Home How a Turnaround in Gaming Can Impact the Building Industry

How a Turnaround in Gaming Can Impact the Building Industry

Bullishness and optimism (albeit cautious) was the buzz at NIGA this year. In fact, most people involved in the gaming industry have a renewed bounce to their step. Upbeat attitudes intertwined with subtle economic gains signal the economy is showing signs of life again. An encouraging report recently published by the 2011 AGA Survey of Casino Entertainment reaffirms that sentiments are improving. A whopping 73 percent of global gaming suppliers think industry conditions will improve within a year—a robust vote of confidence.

For those of us who earn our living in construction and design, the ripple effect of positive economic forecasts equates to a resurgence in renovation, retrofits, gaming expansion and new ground-up facilities. On the flipside—cautious optimism is the new mantra—not many people anticipate, at least in the foreseeable future—a rewind of the previous decade when no one lifted an eyebrow at gold-tinted windows. With that said, there are a handful of major players that are moving full bore, proposing “miniature cities” designed as international destinations.

Economic growth, as it relates to construction in gaming, seems predicated on geographical regions, with some areas more poised to launch than others. While commercial gaming in Nevada is still king, a number of states have experienced a solid increase in commercial gaming and racinos revenues, including Pennsylvania, Oklahoma and New York.

At TPC Building Group, we anticipate quite a bit of potential on the East Coast. The enormous population base and the easing of state and local regulations in order to collect additional tax dollars bode well for gaming. We recently built and delivered in 12 months Genting’s Resorts World Casino New York City in Queens, N.Y. When we entered the gaming market in the early 1970s, few imagined gaming would spread like wildfire across the country, but as state and local governments grapple with mounting debt, gaming provides a creative avenue to balance lopsided budgets and keep state dollars at home.

Resorts World exemplifies the lure of pro-gaming legislation through its extraordinary swiftness and impact on state coffers. Within less than five months of opening, Resorts World generated more than $105 million for the New York Lottery’s Education Fund. On an annual basis, the casino contributes $350 million in state tax revenue to support education, with 1 percent of pre-tax profits donated to the local community. The project created more than 2,500 jobs in the state of New York. The most recent article I read interchangeably uses the word “goldmine” for Resorts World and its 20,000 daily visitors.

As more states allow gambling and competition grows even fiercer, gaming establishments have little alternative but to invest in non-gaming amenities. Studies show that the majority of patrons who visit casinos consider it a “total experience” that may or may not even include gambling. Referring back to the 2011 AGA Survey of Casino Entertainment, 16 percent of casino patrons don’t or rarely gamble. They visit casinos to shop, be entertained and eat in unique, upscale restaurants. So how important are non-gaming amenities? The AGA states that almost three-quarters of casino patrons partake in fine dining, and 56 percent see a show when visiting a casino.

As visitors begin to trickle back to their favorite casino, the brakes are bound to come off projects that have been tucked on a shelf for the past three years. Our sense, in addition to actual RFPs, is that casino operators are dusting off plans for small, medium and large projects. Facelift projects will also resurface as the economy gains momentum. As the purse strings loosen, all of us in the design and construction industry are excited about the future.

Based on the steady rise of Native American gaming revenues and the number of tribes in the queue waiting approval for land-in-trust and compacts to be approved, Indian gaming has room to grow and is positioned for even more success as the economy rebounds. According to Casino City’s Indian Gaming Report, from 2000 to 2010, the average annual growth rate for commercial casino gaming revenue was approximately 1 percent. The annual growth rate for Indian gaming during that same time year period was roughly 9 percent.

The gap in total annual revenues between Indian and commercial gaming is closing. In 2010, annual revenues generated by Indian gaming were $26.72 billion, and 2010 annual revenue for commercial gaming was $34.60 billion (which includes $6.7 billion from racinos).

There are a variety of reasons for Indian gaming’s ascent—it’s allowed in more states, and it’s less competitive, although that’s changing. But a main reason is the quality. When you compare similar type and similar cost facilities (commercial vs. Native American), there is no difference. I don’t want to single out one high-end Native American casino we have built, but they are all equally as spectacular and amenity-driven as the commercial casinos we have built in Las Vegas, New York and Atlantic City. The boom of Native American casinos has been an amazing success story—one that is far from over.

The gaming industry, like the construction industry, is aggressively competitive. The industry is not for the faint of heart. When we entered gaming in the 1970s, we were among a handful of general contractors equipped to build elaborate, fast-paced casinos. Although we still rank in the top position, competition in all touchpoints of the gaming industry is much more ferocious, which isn’t a bad thing. Competition breeds diversity, better systems, quality and creativity. Looking ahead, if we had a crystal ball to predict what’s in store for construction in the gaming and hospitality industry—our bet is profitable years to come. Sentiments are changing. I speak with people all over the country, and for the most part, optimism, forward thinking and a readiness to roll is what I’m hearing.

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