Nevada gaming will return to pre-recession levels in 2014, according to a report released by auditing and consulting firm PricewaterhouseCoopers on Tuesday.
While PwC expects the state’s gaming industry will report a 2.9 percent decline in 2010, it predicts it will start seeing mid-single-digit gains between 2012 and 2014.
The Nevada gaming market, which includes Las Vegas and smaller areas such as Laughlin and Reno, is expected to grow at a rate of 4.1 percent annually, from $10.2 billion last year to $12.5 billion in 2014, the report says.
“The gaming industry is facing an evolution, which presents both challenges and opportunities for the industry’s established players and those considering the market,” said Mary Lynn Palenik, director of gaming, entertainment, media and communications practice at PwC US.
Palenik said the increase in entertainment choices for consumers “will make it more vital for the industry to produce an offering and experience that consumers want to spend money on.”
In its gaming industry outlook report, the research firm expected a relatively gradual recovery in Las Vegas since gaming centers tend to lag about 12 to 18 months behind a rebound in the economy.
At the same time, significant new capacity has entered the Las Vegas market. This includes MGM Resorts International’s $8.5 billion CityCenter development and the $3.9 billion Cosmopolitan of Las Vegas, scheduled to open Wednesday night.
“As the global economy recovers, and international visitors return alongside domestic visitors, Nevada continues to be better placed to capitalize on the upturn than Atlantic City, since Nevada is less affected by competition from regional casinos,” PwC said in its 44-page report.
Overall, PwC projects that U.S. gaming revenue will increase to $68.3 billion in 2014, which would be a 3.6 percent compound annual jump. This compares with the 23.6 percent compound annual growth rate it forecasts for the Asia Pacific market, which should hit $62.9 billion in 2014.
While the United States will remain the dominant gaming market, Asia threatens this position, the report found.
Singapore, which recently legalized gaming, had its first two casinos come on line this year. The $4.4 billion Resorts World Sentosa opened in February, followed in April by the $5.5 billion Marina Bay Sands.
The report expects Singapore to overtake Australia and South Korea next year, making it Asia’s second-largest gaming market behind Macau. PwC foresees Singapore revenue reaching $2.8 billion this year and $5.5 billion in 2011.
Macau remains the world’s largest gaming market at $15 billion in revenues last year. By 2014, Macau will total $45.1 billion, more than three times the size of the Nevada gaming market.
“More customers, longer stays, everything that the government of Macau intended to happen in Macau is happening,” Steve Wynn, CEO of Wynn Resorts Ltd., said in a recent conference call with analysts. “Here’s a government with a plan, with a common sense plan, and they employed experts to execute the plan.”
The competitive pressures between the two markets will increase next year with the opening of new high-end resorts. Construction of the Sands China complex in Cotai was stopped in 2008 because of the recession.
Building resumed earlier this year with $1.7 billion in financing from Goldman Sachs and UBS. The project was scheduled to open late next year.