Cashing In on Casinos

May 1, 2003
Megaresort construction is hot across the country, particularly in Las Vegas and Atlantic City. Odds are good it will continue.From Bellagio to Circus

Megaresort construction is hot across the country, particularly in Las Vegas and Atlantic City. Odds are good it will continue.

From Bellagio to Circus Circus, casinos around the nation are in the midst of a construction frenzy and the electrical industry is enjoying a jackpot in related sales, industry experts say.

"The overall casino industry has remained very strong and has had phenomenal growth in the past five to nine years," says Geoff Underwood, director of research for the American Gaming Association, Washington, D.C. "From 1982 to 1997, there was a steady growth of 11%."

The spread of legalized casino gambling has brought new construction projects to many areas, from the long-time gambling meccas of Las Vegas and Atlantic City to riverboats and Native American reservations across the country. The big news for the electrical industry is the spread of megaresorts--huge, multi-billion-dollar complexes that combine gambling, recreation and hospitality. These are the big gorillas of the U.S. gambling renaissance and provide lots of MRO sales, as well as a surge of business from new construction.

The Italian-themed $1.9 billion Bellagio, opened recently to the public in Las Vegas, came up a winner for many electrical manufacturers. "All of those wonderful connectors in that $1.9 billion casino were Burndy connectors," says Paul Werthman, western divisional director for FCI Electrical/Burndy, Manchester, N.H.

"Las Vegas is in a world of its own and growing faster than anything I have ever seen. The construction business in Las Vegas is superb and there are no signs of a slow-down," says Werthman, who's based in Las Vegas.

Nevada's casino revenues grew $7.6 billion, making Las Vegas the hottest market for casino construction today, said a recent report by the American Gaming Association. Mandalay Bay, and The Venetian, two other Las Vegas megaresorts opened earlier this year.

"The Las Vegas market is more than just the gaming industry. It's really the glitz and glamour, and that helps new construction to be phenomenal," says Scott Lyscio, senior sales rep for the Las Vegas market for Osram Sylvania Inc., Danvers, Mass. "We are actively involved with new construction, and once the new casinos are built, they become a customer of ours for the next several years. With all the new construction and MRO business the casinos create, the lighting industry looks pretty bright in Las Vegas."

On an average, a casino can use at least 200,000 lamps, he says. These lamps are of all varieties. Combining new construction and lamp replacement business, one casino can use from $50,000 to $100,000 in lamps.

Siemens Energy & Automation Inc., Alpharetta, Ga., and Las Vegas electrical contractor Potter Electric worked together to supply and install distribution equipment for the $70 million Santa Fe Hotel and Casino in Las Vegas. For this project, the company says the Las Vegas branch of Crescent Electric Supply, East Dubuque, Ill., provided switchboards, panel board, lighting panels, busway and other equipment for the construction of the 350,000-sq. ft. facility opening in October 1999.

Atlantic City has a promising future, too, says Bob Lane, principal, Trio Sales Agency Inc., Philadelphia, Pa. "We are expecting another boom in the next twelve to eighteen months, with two or three more casinos coming out," he says.

Bob White, manager of Kay Electric Supply, a CED location in Pleasantville, N.J., agrees. White expects another casino construction boom in Atlantic City in the year 2000. "1998-1999 has been very quiet on the construction front. But by the end of 1999 and for the year 2000, we will have new operators that will be coming into town."

These projects bring a lot business to the electrical industry. "The projects we are aware of probably represent anywhere from $1.5 billion to $2 billion worth of construction. If any other gaming companies decide to move forward in Atlantic City, that number could grow," White says.

The outlook is equally bright in Illinois, says Randy Lead, Illinois-branch manager for Butler Supply Inc., St. Louis, Mo., adding that the casinos are bringing more construction business such as hotels and parking lots.

"They use the latest technology available and all the energy-saving stuff, and it's all high-end," he says. "There's nothing low-end about these casinos in Illinois."

Underwood of the American Gaming Association says, "I don't think we will see the same level of growth as in the last five years, but there will be smarter growth."

He predicts that California will be the next casino hot spot, where the battle continues to rage over anti-casino regulations.