How prosperous Las Vegas casinos really are?

How much money do Las Vegas casinos make? Source: unsplash.com

Gambling businesses have always been on the shady side of economies. They are treated as high-risk enterprises when applying for a loan or other financial services. Most people stay away from such places, being prudent about their hard-earned money. And yet, Las Vegas casinos seem to defy all the prejudice. They are a symbol of the city, one of its main attractions, and a magnet for betting people from all walks of life.

For sure, people who love to test their luck are numerous. Just to put it into perspective, last year, the American Gaming Association estimated that $150 billion was gambled around the world per year in legal and illegal settings.

So, how prosperous are casinos really? PaySpace Magazine’s team is eager to know that. Are you?

How do casinos make money?

At first sight, the answer seems clear. People place bets in various gambling games. When they lose, the money bid goes to the casino. However, bets also often pay off for the gamblers. One may think that casino owners are betting people too, putting the success of their business at stake. However, it’s not true. As Nico Zographos, dealer-extraordinaire for the ‘Greek Syndicate’ in Deauville, Cannes, and Monte Carlo in the 1920s observed about casino gaming: “There is no such thing as luck. It is all mathematics.” Well, statistics, to be precise.

If they don't structure it well enough, they lose money. This isn't cheating at all. All the Casino managers have done is to structure their games in such a way that benefits them in the long run. This is, to put it in the simplest way, one of the biggest secrets of running a Casino well. Jun 26, 2019 If your hand busts, you lose your chips immediately, before the dealer plays her hand. Even if the dealer busts, too, you’ve lost your money. That, by itself, is enough of an advantage for the casino to make a profit. Even if you play with perfect basic strategy, you’ll probably bust your hand around 30% of the time. Answer 1 of 26: I Know they are all struggling at the moment but what I mean is specifically the casino. For instance, the house has the edge on all the games, do you think in a day they ever have more winners then losers so actually loose money in their own. Each slot machine has a casino house edge, or percentage, that the program keeps from the bets that are placed on the machine.For example, if the machine is programmed to keep 8% of the money, this is exactly what the machine does.

The casino usually wins in the long run, due to the thoroughly calculated “house edge”. It’s also known as the casino advantage. That edge exists on every table game, lotto, or slot in a casino online or on land. The stats don’t depend on the casino establishment, these are purely mathematical odds of the game itself. The house edges for the most popular games vary from 0,5% to 40%.

In addition, individual casinos get more income when they find a method of increasing their house edge, the amount of time on each game and the average bet size. Therefore, the minimum amount is required in most table games. The maths is simple, the casino expects to make a certain amount of money for each round. The higher the limits, the better probability of attracting wealthy gamblers who like to play big. Players may be also encouraged to bet more by special offers called ‘comps’. Comps are gifts such as airline tickets or tickets to shows or even a certain extra percentage of the total winnings. They can be obtained by participating in a kind of “loyalty program” of a certain casino. Gamblers who receive a club card must meet certain requirements like spending a particular amount of time on a game, reaching a certain number of stakes, etc. This strategy is also advantageous to the casino despite the seemingly extra costs.

Moreover, betting itself is actually only a small part of the total casinos’ revenues. Non-gaming income comes from selling food and drinks, guests visiting in-house entertainment venues or spa facilities, renting rooms for overnight stays, paid parking lots, etc.

The average Las Vegas casino visitor spent $434.70 per night. Source: unsplash.com

In fact, since 1999, revenue generated by non-gaming amenities has exceeded casino revenue in Nevada. By 2013, the direct gaming income constituted only one-third of the total profits made by Las Vegas casinos.

Research conducted by David Schwartz, the former director of UNLV’s Center for Gaming Research, showed that in 2018, the average Las Vegas casino visitor spent $434.70 per night with $285.41 going to non-gaming attractions and only $149.29 placed on gambling.

Furthermore, the share of people who visit casinos without gambling at all, for the sake of fun and new experience seems to grow with every generation. During the 2014 survey, 51% of the responding US Millennials vs 15% of Matures admitted they had visited a casino and not gambled but spent money on non-gaming amenities such as food and beverages.

Revenues and stats

Now that you understand the full picture, let’s get down to the exact numbers.

That’s how much major Las Vegas casinos earn annually:

The owner of MGM Grand Las Vegas, MGM Resorts International had its consolidated net revenues increase 10% to $12.9 billion in 2019, with $5.8 billion attributed to Las Vegas Strip Resorts.
Caesars Entertainment that stands behind the famous Caesars Palace generated approximately $4.45 billion in revenue from its casinos in 2019 with $4 more billion coming from non-gaming sources.
Casino and entertainment resort company Wynn Resorts generated approximately $6.61 billion in revenue in 2019.
Circus Circus Casinos, Inc. has a comparably modest approximate annual revenue of $115.91 million.
Las Vegas Sands, the owner of The Venetian, reported Consolidated Net Revenue of $13.74 billion in 2019; whereas its operating income decreased 1.4% to $3.70 billion.

In fiscal 2017, 24 casinos in the Las Vegas Strip area produced gaming revenue of more than $72 million. The average daily revenue of a single casino made up $1.8 million with $634.5 thousand coming from the gaming bets.

169 large casinos in Las Vegas reported total revenues of nearly $22 billion. Source: unsplash.com

In the 2019 fiscal year, 169 large casinos in Las Vegas reported total revenues of nearly $22 billion. Their aggregate net income almost reached $2 billion.

At the same time, casinos in the state of Nevada generated $8.76 billion in revenue from gaming.

Coronavirus impact

The woes of the 2020 pandemic brought sad outcomes to the gambling sites. Being non-essential businesses, nearly all gambling venues and resorts were closed for a long time. Therefore, the losses of casinos are colossal.

Thus, MGM Resorts posted a 91% decline in quarterly revenue for the Q2 2020. The company also had an operating loss of $1 billion compared with operating income of $371 million a year earlier.

Las Vegas Sands announced net revenue of $98 million, a decrease of 97.1% from the prior year quarter. Operating loss was $922 million, compared to operating income of $894 million in the same period of 2019.

Though the casino operators speak about the reopening and recovery processes with hopefulness, their usual revenue levels may not be reached too quickly. Experts believe that a complete recovery to 2019 levels may not occur until 2022 or possibly 2023. Unlike many regional gambling markets, Vegas is heavily reliant on air travel, which is still pretty restricted. The number of international tourists and business travelers who are drawn to the wonders of illuminated casino buildings will be significantly smaller in the upcoming seasons.

Furthermore, the state’s “Road Map to Recovery” limits casino operations to 50 percent occupancy. That is another factor for the revenue decrease in the foreseeable future.

SunTrust Robinson gaming analyst Barry Jonas believes Las Vegas needs to return to its “gaming roots” to survive the pandemic crisis:

Today’s gaming market has essentially morphed back 30-plus years in time to when the main focus was recession-resistant gambling, as non-gaming amenities take a back seat.

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