Commercial Casinos Energy Policy Act Tax Opportunity

The Casino Environment

Before the economic downturn commercial casinos generated more than $30 billion in revenue each year between 2005 and 2008.1 In that time frame, US casino owners built new casinos and increased facilities they already had. facilities. Due to the economic slump, new US new construction of casinos has come to a halt. to a halt, and casinos are now focusing on cost reductions for existing facilities.

The Section 179(D) Tax Provisions

Casino operators are increasingly using casinos are taking advantage of EPAct IRC section 179(D) commercial energy efficiency provisions for buildings that have been extended through 2013. EPAct tax deductions are offered for qualifying energy reductions that are related to lighting HVAC(heating air conditioner, venting, or heating) as well as the building envelope. (Building envelope is comprised of the building’s foundation, walls and roofs, windows, and doors. They all regulate the flow of energy between the exterior and interior and exterior of the structure.)

The Nature of Casino Properties

Commercial casinos are often hotels that provide appealing packages of services to their customers from the family to corporate. Casinos are ideally suited for EPAct because of their massive gaming floors as well as hotel occupancy rooms, meeting rooms, and parking garages. Each of these options typically consumes large square footage and the EPAct benefits have the potential of UFABET เว็บตรง bringing in as much as 60 cents per square foot for each of the three factors that are mentioned in the previous paragraphs. Some of the tiniest commercial casinos are about 500 square feet. The majority of American casinos span over 100,000 square feet. One of the largest ones, MGM Grand on the Las Vegas strip is almost 2 million square feet. Hotels themselves are the most sought-after of the Section 179’s construction category. (See “Hotels and Motels Most Favored Energy Policy Act Tax Properties”)

It is common to think of commercial casinos as being situated in two states: Nevada or New Jersey. While it is true that both states enjoy the most commercial casino revenues There are twelve states with commercial casinos in the United States, the other states that offer commercial casinos are Colorado, Illinois, Indiana, Iowa, Louisiana, Michigan, Mississippi, Missouri, Pennsylvania, and South Dakota. The members of the American Gaming Association have publicized some of their commitments to reducing energy consumption. The casinos that report include Boyd Gaming Corporation, Harrah’s Entertainment, Inc., and MGM Mirage. There are projects in place that will provide significant energy savings by cogeneration ERV(energy recover ventilation) better HVAC systems, replacing incandescent light bulbs with energy efficient lightings windows that have energy efficient day lighting systems, solar thermal storage and various other initiatives that save energy.

The basic rule to make a property eligible to receive the Section 179D lighting tax deduction makes casinos, and specifically casinos the most sought-after property category to receive the tax incentive. The rules set require at minimum a 25 percent reduction in watts-per-square-foot as in comparison to the 2000 ASHRAE (American Society for Heating Refrigeration and Air Conditioning Engineers) building energy code standard. The full tax deduction can be achieved by a 40% watts-per-square foot reduction compared to the ASHRAE 2001 standard. The ASHRAE 2004 hotel and motel building code standards require 40% reduction in watts so every hotel and motel lighting system that meets that building code standard will automatically qualify for the maximum EPAct tax deduction.

Occupancy Rooms

In the majority of other categories of buildings The Section 179D tax provisions require compliance with the bi-level-switching requirement. The comparison is always made using wired instead of plug-in lighting. Hotel occupancy rooms in casinos have a major advantage in that they typically have plug-in lighting. Additionally, since these rooms are hotels and motels which aren’t exempt from the tax bi-level switching obligation. Since occupant rooms are usually one of the larger spaces at casinos in hotels casino rooms, they’re able to use energy efficient lighting to produce large EPAct tax deductions to the facility.

B ack of the House Spaces

Casinos often have large kitchen, storage, and laundry (so they are also known as”back” of home) areas that have traditionally used T-12 fluorescent lighting. This lighting is so energy inefficient compared to today’s lighting fixtures that it will become illegal production in the United States after July 1, 2010.4 Once manufacturing of these lighting fixtures from the past ends, the cost for replacing these inefficient bulbs will rise. It is imperative that casinos take action now to replace these fixtures in order to reduce both costs for energy and lamp replacement. The EPAct lighting tax incentive could be utilized to take advantage of the opportunities associated with these legally mandated product modifications

Ball Rooms, Banquet Rooms and Restaurants

These areas of casinos typically have designer lighting that is not energy efficient and, often, expensive to maintain and replace. Particularly, replacing bulbs and lamps in high ceilings can be extremely expensive since costly hydraulic platforms for mobile use must be purchased or rented to deal with the replacements. New lighting equipment, and specifically, light emitting diode (LED) products, use a fraction of the energy and have a longer useful life and are now being substituted. The combination of large energy cost reduction and operating cost savings along with utility rebates, and EPAct tax deductions will greatly improve the economic payback from these more costly lighting improvements.

Parking Garages

Many casinos have large adjacent parking garages which can conserve significant energy and also earn tax deductions by converting to energy-efficient fixtures. In Notice 2008-40, issued on March 7th, 2008, the IRS stated that parking garages are classified as a property type which is specifically eligible to use the EPAct tax deductibility. Also, parking garages are excluded from the tax-bi-level switching obligation. See the September 2008 International Parking Institute article devoted to parking garages’ electric light deduction tax opportunities.5

Slot Machines and Gaming Floors

One of the largest energy users on hotel gaming floors are slot machines. While they were the first adapters of fluorescent technology, these efficient bulbs typically need to be replaced 3 times a year because of their 24/7 operation. Due to the expensive labor expenses for maintenance, many casino owners are now converting to LED technology for their machines. LED’s, although they have higher upfront costs, have high energy efficiency and a long life cycle, resulting in substantial savings on labor and maintenance costs.


Casinos, due to their 24/7 occupancy can enjoy significant savings in energy expenses through the energy-efficient HVAC system. In particular, Nevada’s hot climate also makes energy efficient HVAC an extremely worthwhile investment. Fortunately. Nevada which has the highest earnings from casinos is America’s second largest capacity for energy efficiency by using energy from renewable sources like geothermal energy.6 Certain types of extremely efficient HVAC investments can often be eligible for the HVAC EPAct tax incentive , which includes thermal and geothermal storage.

LEED Casinos

We expect to see more casinos gain LEED status. (See LEED Building Tax Opportunities Article7). The year 2008 saw The Palazzo, Las Vegas Casino became the world’s largest LEED certified structure in the world and one of the very first certified LEED casinos to be found in the US.8 Hotels and casinos have discovered that certain types of frequent travellers are attracted by facilities which have proven that they care about the environment and sustainable design. To be LEED certified the casino must possess a building energy simulation model designed by a certified engineer. Modelling is also necessary for EPAct, HVAC and Building Envelope tax deductions. Expert tax professionals who know how to make the adjustments needed to transform LEED computer models into EPAct Tax Deduction Models are able to examine LEED models and determine whether huge tax deductions are possible. For example an 500,000 square foot LEED casino that qualifies with the top EPAct tax deduction could receive an immediate tax deduction in the amount of $900,000. =(500,000*$1.80). Casino owners who understand the importance of these benefits could use the tax savings to justify the cost that are associated with attaining LEED status.


Casinos due to their huge subspaces are a favored construction category in the EPAct commercial tax deduction law. Property owners who understand the potential of these spaces can take advantage of the current recession to improve their facilities, cut operating costs , and even become LEED certified facilities

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