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DENVER-About $3.9 billion in non-Native American casino projects are under construction or slated for imminent development in the US, about a 9% decline from last year, shows a survey by Denver-based Hospitality Real Estate Counselors Inc. What HREC classifies as ”proposed/highly likely” gaming projects totals $4.5 billion, raising the pipeline of future projects to $8.4 billion.

HREC is a national hotel and gaming consulting firm. It provides real estate and business valuations, market feasibility studies, litigation support and investment analysis.

Before the terrorist attacks on Sept. 11, non-Native American casino development under construction or slated for imminent development was estimated to total $4.4 billion, compared with the current $3.9 billion figure.

The $500-million decline is due to the recent openings of the Hyatt Casino in Black Hawk, CO and the Palms Casino in Las Vegas plus the cancellation of the $100-million Casino Magic Bossier City expansion project in Los Angeles. Currently, Native American gaming development is estimated at $6 billion. Inclusion of Indian gaming development raises the total domestic casino development pipeline to $14.4 billion.

Other findings of the HREC Annual Casino Development Survey:

* Currently, 688,000 sf of casino space is being actively developed in comparison to 870,000 sf at this time last year, a decline of 21%. The decline is due to a higher mix of expansion versus new development projects.

* Potential estimated casino revenues to be generated from the total dollar amount of development are approximately $300 to $450 million less than typically generated due to the lower amounts of dedicated casino space.

* Five of the eight proposed/highly likely projects are large-scale developments, with estimated costs over $500 million each.

* Under construction/imminent casino development outside of the Nevada and New Jersey markets has seen a sharp decline over the past year. In 2000, regional markets incurred $2.9 billion in development costs, or 69% of the total costs.

Conversely, in 2001, regional markets only comprise $380 million in development costs, or less than 10% of the total costs.

* Hotel development related to non-Native American casinos continues to grow, with more than 6,300 new hotel rooms under construction/imminent development in concurrence with casino projects, a slight decrease of 4.8% from last year’s survey. Atlantic City and Las Vegas continue to increase hotel room inventories, accounting for 85% of the total under construction/imminent hotel development associated with casinos. In addition, nearly 3,600 hotel rooms were in various stages of development at casinos without the addition of casino gaming space, according to the report.

* However, after Sept. 11, three of the six hotel-only projects have been delayed, although none have been cancelled, HREC notes. An aggregate of more than 15,000 hotel rooms are being developed or have been proposed for the non-Native American gaming market.

* Indian gaming continues to grow nationally as a source of casino development. An aggregate of approximately $6 billion of Indian casino development is estimated to be developed, a decrease of $2.5 billion — 29% — from last year. The decrease is somewhat misleading, however, due to the opening of casinos in 2000 and 2001 after California passed Proposition 1A permitting “Vegas-style” gaming on Indian reservations. New York recently passed legislation permitting six Indian casinos, although the majority ofdevelopment activity is expected in 2002. Potential gaming revenues from additional casino development on Indian reservations nationwide is estimated at $3 to $4.5 billion, as approximately 1.9 million sf of gaming space is added to the Indian casino market.

* Due to the recession, HREC anticipate that many states will aggressively pursue legalizing additional forms of casino gaming as a source of tax revenues. Some of these states include New York, Kansas, Maryland, Kentucky, Florida, Massachusetts, New Hampshire, Ohio, Pennsylvania, Rhode Island and West Virginia. Racinos (casino gaming at race tracks) are one vehicle that is expected to increase in activity over the coming years.

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