Las Vegas Strip casinos were dealt a bad hand with COVID-19. Numbers released this week by the state Gaming Control Board (NGCB) reveal just how severe the pandemic’s impact has been.
While statewide gross gaming revenue climbed 25 percent from fiscal year 2020, Nevada casinos incurred a net operating loss of $206.4 million in FY2021. The data period represents the 12 months ending June 30, 2021.
The NGCB’s annual Gaming Abstract reports on operating performance for casinos that grossed at least $1 million in gaming revenue during the year in question. The state says 302 casinos did so and were included in the Nevada Gaming Abstract 2021.
Total revenue — money spent by patrons on gaming, rooms, food and beverage, and entertainment — was more than $16.12 billion. However, the FY21 revenue was down 12 percent from the prior year.
Gaming was the bright spot, as casino revenue rose to $8.45 billion. But revenue in other resort areas continued to be deeply affected by the coronavirus. The absence of conventions for much of the fiscal year resulted in slow non-gaming operations.
As expected, gaming win increased across all areas of the state, and this was the result of limited entertainment options and stimulus (for consumers),” said Michael Lawton, senior economic analyst with the NGCB.
“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 added. “Additionally, a lack of international travelers, convention attendees, and the sluggish ramp-up for leisure travel contributed to these results.”
Strip Responsible for Decline
As Las Vegas goes, so does Nevada’s gaming industry. And in the fiscal year 2021, the Strip’s struggles pushed the statewide gaming and hospitality sector into the red.
The statewide net income loss of $206.4 million was entirely due to the Las Vegas Strip, which experienced a net loss of more than $1.95 billion. Clark County offset some of the massive losses by way of downtown Las Vegas, Laughlin, and the Boulder Strip, all three areas posting net income gains. Clark County as a whole reported a net income loss of $742.5 million.
Strip struggles were linked to high operating costs and expenses for the casino resorts, while COVID-19 led to state officials prohibiting or limiting many forms of entertainment and hospitality. Ongoing pandemic-related mandates, such as indoor face masks and limited international travel, added to the woes.
The Strip was the only metered market that incurred a net income loss during the fiscal year.
“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,” said Lawton.
Strip Share Remains Suppressed
Gross gaming revenue on the Las Vegas Strip totaled $3.6 billion in FY21, a 5.7 percent year-over-year premium. But Lawton explains that the Strip’s casino earnings, which accounted for 42.4 percent of the statewide total, is below where the main drag is typically expected.
The gaming analyst says the Strip accounted for almost 54 percent of Nevada’s statewide gaming revenue total over the 10 years prior to the pandemic.
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