Reno has the largest concentration of Nevada casinos outside of Las Vegas and employment there is down 44% since 2000.

As the following chart shows the sharp declines in casino employment in Atlantic City and Nevada outside of Las Vegas has occurred at the same time that casinos have been rapidly expanding outside of Atlantic City and Nevada.  (The chart normalizes employment to 100 in the first quarter of 2000 using the Current Employment Statistics series of the BLS.)

CasinoHotels

Employment in casinos outside of Nevada and New Jersey is up about 45% since 2000.  Vacationers who previously travelled to Atlantic City and Reno to gamble are instead visiting casinos along the Gulf Coast, or one of the 470 American Indian casinos located across the U.S. (including Connecticut, upstate New York, and parts of California).  Casinos outside of Nevada and Atlantic City employed 13.2% of all casino workers in the U.S in 2000 but now account for 21% of U.S. casino jobs.  Moreover casinos outside of Nevada and Atlantic City now employ more workers than all the casinos in Atlantic City, Reno, Laughlin, Lake Tahoe and all of Nevada outside the Las Vegas metro area.  This trend will continue as states and cities hungry for new sources of tax revenue allow more casinos to be built.  New casinos located throughout the U.S. will offer even more competition to Atlantic City and Reno.  The unemployment rate in 2013 has been an average of 13.2% in Atlantic City and 9.8% in Reno – both well above the U.S. rate.  Increased competition in casino gambling, the primary entertainment and tourist attractions in these cities, means that their local economies will continue to struggle.

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