How each one works in our climate
A standard tank gas water heater stores 40 or 50 gallons of hot water at all times and reheats it as it is used, with the burner cycling on whenever the stored temperature drops below a setpoint. A gas tankless water heater holds no water at all; when a hot tap opens, a flow sensor triggers a burner that heats water on demand as it passes through a coiled heat exchanger. Both work in Las Vegas. The choice between them is about how the home uses hot water and what mechanical reality the unit will be sitting in. Most Las Vegas water heaters live in the garage or in an exterior closet, where summer ambient temperatures regularly exceed 110 degrees from June through September. That heat is brutal on a tank's standby losses because the unit is constantly losing energy to a hot environment, and its insulation is fighting in the wrong direction. A gas tankless unit has no standby losses to speak of and effectively does not care what the garage temperature is. On the other hand, winter overnight lows in the high desert can drop to the 30s or low 40s, which means the inlet water temperature in January can be 20 to 30 degrees colder than in July, and a tankless unit's flow rate at full temperature rise drops accordingly. A unit sized for summer use can underperform in January if the sizing was sloppy. Electric tankless exists as a category but is rarely the right answer in Las Vegas because the amperage demand on a 200 amp service is significant and the gas infrastructure is almost always already in place.