Rising Gas Prices and the Possible Effects on Casino Visitation

Brendan Bussmann

Rising Gas Prices and the Possible Effects on Casino Visitation

The steady rise in gasoline prices over the past year and the possibility of further increases in the near future is a growing concern among gaming executives as well as financial analysts that watch trends in the gaming industry. While casinos in a number of jurisdictions have recently enjoyed steady increases in visitation and gaming revenue, the question that is on many peoples’ minds is, “how will rising gas prices affect the gaming industry?” The question is of particular concern to managers of Indian casinos since the majority of Native American gaming operations are located outside of metropolitan areas in rural locations that require patrons to drive further and expend more fuel than if they were to participate in other entertainment options closer to home.

A recently completed survey by a research company in Nevada attempted to gauge the effects that rising gas prices will have on drive-in traffic from Southern California. The study noted that 48 percent of respondents said higher gasoline prices would deter them from planning vacations to Las Vegas and that 57% said fuel costs are affecting their decisions to go on weekend trips. At first blush, the results of this survey would cause casino managers in all US jurisdictions to be concerned. However, the Las Vegas Sun newspaper reported that as gas prices rose earlier this year, auto traffic to Las Vegas increased. From January to August of 2005, gasoline prices in California increased by 40% but auto traffic on Interstate 15 at the Nevada-California
border increased by 30%. Las Vegas continues to enjoy historically high levels of visitation and gaming revenues. Even with gas prices hovering at $3.00, people continue to drive into the city from Southern California for gaming/entertainment vacations.

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