Nevada gaming revenue posts higher total share of FY21 revenue while overall revenue falls

Nevada gaming revenue posts higher total share of FY21 revenue while overall revenue falls

  • Buck Wargo, CDC Gaming Reports
January 14, 2022 12:07 AM
  • Buck Wargo, CDC Gaming Reports
  • Other

According to a Nevada report issued by the Nevada Gaming Control Board Thursday, gaming revenue in Nevada increased 25% in the fiscal year and comprised the highest percentage of revenue since 2000 – but the lack of amenities due to pandemic restrictions, especially on the Las Vegas Strip, turned 2020’s nearly $3 billion profit into a $206 million loss.

The Nevada Gaming Abstract 2021 looks at the 302 casinos generating $1 million or more in revenue, shows a net loss of $206.4 million, a massive drop from fiscal year 2020’s net income of $2.89 billion.

Gaming revenue, which year over year increased 25.3%, accounted for 52.4% of total revenue, up from last year’s 36.8%. According to Michael Lawton, a senior economic analyst with the state, that represents the highest percentage recorded since fiscal year 2000, when gaming represented 53% of total revenue.

“As expected, gaming win increased across all areas of the state, and this was the result of limited entertainment options and stimulus (for consumers),” Lawton said.

That contrasts to total revenue generated in all casino departments at $16.1 billion compared to $18.3 billion last year – a 12.1% or a $2.2 billion decrease from the previous year.

Rooms, food, beverage, and other departments (non-gaming revenues) accounted for 47.6% of total revenue, down from last year’s 63.2%. Overall, non-gaming revenues decreased $3.9 billion or 33.9%.

“Pandemic-related restrictions which limited restaurants, bars, entertainment offerings including showrooms, concerts, special events and nightclubs all played a large role in the decreases recorded to non-gaming revenue,” Lawton said. “Additionally, a lack of international travelers, convention attendees and the sluggish ramp up for leisure travel contributed to these results.”

The Abstract shows that the Strip lagged behind other submarkets across the state. Except for the Strip and Clark County, total revenues and net income across other submarkets increased.

“This was driven by increases to gaming revenue which benefited from strong demand and stimulus,” Lawton said. “Furthermore, revenue-generating departments recognized improved margins due to reductions to employee headcounts and marketing expenses (complimentaries).”

Lawton stated that the Strip’s gaming revenue accounted for 42.4% of statewide gaming revenues, below the 53.9% average over the prior ten years. Excluding the Strip, statewide gaming revenue increased $1.51 billion or 45% compared to fiscal year 2020, while total revenues increased $1.18 billion or 19.1%.

“As anticipated, due to the Las Vegas Strip’s reliance on multiple market segments including international travelers, convention attendees and long haul domestic customers, the strip lagged in the pace and timing of its recovery compared to the other areas of the state,” Lawton said.

With the addition of Circa in the fall of 2020, Downtown Las Vegas reported gaming revenue of $608.1 million, a gain of 39.4% and total revenues topped $1 billion.

“Downtown has recorded net income in seven consecutive years after a streak of six consecutive net losses,” Lawton said. Net income, the money casinos retain after paying expenses but before deducting federal income taxes and accounting for extraordinary expenses, amounted to a -1.3% return in fiscal year 2021 on total revenue compared to 15.8% in fiscal year 2020. Lawton said the net income decrease was due to total general and administrative expenses increasing by $3.57 billion with other expenses totaling $2.79 billion compared to a -$991 million credit balance in fiscal year 2020.

As for the large credit balance in 2020, Lawton said the Strip recorded several large real estate sales in which several properties now lease the land and building from the new owner.

“These sales resulted in large gains being recognized by these licensees due to the disposal of those assets,” Lawton said. “This, in turn, created large credit balances to be recorded in the other general and administrative expenses category of the income statements for the properties affected.

The number of locations generating $1 million or more in gaming revenue statewide increased by 35 from 267 in fiscal year 2020 to 302 in fiscal year 2021. Despite the increase, average number of employees decreased 18% from 135,926 in 2020 to 111,406 in 2021. The 302 casinos paid $802.3 million in gaming taxes and fees, equating to 9.5% of their gaming revenue.

On a county-by-county basis, Clark County had 173 casinos grossing $1 million or more in gaming revenue during 2021, which generated a combined net loss of $742.5 million from total revenues of $13.6 billion. Washoe County had 36 casinos which reported a combined net income of $275.2 million from total revenues of $1.3 billion. Elko County had 18 casinos with $132.2 million combined net income. South Shore Lake Tahoe in Douglas County, with seven licensees, reported net income of $24.4 million. The Carson Valley area, with 15 casinos, generated net income of $37.3 million. The balance of the state had 53 casinos earning $66.7 million in combined net income.

Across the state, occupancy rate decreased to 52.6% from 74.4%, and room revenues of $3.15 billion decreased 33.3% or $1.57 billion – the lowest total recorded since fiscal year 1999, according to Lawton. The Average Daily Rate (ADR) dropped to $130.54, compared to 153.73 last year.

Food revenues of $1.7 billion decreased 45.6% or $1.4 billion, the lowest total recorded since fiscal year 1997.

“Food Revenues experienced declines across all markets due to pandemic related restrictions which included limited capacity, restrictions on the number of diners per table and reservation requirements,” Lawton said.

Beverage and Other Revenues both decreased as well, with a 19.0% and 28.7% drop respectively.