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The Reno Recovery

Why diversification worked for this gaming destination

The Reno Recovery

Einstein once said, “In the midst of every crisis lies great opportunity.” Reno, once a hub of gaming in Northern Nevada, lost its great casinos to Indian gaming in neighboring California.

Amid that disaster, Reno seized the opportunity. It diversified, forging a renaissance that created a home for manufacturing and high tech—and gaming too, because casinos thrive in humming economies.

Today Reno’s population is larger than when it was a casino town. It is the fastest growing city in the U.S., a few miles from the largest industrial park in the world. Here, you can have a good-paying career, raise a family, and join new industries that are changing the face of America. It’s also a gateway to some of best outdoor experiences in the West.

As much as anything, Harrah’s Reno, which Bill Harrah opened in 1932 as Harrah’s Club Bingo, is the face of the new Reno. A Las Vegas developer purchased it in October 2020 for $41.5 million and plans a multi-use development called Reno City Center.

This is how it happened.

Tribal Tribulations

Ken Adams, who publishes CDC Gaming Reports, and who has been an observer and participant in the Reno scene for decades, notes that in 2007 Reno’s revenues dropped by two-thirds.

“The impact of Indian casinos was that Reno lost somewhere between 20 and 25 casinos between 1990 and when the last one (Harrah’s) closed,” says Adams. “The industry shrank proportionately.”

The former Harrah’s Reno is set to become a multi-use residential development

In the 1980s, a local reporter wrote that 25 percent were employed in gaming. “The real impact left Reno without anything to bank its future on. Any career person in the industry went elsewhere. Those who stayed had jobs that weren’t very secure. The casinos that stayed—like the Atlantis and the Peppermill—were well placed in a local neighborhood. They were the only ones that were secure.”

The Eldorado was the first casino in Reno to diversify, says Adams. It bought a casino in Louisiana. “Harrah’s as a corporation simply ignored Reno,” Adams says. “They didn’t keep the property up but continued to use it. They couldn’t sell it because it had $100 million in deferred maintenance. That’s what Reno looked like.”

Then things started to happen. One was in the midtown area. The other was at the new industrial park, east of Reno, in another county, but still a major source of economic strength for the city.

Another factor is unusual: Reno became base for the iconic Burning Man festival, which happens in the desert a hundred miles away. Reno is the closest city to the festival, which attracts 50,000 revelers each August. They create a “city” that, afterwards, vanishes as everyone carts it all away. Someplace has got to supply it.

As Adams describes it, “A woman who owned a used clothing store started to sell costumes to Burning Man participants. Costume stores and then restaurants and other things grew up around that district. It had a year-round presence, but a definite presence once a year. People would stop on their way to Burning Man.”

Burning Growth

Virginia Street, the former hotbed of casinos, has fallen into disrepair

Today, Reno is so identified with Burning Man in that many pieces of municipal art come from the festival. Examples: The 40-foot-long Space Whale sculpture in City Plaza, the 12-foot-high steel “Believe” sign and the Guardian of Eden that debuted at Burning Man and sits at the entrance to the Nevada Museum of Art.

The next big idea was for the “Biggest Little City in the World” was the Tahoe Reno Industrial Center, considered the largest industrial park in the world at 107,000 acres and 160 square miles.

Then-Nevada Governor Brian Sandoval (now president of the University of Nevada, Reno) actively promoted the project.

“He negotiated with Tesla to build Tesla Gigafactory 1. Tesla inspired Panasonic and many other tech companies to look at Reno,” says Adams.

“At the same time we underwent a change in thought process,” continues Adams. “The mayor was a former casino guy, very effective at the business level in trying to do the old way of business. Then we elected a young woman mayor who was interested in changing the business model and going to high tech.” Hillary Schieve, elected in 2016, is still mayor.

“She’s been very supportive of the process although some of the city council were not terribly in favor,” says Adams. “Some tax deferment wasn’t popular. It was anti-business attitude. The governor got past all that. Now people complain not as much.”

A key person in diversification was Mike Kazmierski, president and CEO of the Economic Development Authority of Western Nevada. This nonprofit works with governments and private entities.

The Reno of a decade ago was “at the bottom of a long slide at the end of the Great Recession,” he recalls. “In 2011, unemployment was 11 percent. The gaming economy had dried up. Travel gaming was being sidetracked by new Indian casinos along the interstate. People didn’t need to go to Reno. Because of the recession people didn’t have money to travel. We didn’t have much tourism which was linked to gaming. The industry was in decline. In fact, it was obvious in Reno before it was in Vegas. Reno had been in slow decline. The flagship casinos went elsewhere.”

As a second-tier gaming city, Reno was used to cycles. To rebounding from cycles. “This time, we weren’t rebounding,” says Kazmierski.

After five years, the city remained in a slump.

“The community realized it needed to change. A newspaper called Reno ‘the Detroit of the West.’ That was the environment in 2011. They decided to do economic development differently and invited me in.” Part of that was diversification. “We laid out a plan to attract advanced manufacturing, which I knew was fleeing California. We had insignificant manufacturing. We had no data centers. I had experience with data centers and we were fortunate to get Apple. We had no real entrepreneur growth, which was going to the Bay Area.”

They had a three-pronged goal:

  • Advanced manufacturing
  • Data centers
  • Entrepreneurial growth

They leveraged Reno’s geographic location. “Reno is literally the center of the West when it comes to logistics and ground transportation,” says Kazmierski. “It’s the only city where you can drive to the 11 Western states in one day.”

Kazmierski witnessed the transformation. “We led it,” he says. “The local economy and local governments here support us and are on our board. The board led the effort, supported and participated in the programs we were doing. It was very much a collaborative approach. The community understood we couldn’t go back to where we were before—we needed a new direction.”

Tesla came in 2015. “We brought in 40 companies before Tesla even looked at us,” says Kazmierski. “But by landing Tesla, we used that to market the region even more aggressively. Tesla let us rebrand the region.”

These manufacturing hubs, says Kazmierski, “are more advanced technology than most people realize. The whole Tesla facility is all engineers and desk space; the lower level is robots. It’s high-paying, quality jobs, and not what people think of as manufacturing from 50 years ago.”

The Tahoe Reno Industrial Center is home to Tesla, Panasonic and 20 other companies employing a total of 10,000.

“The reason advanced manufacturing is so important is, it gives you quality jobs you need for the future,” says Kazmierski. “They don’t ebb and flow. They are going to operate no matter what the economy. We operated just fine during the pandemic. Our entrepreneurs worked from home. It’s a very stable part of the economy. Data centers are an important part of our economy.

“We rebranded a quality of life to attract visitors and the talent to fill these jobs. Where the quality of life isn’t spending an hour and a half in a commute. Where you can raise your family. Quality of life was an important component.”

As a result, casinos fill up in midweek from the locals.

“The casinos,” says Kazmierski, “just had their best year ever, even through a year of the pandemic. Unlike Las Vegas. Because our people work up here and drive traffic from California, and because people work here and couldn’t travel. Our revenues were actually up. As we come out of the pandemic, tourism is filling up the weekends and business (i.e., conventions) activity is filling up the midweek.”

Casinos Continue

The Grand Sierra and other casinos away from the center of town have thrived as a result of the diversified economy

Gaming, says Kazmierski, “is still a very important but declining part of our economy. It’s gone from the cake and frosting to just the frosting. It no longer drives our ability to be economically stable.”

Reno’s population rose 30 percent in 10 years.

“Part of that,” Kazmierski says, “is job opportunities, and some people who had left coming back. Heavy construction and home building is off the charts. We’re ranked as the fastest growing city in the nation. And the best city to raise a family.”

Christopher Abraham, senior vice president of marketing for the Grand Sierra Casino, a locally oriented property, is a fan of diversification.

“It benefits all business, everyone across the board. A rising tide lifts all boats and diversification is key,” he says. “We aren’t relying on one industry. Reno has many positive things about it. Nevada has a business-friendly environment. We are centrally located to the West Coast. We’ve made some tax incentives for major companies to relocate including Tesla—Google has a campus; Panasonic and Switch, which is data storage—just to name a few.”

Collateral benefits include a strong local economy buoyed by tech manufacturers.

“It strengthens the local economy,” says Abraham. “They have hired many people. Local wages have risen significantly. We have low unemployment. The airport has more direct flights than ever in history. You can see the runway from our building. More people are relocating here—and when family and friends visit, they need places to stay.”

He adds, “We have a fantastic hotel and 200,000 square feet of business space. Many amenities for business travelers and people checking out the market. We are the first property they see when they leave the plane. If they stay here they get to know our products and our amenities. We see a lot of that business travel.”

Abraham is bullish on diversification for other reasons: “We are probably one of the few Reno resorts that does less than 50 percent of its business in gaming,” he says. “We have 200 rooms and an entertainment venue that seats close to 3,000, a big pool, bowling alley, retail shopping, and an RV park. We have many revenue centers. Gaming is just one part of what we do here.”

Grand Sierra belongs to local chambers of commerce and economic development associations. “We’re part of the effort to bring business here to Reno/Tahoe,” says Abraham. “Every time a new business locates here it’s beneficial to us. We actively promote Reno/Tahoe as a destination.”

Reno City Manager Doug Thornley came to Reno less than a year ago, as a newcomer who appreciates its positives and negatives.

“We are less subject to the ebbs and flows of tourism, but that’s not to say it’s not an incredibly important part of the economy,” Thornley says. “The way it happened has put stress on the housing market and the manner we deliver services. A growing city doesn’t necessary mean revenue keeps up with growth. But again, it is a better spot than we were in 2008, 2009 or 2010.”

The city is growing at a “parabolic rate.”

“It’s extremely difficult to buy a house in the Reno-Sparks area (that includes Storey and Washoe counties). Certainly a hard-working and important part of the local economy are cut out of that,” says Thornley.

“Single-family homes are becoming less attainable. We see a lot of development of apartments and condos, and we would love to see more infill.” Nevada’s property tax system, says Thornley, has “stressed services and makes for long-term challenges.”

The technology park is in neighboring Storey County.

“The taxes stay there but our residents go to work there,” says Thornley. “The development is largely positive, but in terms of service delivery and doing things for our citizenry it is a unique challenge.”

Harrah’s conversion into a mixed-use development is emblematic of the times, says Thornley. Reno is also working with Washoe County to take over homeless shelters, so CDBG and HUD money can be repurposed for low-income housing.

The gaming industry, Thornley notes, is doing just fine.

“The GSR (Grand Sierra Resort) had a run that was their best on record in the spring,” he says. “Caesars is doing well and room nights have ticked up. We have a significant drive in the market that differentiates us from Las Vegas. Reno is not as dependent on the national fly-in. Because our casinos are so accessible they have fared well coming out of this pandemic.”

Thornley sees Reno as “on the precipice of really exciting things. We have a business-friendly climate. We are trying to attract light industry and those who want to make the jump from California. Our future is really bright. Now after having been focused on the pandemic, we’re ready to take the next steps and make it happen.”

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