Tourism tested in new year

The coming year will be a real test for

northern Nevada's gaming and tourism

industries.

Growth in northern California Indian

gaming, the trench ReTRAC project, a

slowdown in air travel - those and other

challenges face the area's leisure industries

in 2003.

Some issues are not new. Air passenger

travel through the Reno-Tahoe

International Airport has been declining

since at least 1999. In that year, 6.1 million

air travelers passed through the airport.

That total dropped 8 percent to 5.6 million

in 2000, and dropped again in 2001,

by 12 percent to 4.9 million. The total for

2002 is not yet available, but passenger

traffic through October was down 10 percent

from the same 10 months in 2001.

The airlines are struggling more than

ever and next year will likely get worse

before it gets better for the area's airports.

The problem of Indian gaming isn't

new either, but several important milestones

are expected in 2003. First, in

March, the tribes are renegotiating their

compacts with the state of California.

Currently the tribes are allowed up to

2,000 slots per casino, but they will be

looking to increase that number significantly.

They'll likely get what they want if the

tribes agree to share more gaming revenue

with the state, according to Bill

Eadington, University of Nevada, Reno,

economics professor and director of the

Institute for the Study of Gambling and

Commercial Gaming.

"California will be desperate enough for

the revenues and will allow more slots if

the tribes agree to allocate a portion of slot

revenues to the state in the same way

Connecticut does," said Eadington. "That

would give the state $250 million. Now it

only gets $70 million. And the state is facing

a $20 billion deficit."

That's good news for California. "But

the point is if they take that position then

it's not good news for Nevada," said

Eadington.

The casinos will

also likely be successful

with additional slots,

said Eadington, since

the market there is

now underserved.

"The rule of thumb is

one gaming device per

100 population. That shows up everywhere,"

there is gaming, he said. "There's

50,000 devices there now for 35 million.

Using that rule of thumb there could be

350,000 devices for that population capacity."

More bad news is coming next summer

when the Thunder Valley Station casino is

scheduled to open in Roseville, Calif., near

Interstate 80. The Indian casino is expected

to have close to 2,000 slots, 100 games

tables, a 500-seat buffet and three restaurants.

The casino could immediately begin to

attract travelers that would otherwise venture

to northern Nevada. "But the real

question will occur next fall and winter

when they're challenged with driving over

the mountain," to reach Reno and Sparks,

said Eadington.

Another casino is going up near

Placerville, 45 minutes from Sacramento,

and it recently received approval to build an

off ramp from Highway 50, said

Eadington.

"There are increasing choices in

California. It will grow the market but it

will also grab those that drive here now," he

said. "The question is how many will be

siphoned off."

Add that to the fact that Washoe

County gaming, in particular, is already suffering.

While statewide gaming rebounded

somewhat late in the year,Washoe County

gaming continued to decline. The latest figures,

for October, show 5 percent gain in

gaming wins statewide

and a 5 percent drop

in Washoe County.

Total visitor volume

is down also. In

the third quarter, the

number of visitors to

Washoe County

dropped 11 percent to

1.2 million.

Convention attendance fell 37 percent to

29,390. Meanwhile, hotel room nights were

up 2.5 percent to 1.4 million.

The three-year trench project could add

insult to injury by deterring people from

going to casinos south of downtown, said

Eadington.

All this adds up to trouble for the

Washoe County economy. Numbers for

2002 aren't yet tallied, but in 2001, the

Washoe County economy took a 4 percent

hit when the number of visitors dropped 4

percent and gaming wins fell 5 percent.

That's why the state's tourism officials

are working to remake Nevada's image as an

adventure destination. The biggest news at

the Governor's Conference on Tourism earlier

this month was the announcement that

the ESPN Great Outdoor Games are going

to be held in Reno next July.With it comes

about 50 hours of television coverage and

tens of thousands of visitors.

"We're working to diversify our economy

so it's not totally dependent on tourism,"

said Lt. Gov. Lorraine Hunt at the conference.

Northern Nevada's economy may

depend on it.