Updated September 3, 2023 - 8:31 am
It seems every time the gaming industry is counted out, it just roars right back.
We saw another example of that last week when the Nevada Gaming Control Board announced record revenue of $1.4 billion for casinos in the month of July.
The nation has gone through some difficult swings with inflation, economy-stifling higher interest rates and higher gasoline and airline ticket prices that would tend to keep some would-be travelers on the sidelines.
We often hear laments about the high cost of entertainment, and that Las Vegas isn’t the value proposition that it used to be.
Yet the Strip’s 60 licensed casinos took in a record $834.9 million in the middle of the hottest summer on record.
Nevada’s phenomenal July came on the heels of two astonishing quarters by gaming companies nationwide. Days before the Control Board was sharing numbers about the Silver State, the American Gaming Association reported revenue of $16 billion for the quarter that ended June 30, beating last year’s second quarter by 8.1 percent. It was the industry’s second-best quarter in history, only trailing this year’s first quarter, and it was the 10th straight quarter of annual growth.
Nevada’s colossal July was the 29th straight month that it has recorded more than $1 billion in monthly gaming win.
The amazing thing for Nevada is that there doesn’t seem to be any obstacle to more growth in its path over the next six months.
But there’s always going to be some doubt.
“The end of 2023 and beginning of 2024 will be a strong catalyst with major events that can only be done the way Las Vegas can do what we do best as an industry in gaming, sports and hospitality,” said gaming industry analyst Brendan Bussmann of Las Vegas-based B Global. “The challenge is always sustaining, but in the end, we continue to adapt and innovate better than anyone else in those industries.”
Bussmann was referencing innovative new entertainment technology with the Sphere, whose opening is now less than a month away with the first of 25 performances of U2.
After that comes the Formula One Las Vegas Grand Prix spectacle in November for which fans from around the world will descend upon the city for an event like no other.
Just under three months after that comes Super Bowl LVIII at Allegiant Stadium. Bussmann says Las Vegas was made for events like these.
In between all of that will be the opening of the 3,644-room Fontainebleau resort on the Strip.
While the Gaming Control Board was unpacking its July numbers, the Las Vegas Convention and Visitors Authority was sharing the month’s visitation statistics. While visitation was up a modest 1 percent to 3.5 million tourists, the number of conventioneers was down 16.8 percent to 270,300.
Gaming industry analyst John DeCree of Las Vegas-based CBRE Equity Research doesn’t think so.
Strong entertainment calendar
“Counterbalancing softer convention attendance was the strong entertainment calendar driving occupancy and ADRs (average daily room rates) higher,” DeCree said in a report to investors last week.
“Despite increasingly difficult ADR comps and lagging occupancy, the Strip continues to push room rates higher,” he said.
DeCree isn’t too worried about the locals market or downtown Las Vegas either.
“The recent declines in gaming volumes have raised some questions about the state of the locals consumer,” DeCree said. “However, with the Las Vegas MSA hitting a new employment peak in July, we remain confident in the overall health of the locals consumer and the Las Vegas economy.”
And on downtown Las Vegas: “Downtown is typically seasonally slower in the hot summer months, but the upcoming convention season this fall appears to be shaping up well with a very strong citywide event calendar, which should also coincide with the completion of some ongoing renovations, such as Boyd Gaming’s Fremont Casino in October.”
There are other worries and uncertainties.
With resorts cashing in on high gaming revenue and a little bit of luck — baccarat and table game hold percentages were unusually high in July — unions are thinking it’s time they get a share of some of the profit.
It’s early in the game, but the Culinary union is at the bargaining table to renew contracts for the 60,000 workers it represents in Las Vegas and Reno.
The union and the resorts in general have been at peace — with the exception of Culinary and Red Rock Resorts’ Station Casino properties, which seem to be in a perpetual state of war.
Two other unions made news last week with discussions by flight attendants for United and American airlines about possible strikes. Industry leaders say that isn’t too likely with laws that prevent key transportation industries from walking off the job.
And while United and American don’t carry a ton of passengers to Las Vegas between them, it isn’t the kind of news that makes the resort industry very comfortable.
There was also some civil disobedience going on at Harry Reid International Airport last week when cars blocked the entrance and exit to the Uber and Lyft areas for about an hour. Reid officials moved swiftly to solve the problem by calling in Metro officers, but labor unrest for ground transportation wasn’t something on the radar of most people.
The tourism and gaming economy is churning along well and looks to do so for the foreseeable future.
But there’s always a little concern about the wild card event that nobody saw coming.