Industrial Casinos Power Plan Behave Taxes Chance.

The Casino Environment

Prior to the recent economic downturn, commercial casinos collected at the least $30 billion in revenues every year from 2005 through 2008.1 In this period, US casino owners built new facilities and expanded how big is their existing facilities. As a result of the economic downturn, new US commercial casino construction has arrive at a screeching halt and casino operators are now focused on existing facility cost reduction.

The Section 179(D) Tax Provisions

Increasingly, casino operators are using the EPAct IRC section 179(D) commercial building energy efficiency tax provisions, which have been extended through 2013. EPAct tax deductions are available for qualifying energy reductions in lighting, HVAC(heating, ventilation, and air conditioning), and building envelope. (Building envelope includes the building’s foundation, walls, roof, windows, and doors, all of which control the flow of energy between the inside and exterior of the building.)

The Nature of Casino Properties

Commercial casinos often encompass hotel resorts, which offer attractive packages of services due to their corporate and family customers. Casinos are particularly suitable for EPAct due to their large gaming floors, hotel occupancy rooms, meeting halls, and parking garages. Each of these features typically consumes large square footage and the EPAct benefit includes a potential for 60 cents per square foot for all the three measures described above. A few of the smallest commercial casinos are about 50,000 square feet many American casinos are usually over 100,000 square feet. One of many largest ones, MGM Grand on the Las Vegas strip is almost 2 million square feet. Hotels themselves are the absolute most favored of Section 179 building category. (See “Hotels and Motels Most Favored Energy Policy Act Tax Properties”)

It’s common to think about commercial casinos as positioned in two states Nevada and New Jersey. Although it holds true that both of these states have the biggest commercial casino revenues, you can find 12 states with commercial casinos in the United States, another commercial casino states are: Colorado, Illinois, Indiana, Iowa, Louisiana, Michigan, Mississippi, Missouri, Pennsylvania, and South Dakota. Members of the American Gaming Association have publicized some of these commitments to energy reduction. Reporting casinos include Boyd Gaming Corporation, Harrah’s Entertainment, Inc., and MGM Mirage. They’ve projects such as significant energy savings via cogeneration, ERV(energy recovery ventilation), better HVAC units, replacing incandescent lights with energy efficient lightings, windows with energy efficient day lighting systems, solar thermal storage and numerous other energy saving initiatives.kingcobratoto

The underlying rule set to qualify for the Section 179D lighting tax deduction makes casinos and particularly casino hotels the absolute most favored property category for the tax incentive. The rule set requires at the least a 25% watts-per-square foot reduction as compared to the 2001 ASHRAE (American Society of Heating Refrigeration and Air Conditioning Engineers) building energy code standard. Full tax deduction is achieved with a 40% watts-per-square foot reduction compared to the ASHRAE 2001 standard. The ASHRAE 2004 hotel/motel building code standard requires 40% wattage reduction, meaning that any hotel or motel lighting installation that meets that building code requirement will automatically qualify for the most EPAct tax deduction.

Occupancy Rooms

For almost every other building categories, the Section 179D tax provisions require compliance with the bi-level switching requirement. The comparison is definitely centered on wired rather than plug-in lighting. Casino hotel occupancy rooms have a significant advantage in which they often use plug-in lighting, and because these rooms work as hotel and motel spaces, they are specifically excluded from the tax bi-level switching requirement. Since occupant rooms are usually one of the larger spaces in hotel casinos, casinos are usually able to use energy efficient lighting to generate large EPAct tax deductions for the facility.

Back of the House Spaces

Casinos often have large kitchen, storage, and laundry (so called back of the house) spaces which have historically used T-12 fluorescent lighting. This lighting is really energy inefficient compared to today’s lighting products so it is likely to be illegal to manufacture in the United States after July 1, 2010.4 Once manufacturing of the prior generation lighting products ceases, the price of replacing these inefficient bulbs will increase. Simply stated, casinos should consider acting now to displace these lighting fixtures to truly save both energy and lamp replacement costs. The EPAct lighting tax incentive can be used to handle the opportunities linked to these legally mandated product changes

Ball Rooms, Banquet Rooms and Restaurants

These aspects of casinos have historically used designer type lighting that’s energy inefficient and often very costly to keep up and replace. In particular, replacing bulbs and lamps in high ceilings is too costly since expensive mobile hydraulic platform equipment should be rented or purchased to deal with the replacements. New lighting products and, specifically, light emitting diode (LED) products, use a fraction of the energy and have a considerably longer useful life and are increasingly being substituted. The mix of large energy cost reduction, operating cost reductions, utility rebates and EPAct tax deductions can greatly increase the economic payback from these more costly lighting upgrades.

Parking Garages

Many casinos have large adjoining parking garages that could save substantial energy costs and generate large tax deductions by upgrading to energy efficient fixtures. In Notice 2008-40 issued March 7th, 2008, the IRS announced that parking garages are a house class that’s specifically eligible to utilize the EPAct tax deductions. Also, parking garages are excluded from the tax bi-level switching requirement. Please begin to see the September, 2008 International Parking Institute article dedicated to parking garages EPAct lighting deduction tax opportunities.5

Slot Machines and Gaming Floors

One of many biggest energy users on hotel gaming floors is slot machines. Although these were early adapters of fluorescent technology, even these energy efficient bulbs normally need to be changed 3 times annually because of 24/7 operating hours. Because of the high labor maintenance costs, casino owners are now transitioning to LED technology in their slot machines. LED’s, while they’ve higher at the start costs, have high energy efficiency and a lot longer life cycle, offering significant savings in labor and maintenance costs.


Casinos due to their typical 24 hour occupancy can perform significant energy cost savings from energy efficient HVAC systems. In particular, Nevada’s hot climate further makes energy efficient HVAC a very worthwhile investment. Fortunately. Nevada with the greatest revenues from casinos has America’s second highest capacity for energy efficiency through renewable geothermal energy.6 Certain kinds of very efficient HVAC investments will often qualify for the HVAC EPAct tax incentive including geothermal and thermal storage.

LEED Casinos

We be prepared to see more casinos obtain LEED status. (See LEED Building Tax Opportunities Article7). In 2008, The Palazzo, Las Vegas Casino became the biggest LEED certified building and one of the first certified LEED casinos in the US.8 Casinos and hotels see that certain kinds of frequent travelers are very enthusiastic about remaining in facilities which have clearly demonstrated they are focused on the environment and sustainable design. To become LEED certified, a casino will need to have a building energy simulation model developed by a qualified engineer. Modeling is also needed for the EPAct, HVAC and Building Envelope tax deductions. Qualified tax experts that know making the adjustments to convert LEED computer models to EPAct tax deduction models can evaluate LEED models and determine whether large tax deductions are probable. Like, a 500,000 square foot LEED casino that qualifies for the most EPAct tax deduction will receive a sudden tax deduction of $900,000 =(500,000*$1.80). Casino owners who understand the magnitude of the benefits can utilize the tax savings to greatly help justify the costs linked to achieving LEED status.


Casinos due to their large subspaces really are a favored building category underneath the EPAct commercial building tax deduction legislation. Property owners who understand these opportunities can act during the existing economic downturn to boost their facilities, reduce operating costs and potentially become LEED certified facilities.

Leave a Reply

Your email address will not be published. Required fields are marked *