Nevada casinos are on a hot streak of their own

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T1129BELLAGIO_C_HR [Credit: MGM Resorts International]
Strip casinos, including the Bellagio, pictured, reported their best-ever quarter with $2.06 billion in gaming revenue from July to September. Photo Credit: MGM Resorts International
Paul Szydelko
Paul Szydelko

Led by the Las Vegas Strip, Nevada casinos are on a formidable roll -- with gaming revenue of at least $1 billion for eight consecutive months.

The streak through October matches the record stretch set in late 2006 and early 2007, before the Great Recession. It's even more encouraging that casino floors are returning to and exceeding pre-pandemic levels without higher-spending international visitors throwing the dice yet.

Casinos statewide took in more than $1.2 billion in house winnings in October, according to the state Gaming Control Board. That's up 16.3% from $1.1 billion in October 2019, five months before Covid-19 prompted casino and business closures.

"Strong demand across markets, the continued rebound of leisure travel and the return of special events and entertainment continued to propel gaming win past 2019 levels," board senior analyst Michael Lawton told the Associated Press. He noted that results are now 8% above 2019 for the calendar year through September.

Record quarter for Las Vegas Strip casinos

Lawton said the third quarter was the best ever for the Strip, with $2.06 billion beating the previous high set in the fourth quarter of 2006. The Strip increase for the quarter was 105.6% better than the same period in 2020.

Most casino operators are going to be pretty happy with 2021, says Anthony F. Lucas, a professor at the William F. Harrah College of Hotel Administration at the University of Nevada, Las Vegas.

"There's some pent-up need to get out of the house and go have fun and live your life," Lucas said. "We're seeing the manifestation of that on the income statement. People are coming out in droves, and they're gambling. But I do think it is a response to not being able to do so."

Slot vegas gambling [Credit: Virrage Images/Shutterstock.com]
What has made the casinos' robust comeback even more remarkable is that it's been done without high-rolling international travelers. Photo Credit: Virrage Images/Shutterstock.com

Lucas noted the federal government's infusion of capital into the economy via pandemic relief benefited the hard-goods sector but also travel and gaming. The recently passed infrastructure bill will ultimately aid the industries, as well, he said.

The casino winnings numbers are even more remarkable considering about 80% of their revenue comes from just 20% of players, a ratio that often stretched to 90% and 10%, respectively, at pre-pandemic peaks, Lucas said.

"It's amazing that we're doing these gaming numbers in Las Vegas, when we don't have a really active pipeline to international play [before restrictions eased on Nov. 8]," Lucas said. "I just find that fascinating. We've always been told we're dependent on this high-roller play. How are we doing record revenues then? Because these guys are not high-rollers who are coming in and playing now."

Another gaming adage Lucas cites: The farther you travel, the more you're worth as player. "That's generally true. We have the data. [But] as bizarre as it is, we've never done better," he said.

Challenges ahead for casinos

Despite the welcome news on casino floors, resort operators likely will remain wary as they head into 2022, thanks to multiple challenges facing the industry: inflation, rising fuel costs, supply-chain issues, finding employees and, of course, lingering uncertainty about Covid-19 internationally.

"We might be done with [Covid-19], but I don't think it's done with us," Lucas said. "I'm not really sure to the extent to which this international [play] is going to come flooding back in and the sustainability of this need/urge to get out and come to Vegas and live your life," Lucas said.

Lucas said he hopes the casino win streak won't diminish the pandemic's lessons in executive offices in Las Vegas resorts, and that they are dutifully anticipating the next threat to gathering in crowds.

"I hope going forward that we realize that a strong balance sheet is important," Lucas said. "It's going to rain. You're going to have a rainy day, so to speak, and that balance sheet is the thing that's going to get you through it.

"I'm hoping that [resorts] don't over-leverage themselves and this serves as something of a cautionary tale. It's coming. We don't know what form it will take or when it's going to be here, but it's going to happen. Be ready for it. And I think most of the corporations will be."

UPDATE: This report was updated to include financial numbers for October, the eighth consecutive month state casinos have topped $1 billion in gaming revenue, matching a record.

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