Hotels, Gaming & Economic Impact

The good news and the bad news of Yucca Mountain is that its economic impact on Southern Nevada will in the long run be negligible. The good side of this coin is that the impact of the repository on the mercurial gaming and hotel industry will be insignificant. The very few tourists expected to shy away because of their risk aversion to Yucca Mountain repository will be offset by the stabilizing effect of the repository workers on the local economy.

The bad news is that because the socioeconomic impact of Yucca Mountain will be much less than what was originally thought, Nevada's bargaining position with the government for compensation has been severely diminished. If the state's politicians thought they were increasing their bargaining position with the federal government over the years by playing hard-to-get on the benefits question, they obviously miscalculated. This may be because senators Bryan and Reid and Governor Miller are politician-lawyers, not businessmen, and hold or play their cards based on political rather than economic cues.

The lack of impact is paradoxically highlighted in a report from the Nuclear Waste Project Office titled "Yucca Mountain Employment: A Review of DOE's Data On Jobs And Work force". The report was sent out by NWPO as part of its aggressive ongoing campaign to prove to Nevadans that there would be no positive benefit from the repository. This was a two-edged sword, because it also strengthens the argument that compensating benefits and negotiations with the federal government are the only way Nevada will gain from hosting the repository. Among NWPO's conclusions:

Yucca Mountain will not be a source of jobs for Nevada Test Site workers displaced as a result of the nuclear weapons testing moratorium. There are too few potential repository jobs and too great a time interval between NTS impacts and peak repository employment." "Employment associated with the Yucca Mountain program is extremely limited and represents only four tenths of one-percent (.004) of the Clark County work force. ["Yucca Mountain Employment: A Review of DOE's Data On Jobs And Work force", NWPO, Aug 1993]

Obviously, the entire purpose of the NWPO study, as well as its widespread distribution in a sophisticated mailer, was to obtain political mileage from the lack of positive employment impact expected from the repository. This does not in any way relate to the safety of Yucca Mountain or the possibility of mitigating impact, and again points to the use of Mountain West socioeconomic studies for overt political purpose The effect of this report, and many others produced by NWPO, has been to undermine any potential negotiating power Nevada might have had with the federal government. In the likely event that Yucca Mountain finally proves acceptable, the state will already have demonstrated to its utmost that there is no employment impact on the local economy, either positive or negative!

The fact that gaming and tourism are unlikely to be negatively affected by the Yucca Mountain project is born out by a study of the effects of the Three Mile Island accident done by Jeffrey Himmelberger, Yelena Obneva-Himmelberger and Mike Baughman. In a draft article titled "Tourist Visitation Impacts of the Accidents at Three Mile Island: Implications for Yucca Mountain spring 1993, the group argues in its conclusions that:

"Information contained within this report strongly supports the conventional view's assessment that the gasoline crisis rather than TMI or other negative factors was primarily responsible for the 1979 slump in tourism experienced in southcentral Pennsylvania. Our findings are compatible with previous qualitative research (discussed previously). Moreover, the state park data provided some evidence linking cool and rainy weather conditions to slowed summer 1979 tourism levels. The polio outbreak in Lancaster County may have benefitted tourism at nearby destinations. Finally, none of the regressions associated the nuclear accident at TMI to summer 1979 visitation levels.

"Based on these results it is plausible to consider that an accident with similarities to TMI occurring at (or near) the proposed Yucca Mountain repository would generate proportionately large amounts of negative national publicity and would probably translate into reduced tourism immediately following the accident (mainly from select populations that are highly risk adverse). However, assuming that the results of this study can be extrapolated temporally and geographically, it is further possible that such an incident would only marginally affect long term visitation levels at nearby tourist destinations. Assuming that little or no radioactive contamination actually resulted from such an accident, recovery of visitation to pre-accident levels would be expected to occur fairly rapidly.

"While our results support the Federal Government's perspective on anticipated tourism impacts of a repository at Yucca Mountain, they do not contradict the State of Nevada's perspective that the perceived repository risks and negative stigma may translate into large secondary socioeconomic effects. However, it may be the case that visitor economies are highly insulated from adverse socioeconomic impacts which may accompany the location of risky facilities and/or accidents at such facilities." [Himmelberger, Jeffrey; Himmelberger, Yelena; Baughman, Mike; "TOURIST VISITATION Impacts of the Accident at Three Mile Island: Implications for Yucca Mountain", Intertech Services Corp., spring 1993]

Thus, while there is little doubt that a significant accident in the transportation or storage of nuclear waste would have a large immediate negative impact on the Las Vegas tourist economy, it is not clear that long term effects would be substantial. In fact, if the engineering projections are correct about the safety margins of waste packages and the repository, damage to a cask might lead to such trivial releases and the cleanup be so moderate that a return to normalcy might be immediate.

It is interesting to note that all three writers of the above report are graduate products of the Clark University geography program, where originated Roger Kasperson's CENTED studies of Yucca Mountain. That their balanced report is not full of the same dire predictions of negative images and a floundering tourist economy as presented by most of the CENTED participants of NWPO's socioeconomic studies is indicative that there exists opposition to the NWPO party line.

Consequently, the socioeconomic studies conducted by NWPO, which concentrated obsessively on the risk perception studies and nuclear stigma studies of Paul Slovic may have caused the gaming industry real harm. Not only are the state's theories not in conformity with past experience in regard to risk perception of tourists to the Nevada Test Site, but they actually have exponentially enhanced the possibility that such nuclear images will grow in the future. NWPO thus hit gamers with a double whammy, their poorly conceived nuclear stigma studies gave the industry false data about possible tourist impacts, and then contributed to making those negative impacts come true.


With a little investigation, one finds that an even larger threat to the Southern Nevada gaming and tourist economy may not be Yucca Mountain, but such trends as competition from other states, gambling on Indian reservations and most importantly regulation by the federal government. While the limited impact of Yucca Mountain on the Nevada gaming economy can likely be mitigated by designating transportation routes which completely avoid Las Vegas and other populated areas of the state, solving the other threats to Nevada's gaming industry may require pure political muscle.


The Administration may raise the amount withheld from winnings and extend the rule to new games

WASH. - The Clinton administration has returned to the gaming industry as a potential source of tax dollars to fund welfare reform, officials said Wednesday.

Instead of imposing a 4 percent excise tax on net revenues of casinos and race tracks, as had been considered earlier this year, the White House is mulling a boost in the tax withholding on gambling winnings, Sen. Richard Bryan, D-Nev said.. . .

Bryan said he asked Panetta about an article in Tuesday's Wall Street Journal that reported the administration is considering a $600 million gambling tax to pay for the General Agreement on Tariffs and Trade. . . .

Under the plan, slot machine players who win more than $7,500 would be required to pay a withholding of 28 percent, Bryan said. Keno and bingo players also would be covered by the rule, which is projected to bring in @250 million over five years. . . .

Gamblers who win more than $50,000 would see an increase in their withholding from 28 percent to 36 percent. This is expected to raise $520 million over five years.

Finally, more stringent reporting requirements are being considered for winnings over $10,000. This would help recover unpaid taxes of about $220 million in five years, officials believe. [Batt, Tony; Las Vegas Review Journal, May 12, 1994, p1A]

After desperate lobbying by Senators Reid and Bruyan and Governor Miller with their friend Bill Clinton, Congress did set aside its drive to make gambling a revenue source in 1994. Passage of such a bill would have been devastating to Democratic party politics in Nevada in 1994, but it is likely that federal taxation of the gaming industry will be revisited. As the largest gambling oasis in the United States, Nevada would be hurt disproportionately by such taxation.

Thus, the stakes for Nevada at Yucca Mountain are higher than ever if one considers grandfathering of Nevada's tax status as part of the negotiations package. Since taxation might cost Nevada as much as $100 million per year, and the yearly cash compensation from the Nuclear Waste Fund might also be $100 million, the combined "rake" is perhaps lager than $200 million per year. A more inclusive list of negotiated benefits which might impact the Nevada gaming industry's bottom line include:

  1. Grandfathering the tax situation so no new burdens are placed on Nevada's main industry.
  2. Widening of I-15 to Los Vegas to improve the access of Californians to the Strip.
  3. General upgrade of the Las Vegas infrastructure now groaning under the burden of a growing population.
  4. Addressing competition from out-of-state casinos and Indian reservations.

Using Yucca Mountain as a bargaining chip for national legislation could therefore have large benefits for the gaming and tourist economy. Furthermore, negotiating for benefits like water rights, infrastructure, educational improvements, etc. might help stabilize the southern Nevada population. These avenues are presently blocked, however, by the political powers of Nevada who refuse to negotiate under any circumstances.

If gambling will no longer be the center of the economic universe in Nevada, the thought that it might be time to diversify has crossed some minds. A high-tech venture like Yucca Mountain would then serve to help stabilize the gambling industry in the state as much as the technical community. A line of casinos ranging from Arizona Charlie's to the Gold Coast, the Santa Fe, Palace Station and other successful operations argue that local clientel are able to support sizeable operations. While it is true direct Yucca Mountain employment may be small, the wages of those employed will be higher than the state average and worker's impact as a significant part of the non-gaming community can be significantly larger than raw statistics indicate.

The strong suit of Nevada's hotel and gaming moguls has long been knowing when to hold or play their business cards. However they have not been particularly astute on the issue of Yucca Mountain. Rather than forcing Bryan, Miller and Reid to play cards in 1989 or 1990 when the feds were on their knees begging to negotiate with Nevada, gaming executives now have little leverage over their political trio, who in turn have even less leverage in the federal legislature. Realizing this perhaps too late, Steve Wynn, owner of the Mirage, began sponsoring fund raising events for Hal Furman, Senator Bryan's Republican opponent in the 1994 elections. Governor Miller, however, enjoyed a substantial lead in donations from the gambling community over his challenger, Jim Gibbons.