The New Economy - How Gaming is Affected

19 September 2001

By David Waddell

It is difficult to focus on what economic impacts the horrible terrorist attack in New York and Washington D.C. will have on the United States' economy. This is especially true when one thinks about the thousands of lives that have been forever scarred. However, it is a reality of the business world that we all have to regroup and move forward. The United States has seen tragedy in the past involving the assassination of its Presidents and bombings of its military bases, but nothing like the events of last week has ever occurred in U.S. history. Thus, there are no good comparisons to give us an idea about the impact these events will have on the United States and world economy. Certainly, the citizens of the United States will eventually return to a relatively normal life. The issue that will be debated for years, and potentially for decades to come, is how will normal life be defined.

To analyze the effects that the attacks on New York and D.C. will have on the casino gaming industry, one has to look at Las Vegas separately from the rest of the gaming jurisdictions located across America.

There is no doubt that there will be a reduction in air travel in the United States. In addition, based on national polls, most Americans have stated that they will reduce their travel plans as a result of last week's events. Considering that the great majority of the 34 million people who visit Las Vegas do so via airline transportation, it is logical that the number of visitors to the city will decline. However, the industry's reactions to current market conditions will define how the gaming industry is impacted in the long term. The Las Vegas gaming market offers a product that is unique only to Las Vegas. For many years, Vegas has operated on a philosophy of "build it and they come." The more unique and costly the better. With the emotional scars of last week's tragedy, Las Vegas will need to develop a new approach to its business model. Continuing to offer a high quality gaming experience with reduced staff, and potentially a reduction in entertainment options, will be a challenge. However, the modern Las Vegas was built by some of the world's brightest business minds, and it was done despite a large number of other obstacles. Therefore, although Vegas might experience a rocky road in the coming months, it is my belief that it will adjust to the new economic conditions. One possible solution will be for the industry to take Vegas virtual and use Internet gaming to keep the unique Las Vegas experience alive.

The Detroit/Windsor gaming market is primarily a "locals market." This means that the visitors to the Detroit and Windsor casinos do so primarily through the means of vehicle transportation. These people tend to come from an area of not more than 300 miles away. Therefore, a reduction of people taking airline flights and a reduction in flights offered should not severely impact the Detroit/Windsor market. However, there is one unique component to the Detroit/Windsor market that, up until last Tuesday, acted as a positive variable. The international border between Detroit and Windsor, which connects the gaming region via a tunnel and a bridge, made this gaming region a unique international market. Prior to the events in New York and D.C. an individual could pass between Detroit and Windsor in less than 15 minutes. Immediately following last Tuesday