An Analysis of Gaming News and Trends by Ken Adams
First Quarter 2018
Reno is growing up 
Reno is undergoing dramatic economic and cultural changes.   Reno has gone from the casino-based economy to one driven by technology.   Locally, it is called the "Tesla effect" because of the mega-factory Tesla is building just east of town. Tesla is part of a wave of technology companies that includes Panasonic, Amazon and Microsoft.   The arrival of the tech companies came just in time to rescue Reno from its long slow slide downhill from the "go-go days" of the 1980s.   Since the early 1990s, Reno's casino economy has been shrinking year after year due to Indian casinos in neighboring states.   As revenues declined and the number of tourists dwindled, so did the number of casinos, leaving empty buildings in their wake.   Before Tesla and before the Great Recession, Reno appeared to be on its way to a new destiny as the old closed hotel/casinos were re-purposed for retail and residential uses.   But the recession stopped the developments .   In 2008, most of the condominiums that had been built stood empty and unsold.   The economic turnaround took a long time and did not really gain momentum until Nevada gave Tesla a special tax exemption in 2014.   With that exemption in hand, Tesla committed to building its mega factory.   It is in the process of building the largest factory in the world in the world's largest industrial park, the Tahoe Reno Industrial Center.  Immediately, dozens of other technology saw opportunity in Reno; that is when the new Reno began to emerge.  
The switch to a tech economy has had some interesting side effects; one of the most notable and surprising developments has been the creation of new business and cultural districts. The change had started before Tesla, but gained momentum with the arrival of new companies and their employees. Midtown, Wells Avenue and the Fourth Street Corridor have acquired new identities and lives. They were not the result of urban planning, rather they were spontaneous outgrowths of a demographic and psychographic evolution. Midtown is the largest and oldest of the three. It grew out of Burning Man; every year on Labor Day, thousands of people gather in the desert north of Reno to party and celebrate art. This year, eighty thousand people are expected to be in the Black Rock Desert to "burn the man" and most of them will be wearing something very unique, costumes fueled by imagination and a sense of free spirit. Those costumes are what built Midtown and in the process changed the culture in Reno.
Midtown started with one or two stores catering to the alternative cultural expression that is the spirit of Burning Man. The "burners" stopped on their way to the desert festival to find just the right combination of specially made, vintage and avant-garde fashions to wear at the grand party in the hot, windblown desert. Other businesses started to move into the area; some catered to the burners, but the majority sought their customers in a young, resident demographic. Midtown has become known as a very fashionable, modern, hip district. At the same time Midtown was blossoming, Wells Avenue was also undergoing its own unique evolution. Over the last 40 years, the residential districts around Wells Avenue have become primarily Hispanic. As the ethnic community grew, the residents needed specific services and retail. To fill that need, stores providing groceries, fashions, hair stylists and other products and services moved onto Wells Avenue. With those two districts Reno acquired a cultural diversity it had not had in the past.
The Fourth Street Corridor is also beginning to show its own unique character. Fourth Street is an urban street that underlies U. S Highway 40, once called the Lincoln Highway that was part of the originaltranscontinental highway system. In the early days of automobile traffic, it was a place to refill your gas tank, grab a quick bite to eat or stay the night in a friendly motel during a cross-country journey.   President Eisenhower and the interstate highway system brought major changes; the interstate highway was routed several blocks to the north and Fourth Street was no longer a major highway. The gas stations, restaurants and motels that catered to tourists tried to find new customers; most did not and closed. Over the next fifty years, Fourth Street was home to a variety of businesses, but nothing that was terribly successful or gave an identity to the area. The motels that survived became low income weekly rentals; driving down Fourth was a dismal experience.
However, with the end of the Great Recession and the new Tesla effect, the
Fourth Street corridor started to show signs of rejuvenation. At the moment, the Fourth Street district is not as clearly defined as Midtown or Wells Avenue, but that may be about to change. Jacob Entertainment has recently purchased a significant section of West Fourth Street and has declared it intends to create a "Fountain District." Jacobs is not new in the area; in 2001 it purchased the Gold Dust West for a reported $25 million. The Reno Gazette-Journal wrote in 2017 that the company has spent $50 million on the property since. A year ago, Jacobs Entertainment announced the purchase of the Sands Regency Casino Hotel and several blocks of businesses and retail on Fourth Street - that created a district four blocks long and two blocks wide - the entire area between the Gold Dust and Sands.
Jacobs does not appear to be a fly-by-night operation. It's been in Reno for seventeen years and owns casinos in Carson City, Nevada, Black Hawk, Colorado, a racetrack in Virginia and slot machines truck stops in Louisiana. The company has big plans in Virginia, as the state has just authorized slot machines at Colonial Downs, which it owns. It has invested in improving its properties everywhere, but nothing that is on the large scale of its Reno plans. The full plans for Reno have not been announced; at the moment the company is in the process of tearing down old buildings, making room for new ones. Initial plans are for a mixed use district of residential housing and retail, anchored of course by the Gold Dust West and the Sands Regency.
The concept reminds me of the MGM's City Center in Las Vegas. City Center was envisioned as a new model for casino development. It was conceived as a casino resort model for a new century. City Center was meant to bypass the oldmodel and in the process create a new cultural center for Las Vegas; at an estimated $10 billion dollars it was a verygrand plan. Jacobs' concept is not as extensive or expensive as City Center, but it is also attempting to create a new casino model. The Jacobs Entertainment plan is to build a district with its own residents, retail, and entertainment, called the Fountain District. When it is fully built out, the district will replace Reno's former casino district.
The old casino district failed primarily due to the competition from Indian casinos, but also because it lacked a supporting residential community, parking and hotel rooms. Most of the casinos that closed in the downtown either did not have rooms or only had a few hundred; there were not enough hotel rooms for the tourists and not enough parking for the locals. The exceptions have beenthe three properties of the Eldorado Resorts; the Eldorado, Silver Legacy and Circus Circus. Combined, these three properties have over 4000 rooms, as well as three large parking garages.
While the downtown was contracting, two miles south the Atlantis and the Peppermill were growing and expanding. The two casinos were able to grow at least in part because they were not totally dependent on tourists. They are located within a large residential area. The Atlantis and Peppermill have a constant flow of local customers to supplement the tourists staying in the hotels and they have thousands of easily accessed parking spaces for those local gamblers. If it is successful, the Fountain District will overcome the weaknesses of the old casino district.
Although, Tesla had given Reno a new identity and economy, the old one still has value. When the Jacobs' project is complete there will be a new and vibrant casino district. The district will not stand alone; the Eldorado group is on its eastern edge. There will be five casino hotels with over 5000 hotel rooms. But now there will be hundreds of permanent residents to strengthen the casino economy and adequate parking and restaurants, shops and other entertainment that will not only attract tourists to Reno and the area, but also residents from the entire Truckee Meadows. Those new customers in the district will include all of the new techies who have come to live here because of the new economy. It will also connect easily with the other development taking place further east on Fourth Street; at that point there will be a district that is more than a mile long and encompasses a diversity of cultures and experiences.
Twenty years ago, I was trying to predict the future of the Sands and the Gold Dust based on my limited view of the future. The future as I saw it then, did not include a new economic model for Reno, or a cultural shift that would include three separate districts or a casino district that stretched for a half mile east to west replacing the old north south axis. The rejuvenation of the Lincoln/ U.S 40 Highway and the creation of a new casino district illustrates the process of economic evolution. The process is common to people who live in big cities like New York, or Chicago. Cities are in a constant state of flux; districts change ethnic identity and economies over and over in cities. But it is not common in small cities like Reno. The switch from casinos to technology and from a homogeneous identity to a multi-cultural and diverse existence was totally unexpected. It is unusual and very exciting. For the first time in its history Reno is not dependent on one industry and it has taken the first step toward being a true city, not just "the biggest little city." A city by definition is diverse and is always in the process of becoming something new. This new Reno is one I could not even imagine until it began to happen. And try as I might, I would never have imagined the atmosphere of optimism that prevails in Midtown, Wells Avenue, Fourth Street and the Tahoe Reno Industrial Center. Reno is growing up, it is no longer the biggest little city; instead it is on its way to becoming a true city.

But that is just my opinion, isn't it?

Ken Adams