Energy Policy Act Tax Opportunity

The casino Environment

Before the recent economic downturn commercial casinos earned more than $30 billion in profits each year from 2005 through 2008.1 In that time frame, US casino owners built new facilities and increased in size their current ones. Because of the economic slump, new US casinos constructed commercially has come to an abrupt to a halt and casinos are now focused on existing facility cost reduction.

This is the Section 179(D) Tax Provisions

Increasingly, casino operators are making use of the EPAct IRC section 179(D) commercial building energy efficiency tax provisions which were extended until 2013. EPAct tax deductions are available for qualified energy savings in lighting, HVAC(heating, ventilation, and air conditioning) and the building envelope. Bocoran taiwan (Building envelope comprises the foundation of the building, its walls, roof, windows and doors, all of which control the flow of energy between the interior and exterior part of the house.)

The Nature of Casino Properties

Commercial casinos are often hotels that offer appealing packages of services to their patrons from families and corporate. Casinos are especially suited to EPAct because of their vast gaming floors, hotel occupancy rooms, meeting rooms, and parking garages. Each of these facilities typically consume large square feet and the EPAct benefit has the potential to earn as much as 60 cents per square feet for each of the three measures described above. A few of the smallest commercial casinos have a total of 50,000 square feet while most American casinos typically exceed 100,000 sq. feet. One of the largest, MGM Grand on the Las Vegas strip is almost 2 million square feet. Hotels themselves are one of the most highly-rated of the Section 179’s construction category. (See “Hotels and Motels Most Favored Energy Policy Act Tax Properties”)

It is typical to think of casinos as being situated in two states: Nevada in Nevada and New Jersey. While it is true that both states enjoy the most commercial casino revenues, there are 12 states with casinos that are commercial within the United States, the other states that have casinos are: Colorado, Illinois, Indiana, Iowa, Louisiana, Michigan, Mississippi, Missouri, Pennsylvania, and South Dakota. The members of the American Gaming Association have publicized the commitments they have made to reduce their energy use. 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 via cogeneration, ERV(energy recuperation ventilation) and more efficient HVAC systems, and replacing incandescent lighting with energy efficient lightings, windows equipped with energy efficient day lighting systems Solar thermal storage, as well as various other initiatives that save energy.

The rule of thumb set to qualify in the section 179D lighting tax deduction makes casinos and especially casino hotels the top property category to benefit from the tax incentive. The rule requires at least a minimum of 25% watts-per-square foot reduction as compared to the 2001 ASHRAE (American Society of Heating, Refrigeration and Conditioning Engineers) standard for building energy codes. Full tax deduction is obtained by a 40% watts-per-square foot reduction compared to the ASHRAE standards of 2001. The ASHRAE 2004 hotel/motel building code requires 40% reduction in watts which means all hotels or motels light installation that meets the building code standard will automatically be eligible as the highest EPAct deduction for tax.

Occupancy Rooms

For most other building categories that fall under Section 179D, tax laws require conformity to the bi-level switching requirement. The comparison is always made on wired , not plug-in lighting. Hotel occupancy rooms in casinos have a major advantage in the fact that they generally use plug-in lighting, and since they are motel or hotel spaces, they are specifically excluded from the tax bilevel switching requirement. Because occupant rooms are typically among the largest areas in hotels Casinos are usually equipped to utilize energy efficient lighting to produce significant EPAct tax deductions for the establishment.

B ack of the House Spaces

Casinos usually have large kitchen storage, laundry, and kitchen (so called”back” of home) spaces that have historically utilized T-12 fluorescent lighting. This lighting is so energy efficient compared to the current lighting products that it will be unlawful to manufacture in the United States after July 1, 2010.4 Once manufacturing of these earlier generation lighting products stops, the cost of the replacement of these inefficient bulbs will rise. Simply put, casinos must think about replacing these lighting fixtures to save both the energy costs and lamp replacement expenses. The EPAct tax incentive for lighting could be utilized to take advantage of the opportunities related to these legally mandated changes to product designs.

Ball Rooms, Banquet Rooms and Restaurants

Casinos typically have designer lighting, which is inefficient and can be costly to maintain and replace. In particular, replacing lamps and bulbs in areas with high ceilings is extremely expensive as expensive mobile hydraulic platforms must be hired or purchased for the purpose of replacing the bulbs. New lighting products and, particularly, light emitting diode (LED) productsconsume a fraction of the energy and have a much longer useful life and are currently being replaced. The combination of a significant energy savings and operational cost reductions utility rebates, and EPAct tax credits can significantly enhance the economic return on these costly upgrades to lighting.

Garages Garages

Many casinos have large adjacent parking garages that could conserve significant energy and generate large tax deductions by converting to energy efficient fixtures. In Notice 2008-40 that was released on the 7th of March, 2008, the IRS announced that parking garages constitute a class of property that is specifically eligible to take advantage of the EPAct tax credits. Additionally, parking garages are exempt from the tax bi-level switch requirement. Please see the September, 2008 International Parking Institute article devoted to parking garages EPAct taxes on lighting opportunities.5

Slot Machines and Gaming Floors

One of the largest players of energy on hotel gaming floors is the slot machine. Although these were early adapters to fluorescent lighting, even these energy efficient bulbs generally need to be replaced three every year due to 24/7 operating hours. Due to the high cost of labor costs for maintenance, casinos are currently switching to LED technology in their machines. LED’s, although they have higher up front costs, offer high energy efficiency and a longer life cycle, resulting in substantial savings on labor and maintenance costs.


Casinos because of their typical continuous operation can benefit from significant energy cost savings from energy efficient HVAC systems. In particular, Nevada’s hot climate further makes energy efficient HVAC an extremely worthwhile investment. Fortunately. Nevada which has the highest earnings from casinos is America’s second-highest capacity for energy efficiency through renewable geothermal energy.6 Certain types of efficient HVAC investments can often be eligible for the HVAC EPAct tax credit, including thermal and geothermal storage.


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