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From Sin City to Sports Central: How Las Vegas is betting big on a lucrative industry

Minneapolis
CNN

When Formula One racing cars race across the iconic Las Vegas Strip this Sunday, it will be another stark reminder of a significant shift in the city’s economy.

In less than a decade, the desert city long known for its casinos, food and live entertainment has become home to four major league sports teams (the newest is MLB Athletics), six minor league teams and a major sports organization in Ultimate Fighting and four major sports venues that host events such as NCAA tournament games, NFL Pro Bowls and, this February, Super Bowl LVIII.

At least a half-dozen other venues are in the planning stages, and the city appears to be a top pick for an NBA expansion team and an MLS team.

“Ten years ago, the leagues wouldn’t even look at us twice,” said Andrew Woods, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas. “Now it feels like we’re the prom queen.”

Las Vegas a sports metropolis? It is a potentially lucrative development that could mean expansion and a broader economic base for the city; However, it comes with growing pains.

The initial economic impact estimates for Sunday’s Formula 1 Las Vegas Grand Prix and the Super Bowl in February 2024 were $1.3 billion and $500 million, respectively. (But that was before Formula 1 ticket prices dropped when the championship was won at the start of the season.)

That total would equal the estimated $1.8 billion that all sporting events brought to the metro area from July 2021 to June 2022, according to an economic impact study released this summer by the Center for Business and Economic Research from UNLV’s Lee Business School.

However, with larger events come greater challenges. The construction work and preparations for the F1 race led to traffic chaos and at the same time caused unrest among the locals. Also raising the ire of long-time residents and visitors are the (initially) exorbitant prices and the potentially obstructed view of everything from the Bellagio Fountains to the Mirage Volcano due to the makeshift grandstand and signage.

“The question is whether we have sufficient infrastructure to handle larger and larger events,” Woods said. “How can we make this both beneficial to a community that could soon have 3 million residents and 50 million visitors a year, and make this work for everyone?”

And at first it doesn’t look like everyone will benefit equally from the doubling of sport. When Woods and his team examined the intensity of sports in the Las Vegas area, they noticed a troubling trend: “sports deserts,” a lack of access to facilities.

They noted that some communities, particularly those that have been historically underserved, may not have the same access to parks, local sports businesses and amenities. Woods said further research is needed to confirm the initial findings.

The sport has had deep roots in Las Vegas for decades, dating back to boxing’s heyday in the 1950s and 1960s and the rise of sports betting. Super Bowl Sundays and March Madness tournaments typically bring crowded casinos and sportsbooks.

But for decades, the NFL and other leagues resisted establishing sports franchises in Las Vegas, most likely due to the city’s deep-rooted gambling industry. At one point, the city was unable to run a tourism advertisement during the Super Bowl.

In 2017, sentiment began to change — including among league commissioners like the NFL’s Roger Goodell — as both the National Hockey League and the Oakland Raiders had plans to locate there.

“I think society in general is changing a bit in terms of gambling in general,” Goodell said during a press conference in March 2017. “Vegas is not the same city it was 10 or 20 years ago. It’s a much more diverse city, it’s become an entertainment mecca.”

John Fisher/Getty Images

Major League Baseball owners unanimously approved moving the Oakland Athletics to Las Vegas last week.

He added: “They have put forward a very compelling proposal which the owners have obviously agreed to overwhelmingly.”

Then came the Supreme Court ruling in 2018 that struck down a federal law that banned commercial sports betting in most states.

As sports betting entered people’s living rooms, Vegas remained the center of this digital industry – as the home of the casino operators that supported these sports betting and online gaming companies like FanDuel. “The rise in sports betting and the continued explosion in fantasy football have led to additional interest in sports and with it in Vegas,” said Steve Hill, executive director of the Las Vegas Convention and Visitors Authority.

“Vegas fans also tend to be sports fans, and sports have helped us expand the customer base willing to consider Las Vegas,” Hill said.

Last year, 6% of visitors surveyed attended a sporting event, up from 3% in 2019, and 4% of visitors said sporting events were the primary reason for a Las Vegas trip, according to the LVCVA 2022 Las Vegas Visitor Profile Study.

“I think the city and our businesses are making a big bet that both of those percentages are going to go up,” said UNLV’s Woods, “that we could see those percentages double here in the next two, three years in the short term . “Four years as we add more sporting events.”

Survive the ups and downs

The city that billed itself as the “Entertainment Capital of the World” has now rebranded itself as the “Sports and Entertainment Capital of the World.”

Sports are on the rise in Las Vegas, but leisure and hospitality remain the city’s bread and butter. In Clark County, Nevada, where Las Vegas is located, one in four workers works in the leisure and hospitality sector, and $1 for every $3 earned by these businesses, Woods said.

And over the past two years, Las Vegas and other tourist-focused cities have benefited from post-pandemic consumers increasingly choosing experiences and travel over goods. Nevada’s monthly gaming revenue exceeded pre-pandemic levels this year, reaching a record nominal monthly high of $1.4 billion in July, according to data from the Nevada Gaming Control Board.

Such a strong focus on one industry can be positive in good times, but when there is an economic downturn it can have devastating consequences for the local economy.

In April 2020, Covid-19 closures caused unemployment in Las Vegas to rise to a staggering 34%, as the metropolitan area was the hardest-hit region in the United States.

“The Strip was closed, and that’s where it generates revenue for services and creates the livelihoods of hundreds of thousands of people, and it was terrible and frightening at the time,” Hill said.

Ethan Miller/Getty Images/FILE

The Las Vegas Strip is seen outside the porch doors of Allegiant Stadium during a game on October 15, 2023 in Las Vegas, Nevada.

As the pandemic progressed, construction continued, among other things, on the expansion of the Las Vegas Convention Center and the Raiders’ Allegiant Stadium.

“The city continued to rely on itself,” Hill said. “And it really paid off.”

Although the sporting events industry is in the leisure and hospitality sector, there are early signs that the investments could spur the diversification of the regional economy through the creation of ancillary businesses in areas such as services, marketing and medicine.

According to a UNLV study, the number of physical education businesses has increased 156% in the last decade. And participation in youth sports, particularly among girls and young women, has increased significantly, according to the report.

“Any time you can expand what drives the economy, that has a stabilizing influence and perhaps a growth influence,” Hill said. “Especially when it comes to team sports, it doesn’t matter what’s going on in the economy, there will be events like this and that’s a reason for people to choose to come to Las Vegas.”

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