Tuesday, November 23, 2010

Looking Ahead: What's Next for Nevada? And for Vegas? (Part 1)

2010 has definitely been a wild ride... But what might 2011 possibly have in store for us?

Soon-to-be-Governor Sandoval is already loading up his future staff. Education activists are already threatening law suits if Governor Sandoval and/or The Legislature try to cut too much. And speaking of that budget, it will be quite brutal and internal GOP strife may cause a number of additional headaches and/or opportunities.

Nevada's unemployment rate is finally dropping... But that doesn't mean happy days will be here again so soon. Sheldon Adelson may be feeling bullish about the future, but that's largely because he's now investing in Asia... Only 15% of Las Vegas Sands' revenue actually comes from Vegas, and word has it the numbers at Wynn Resorts look awfully similar. Harrah's Entertainment will soon become Caesars Entertainment, but that still doesn't answer the question of when Harrah's/Caesars will finally finish the Octavius Tower at Caesars Palace, along with that "entertainment district" near Harrah's that they've promised for some time. Apparently MGM Resorts' bookings are up and Wall Street is feeling more bullish about MGM and Vegas these days, so things are looking better. Just don't expect a return to the mythical "glory days" any time soon.

So where am I going with all my wild and crazy ramblings? Come on. I laid it all out for you in March.

[T]he casinos can no longer be counted upon as a "free ride". We can't just expect new casino construction to prop up demand for construction jobs, which props up demand for new housing, which props up demand for housing construction, which props up the rest of Southern Nevada's economy. We may have lucked out in seeing this model work from 1989 to 2007, but all it really did was hide the weaknesses in this shaky economic model that ended up being exposed when "The Great Recession" hit and all the artificial demand for new casinos, new homes, new whatever fell like a row of dominoes.

The Cosmopolitan will be opening next month, but once that opens we probably won't be seeing any new Strip casino-resorts opening for at least five years. We've really learned the hard way that we can no longer rely upon an unsustainable "growth begets growth" model of construction being fueled by artificially inflated "demand" fueled by real estate speculation. Those days ended three years ago, and it makes absolutely no sense to even try to return to that model. Even though the gaming industry will most certainly improve, that and the "growth industry" that has come with it can no longer be our sole source of sustenance.

Nevada needs to change, that much is clear. We need to change dramatically. We need to change our priorities. We need to change the way we think of our economy. We need to go beyond our "comfort zone" of relying upon the casinos for everything, slapping together "quick fix budgets" loaded with "legislative band-aids and duct tape", continuing to delay the building the kind of infrastructure our state needs to move forward, and putting so much effort into making today's "quick fix" that we forget about the challenges facing us tomorrow.

So how do we change? Later, I'll be talking about where I think we need to go.


  1. The good news is that housing is a lot more affordable. May be the only good news.

  2. Good point about needing to prioritize long term solutions rather than focusing on short term fixes.