The world-famous Las Vegas Strip is what many people think of when it comes to casinos and gambling. The famed stretch of roadway is home to massive properties like Caesars Palace, Aria, and MGM Grand. From high-end shopping and dining to gambling to massive hotel towers and numerous entertainment options, the area attracts millions of visitors each year.
And while Nevada saw record gaming and revenue totals in 2023, recent reports also paint a drop in profitability for the properties that line Las Vegas Boulevard despite the Strip also seeing record numbers. Net income (profits) saw a double-digit decline from 2022, according to the 2023 Nevada Gaming Abstract.
A Look at the Numbers
Despite some massive events in 2023 like the Super Bowl and a Formula One race, Strip properties saw a drop in net income of 33.6% to just under $1.4 billion. On the flip side, total revenue increased 11.6%.
The abstract looks at various revenue streams for gaming properties across the state. When looking at just Strip total casino gaming, revenues dropped 2.3%.
The Strip wasn’t the only location to see declines. Statewide casino profits decreased 21.4% to $3.4 billion while revenues rose 8.9%. Gaming revenues declined 1%. Downtown Las Vegas casinos also suffered a drop in profits as well, slipping 3.9% to $259.2 million.
In total, 300 Nevada casinos grossed more than $1 million in 2023. Gaming accounted for 36.6% of total revenues for those 300 properties. The abstract also noted that there were 54 casinos owned by publicly-traded companies, which accounted for 64.4% of total gaming revenue statewide.
The Reno/Sparks area registered one of the largest drops in casino profits, plummeting 41.3% while seeing total revenue up 5.7% and gaming revenue increase 2.4%.
Overall, Nevada casinos reported record gaming revenue of $15.5 billion, a 4.6% increase over 2022. Strip casinos also recorded record gaming revenue of $8.9 billion, a 7.4% jump from 2022. That number accounted for 57% of the entire state’s gaming revenue total.
Total Strip revenue reached $20.5 billion, another new record and an 11.6% ($2.1 billion) increase from 2022. Strip room, food, beverage, and other sources accounted for a record 73.4% of total revenue, up from 69.6% from the previous year. Non-gaming revenues were $15 billion, also a new record and an increase of 17.7% ($2.3 billion), topping the previous record of $12.8 billion.
“It shows that Nevada’s gaming industry is extremely diversified with its product offerings, which draw visitors from all over the globe, not to just gamble, but to experience other world-class amenities,” Nevada Gaming Control Board senior economic analyst Michael Lawton said.
Along with record gaming numbers, Las Vegas tourism topped 40.8 million visitors last year, just under the record of 42.9 million in 2016. Harry Reid International Airport also topped 2023’s passenger record with 57.6 million travelers, up 9% over last year.
Possible Reasons for Profit Declines
Part of the increased revenue numbers for 2023 included the opening of two new casino resorts, the $3.7 billion Fontainebleau at the north end of the Strip and the $780 million off-Strip Durango property for local players.
The $2.3 billion Sphere entertainment venue also opened and the NBA’s new in-season tournament finale was also held at T-Mobile Arena.
However, the drop in profits on the Strip doesn’t paint a completely rosy picture for Strip properties, according to a report from Fantini Research. Caesars Entertainment recently announced that the company expected a net loss between $4 million and $157 million for the last three months of 2023.
Much of the anticipated loss was because of the company’s Strip properties, which were expected to sustain total fourth-quarter revenue of between $1.08 billion and $1.09 billion, down from $1.1 billion in the prior quarter. The report noted that Strip table gaming revenue was down 1% for the quarter and hold percentage on wagers was down 2%.
The fall in profits seem congruent with the American Gaming Association’s 2023 “Gaming Industry Outlook” report. While executives who were surveyed expected a positive outlook for the industry, there were also some concerns.
The survey noted that operators expected gaming units in operation to increase (11% net positive), but 67% expect greater-than-normal investments in food and beverage. Another 33% expected greater-than-normal capital spending on gaming machines. Some of these expenditures may have contributed to declines in profit.
Additionally, a total of 58% of casino executives reported that inflation or interest rate concerns as factors limiting operations, followed by overall uncertainty of the economic environment at 55%.
