Las Vegas' Big Gamble: Transforming from Sin City to Sports Central
Las Vegas is transforming from Sin City to Sports Central, as seen with the Formula One race cars speeding along the iconic Strip This marks a major shift in the city's economy, attracting visitors and boosting its lucrative industry
The Formula 1 racecars speeding down the famous Las Vegas Strip this Sunday will be a clear indication of the noteworthy transformation occurring in the city's economy. In less than ten years, this desert city, previously renowned for its casinos, cuisine, and live shows, has emerged as the destination for four major sports teams (with the MLB's Athletics being the most recent addition), six minor league teams, the prominent Ultimate Fighting Champion organization, and four expansive sports arenas that have hosted a variety of events including NCAA tournament games, NFL Pro Bowls, and, soon to come in February, Super Bowl LVIII.
Several more venues are currently being planned, indicating that the city is highly likely to be chosen as a top destination for both an NBA expansion team and an MLS team.
According to Andrew Woods, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas, the city's popularity has significantly increased over the past decade. Previously, leagues were not interested in considering Las Vegas as a potential location, but now it seems that the city is highly sought after and recognized for its potential.
Las Vegas, a sports metropolis, has the potential for lucrative development, leading to expansion and a broader economic base for the city. However, there are challenges that come along with this growth.
Initially, the estimated economic impact for the Formula 1 Las Vegas Grand Prix held on Sundays was $1.3 billion, while the February 2024 Super Bowl was estimated to bring in $500 million. It is worth noting that these estimates were made before ticket prices decreased for the Formula 1 event due to the championship being won earlier in the season.
The Bellagio Grandstands are seen during a Formula One race in a rendering.
From MGM Resorts International
Formula One is bringing thousands of racing fans to Las Vegas this weekend. Not everyone is thrilled about it
The total amount would be equivalent to the estimated $1.8 billion contributed to the metropolitan area by all sporting events between July 2021 and June 2022, as indicated by a summer economic impact study conducted by the Center for Business and Economic Research at UNLV's Lee Business School.
However, hosting larger events also poses greater challenges. The construction and preparation for the F1 race have caused significant traffic congestion, frustrating local residents. Moreover, the initially high prices and potential obstruction of views, ranging from the Bellagio fountains to the Mirage volcano, due to the temporary grandstand and signage, have sparked dissatisfaction among long-time residents and visitors alike.
Woods expressed concerns over the adequacy of our infrastructure to accommodate larger events. He pondered on how we can ensure benefits for a community with an increasing population of 3 million residents and 50 million annual visitors. Furthermore, it seems that not everyone is benefiting equally from the emphasis on sports. Upon reviewing the sports scene in Las Vegas, Woods and his team discovered a concerning pattern known as "sports desserts."
Some communities, particularly those historically underserved, may lack equal access to parks, local sports establishments, and facilities, according to their findings. Further research is required, as stated by Woods, to validate the preliminary conclusions.
If you build it, they will come
Las Vegas has a long history of involvement in sports, dating back to the height of boxing in the 1950s and 1960s and the growth of sports betting. Events like the Super Bowl and March Madness consistently draw large crowds to the city's bustling casinos and sportsbooks.
However, for many years, the NFL and other leagues were against the idea of having sports teams based in Las Vegas, likely because of the city's strong ties to the gambling industry. At one time, the city was even prohibited from running a tourism advertisement during the Super Bowl.
By 2017, the sentiment began to change, even among league commissioners such as Roger Goodell of the NFL and the National Hockey League, as well as the Oakland Raiders, who had intentions of establishing a presence there.
"I believe that society, as a whole, has undergone a shift in attitude towards gambling," Goodell expressed during a press conference in March 2017. "Vegas has transformed significantly over the past decade or two. It has evolved into a highly diverse city and a hub of entertainment."
Major League Baseball owners last week unanimously approved the Oakland Athletics' relocation to Las Vegas.
John Fisher/Getty Images
He added: "They made a very compelling proposal, which the ownership obviously approved overwhelmingly."
The Supreme Court's 2018 ruling overturned a federal law that banned commercial sports betting in most states. As sports betting became more popular, Vegas maintained its position as the hub of the digital industry. It was home to casino operators supporting sportsbooks and online gambling companies like FanDuel. The increase in sports betting and the popularity of fantasy football generated more interest in sports and attracted visitors back to Vegas, according to Steve Hill, CEO of the Las Vegas Convention and Visitors Authority.
"Sports have played a significant role in attracting a wider customer base to consider Las Vegas, especially among fans of the city. According to the LVCVA 2022 Las Vegas Visitor Profile Study, last year saw a notable increase with 6% of surveyed visitors attending sporting events, compared to only 3% in 2019. Additionally, 4% of visitors stated that sporting events were the main reason for their trip to Vegas."
Weathering the highs and lows
According to Woods of UNLV, the city and our businesses are gambling on the belief that both these figures will increase. It is anticipated that these percentages may even double in the near future, specifically within the next two, three, or four years, due to the addition of more sporting events.
Las Vegas, known as the "Entertainment Capital of the World," has recently transformed its image and is now promoting itself as the "Sports and Entertainment Capital of the World." Although the sports industry is expanding in Las Vegas, the main economic focus continues to be on leisure and hospitality. In Clark County, Nevada, home to Las Vegas, one out of every four workers is employed in the leisure and hospitality sector. Additionally, these businesses generate one-third of the total revenue in the area, as stated by Woods.
Over the past two years, cities like Las Vegas that heavily rely on tourism have experienced an increase in consumer spending on travel and experiences rather than goods, following the pandemic. Nevada's monthly gaming revenue surpassed pre-pandemic levels this year and reached a new record high of $1.4 billion in July, as reported by the Nevada Gaming Control Board. While this concentration in a single industry can be advantageous during prosperous times, it can have severe consequences for the local economy during an economic downturn.
In April 2020, the Covid-19 pandemic led to a significant increase in unemployment rates in Las Vegas, reaching an alarming 34%. The metro area was profoundly impacted, experiencing the worst effects among all regions in the United States.
Hill expressed that the shutdown of the Strip, which is a significant source of revenue for local services and the livelihood of hundreds of thousands of people, was a terrifying and distressing situation at that time.
The Las Vegas Strip can be seen outside the lanai doors at Allegiant Stadium during a game on October 15, 2023, in Las Vegas, Nevada.
Ethan Miller/Getty Images/FILE
As the pandemic wore on, construction continued on expanding the Las Vegas Convention Center as well as the Raiders Allegiant Stadium, among other projects.
"The city's unwavering faith in itself reaped tremendous rewards," Hill commented. "The sports events industry, although part of the leisure and hospitality sector, shows promising signs of fueling diversification in the regional economy. This is evident in the growth of ancillary businesses in fields like service, marketing, and medicine."
According to research conducted by UNLV, there has been a significant 156% increase in the number of businesses offering sports instruction over the past decade. Additionally, the report highlights notable growth in youth sports participation, particularly among girls and young women.
"The expansion of the sports instruction industry not only contributes to a more stable economy but also potentially fosters growth," stated Hill. "Regardless of economic circumstances, team sports events continue to attract people to Las Vegas, making it an appealing destination for visitors."
