Industrial Casinos Power Plan Behave Taxes Chance

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

The Nature of Casino Properties

Commercial casinos often encompass hotel resorts, which provide attractive packages of services for his or her corporate and family customers. Casinos are particularly suitable for EPAct due to their large gaming floors, hotel occupancy rooms, meeting halls, and parking garages. All these features typically consumes large square footage and the EPAct benefit has a potential for up to 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 some American casinos are usually over 100,000 square feet. One of the largest ones, MGM Grand on the Las Vegas strip is nearly 2 million square feet. Hotels themselves are the most favored of Section 179 building category. (See “Hotels and Motels Most Favored Energy Policy Act Tax Properties”)

It is common to think of commercial casinos as situated in two states Nevada and New Jersey. While it does work that both of these states have the largest commercial casino revenues, you will 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 their commitments to energy reduction. Reporting casinos include Boyd Gaming Corporation, Harrah’s Entertainment, Inc., and MGM Mirage. They have projects such as significant energy savings via cogeneration, ERV(energy recovery ventilation), more efficient 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.

The underlying rule set to qualify for the Section 179D lighting tax deduction makes casinos and particularly casino hotels the most favored property category for the tax incentive. The rule set requires at the very 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 any hotel or motel lighting installation that fits that building code requirement will automatically qualify for the most EPAct tax deduction.

Occupancy Rooms

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

Back of the House Spaces Keluaran HK

Casinos frequently 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 that it will 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 must look into acting now to replace these lighting fixtures to save both energy and lamp replacement costs. The EPAct lighting tax incentive may be used to handle the opportunities related to these legally mandated product changes

Ball Rooms, Banquet Rooms and Restaurants

These areas of casinos have historically used designer type lighting that is energy inefficient and often very expensive to keep up and replace. Particularly, replacing bulbs and lamps in high ceilings is very costly since expensive mobile hydraulic platform equipment should be rented or purchased to handle the replacements. New lighting products and, particularly, light emitting diode (LED) products, make use of a fraction of the vitality and have a much longer useful life and are now 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 expensive 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 property class that is 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 devoted to parking garages EPAct lighting deduction tax opportunities.5

Slot Machines and Gaming Floors

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


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

LEED Casinos

We expect to see more casinos obtain LEED status. (See LEED Building Tax Opportunities Article7). In 2008, The Palazzo, Las Vegas Casino became the largest LEED certified building and among the first certified LEED casinos in the US.8 Casinos and hotels discover that certain categories of frequent travelers are very interested in residing in facilities which have clearly demonstrated they are dedicated to the environment and sustainable design. To become LEED certified, a casino will need to have a building energy simulation model created by a qualified engineer. Modeling is also needed for the EPAct, HVAC and Building Envelope tax deductions. Qualified tax experts that know how to make 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 related to achieving LEED status.


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