Commercial Casinos Energy Policy Act Tax Opportunity

The casino Environment

Prior to the current economic downturn, commercial casinos collected more than $30 billion in annual revenues every year between 2005 and 2008.1 The time period was when US casino owners constructed new facilities as well as increased facilities they already had. facilities. Due to the economic downturn, new US casinos constructed commercially is coming to a grinding stop and operators of casinos are now focusing on reducing the cost of existing facilities.

This is the Section 179(D) Tax Provisions

More and more, casinos are making use of the EPAct IRC section 179(D) commercial building energy efficiency tax provisions that have been extended until 2013. EPAct tax credits are available for qualifying energy reductions on lighting and HVAC(heating and cooling), ventilation) and the building envelope. (Building envelope is made up of the building’s foundation, walls and roofs, as well as windows and doors. All of these are responsible for the flow of power between the interior and exterior part of the house.)

The Nature of Casino Properties

Commercial casinos often encompass hotel resorts, which offer appealing services for their corporate and family customers. Casinos are particularly suited to EPAct due to their massive gaming floors and hotel occupancy rooms. They also have meetings halls, and parking garages. Each of these options generally Xóc đĩa Kubet consumes large amounts of space and EPAct offers the potential of bringing in up to 60 cents per square foot in each of the three factors described above. Some of the smallest commercial casinos have a total of 50 square feet, while the majority of American casinos typically exceed 100,000 sq. feet. One of the largest ones, MGM Grand on the Las Vegas strip is almost 2 million square feet. Hotels are among the most popular of the Section 179’s building category. (See “Hotels and Motels Most Favored Energy Policy Act Tax Properties”)

It is normal to think of casinos as being in two states: Nevada as well as New Jersey. Although it is true that these two states have the most commercial casino revenues but there are 12 states with casinos that are commercial within the United States, the other states with casinos that are commercial are: Colorado, Illinois, Indiana, Iowa, Louisiana, Michigan, Mississippi, Missouri, Pennsylvania, and South Dakota. Members of the American Gaming Association have publicized some of their plans to reduce energy use. These casinos are Boyd Gaming Corporation, Harrah’s Entertainment, Inc., and MGM Mirage. They have projects which include significant energy savings by cogeneration ERV(energy recover ventilation), more efficient HVAC components, replacing incandescent light bulbs with energy-efficient lightings, windows that have energy efficient day lighting systems as well as solar thermal storage. There are various other energy-saving initiatives.

The rule of thumb set to make a property eligible to receive the Section 179D lighting tax deduction makes casinos and particularly casinos the most sought-after property category for the tax incentive. The rule set requires at least a 25% reduction in watts-per square foot relative to the 2001 ASHRAE (American Society of Heating Refrigeration and Air Conditioning Engineers) standard for building energy codes. The tax deduction is fully realized with a 40% watts-per-square foot reduction compared to the ASHRAE standards of 2001. The ASHRAE 2004 hotel/motel building code requires 40% wattage reduction and each hotel lighting installation that meets the building code standard is automatically eligible for the maximum EPAct tax-deductible.

Occupancy Rooms

In all other categories of construction the Section 179D tax laws require compliance with the bi-level switching requirement. The calculation is always made using wired instead of plug-in lighting. Hotel occupancy rooms in casinos offer a significant advantage in that they usually have plug-in lighting. Additionally, because these rooms function as hotels and motels, they are specifically excluded from the tax bilevel switching rule. Since occupant rooms are usually one of the larger spaces in hotel casinos Casinos are usually in a position to utilize energy efficient lighting to generate substantial EPAct tax deductions to the facility.

B ack of the House Spaces

Casinos usually have huge kitchen as well as storage and laundry (so known as”back-of-house”) spaces that have historically used T-12 fluorescent lighting. The lighting is so inefficient in comparison to current lighting that it will be illegal manufacturing in the United States after July 1, 2010.4 Once manufacturing of these lighting fixtures from the past stops, the cost of replacing these bulbs with inefficient ones will rise. Simply put, casinos should consider acting now to replace these fixtures for savings in both cost for energy and lamp replacement. The EPAct tax incentive for lighting can be utilized to take advantage of the potential benefits of the legal requirements for changes to products.

Ball Rooms, Banquet Rooms and Restaurants

These casinos have historically used designer type lighting that is inefficient and, often, expensive to maintain and replace. Particularly, the replacement of bulbs and lamps in high ceilings is very expensive as expensive hydraulic platform equipment must be rented or purchased to deal with the replacements. New lighting products and, specifically the light emitting diode (LED) products, use only a small amount of energy, and have a longer service life, and are increasingly being replaced. The combination of large savings in energy consumption and operating cost savings in addition to utility rebates and EPAct tax credits can significantly increase the return on investment of these costly lighting enhancements.

Parking Garages

A lot of casinos have huge adjacent parking garages that could reduce energy consumption and also earn tax deductions by converting to energy-efficient fixtures. In Notice 2008-40 issued on March 7th, 2008, the IRS declared that parking garages constitute a class of property that is specifically entitled to use the EPAct tax deductibility. Additionally, parking garages are exempt from the tax-bi-level switching obligation. Please 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 largest players of energy on hotel gaming floors are the machines. While these were the first adopters of fluorescent technology, these energy-efficient bulbs usually have to be changed 3 times a year due to their 24/7 operation. Because of the labor-intensive expenses for maintenance, many casino owners are now switching to LED technology for their slot machines. LED’s, while they have greater upfront costs, are also energy efficient with high efficiency and a long life cycle, resulting in significant savings in labor and maintenance costs.


Casinos with their usual continuous operation can benefit from significant savings on energy costs from efficient HVAC systems. In particular, Nevada’s warm climate further ensures energy-efficient HVAC a very worthwhile investment. Fortunately. Nevada with the highest revenue from gambling has America’s second highest capacity for energy efficiency by using geothermal renewable energy.6 Certain types of efficient HVAC investments often qualify as eligible for HVAC EPAct tax incentives, which include geothermal and thermal storage.


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