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October 21, 2014

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gaming:

Strip casinos continue to see revenue shift toward nongaming sources

CARSON CITY — The trend is continuing and growing at Strip casinos that make more money off their rooms, restaurants and entertainment than from the table games and slots.

Forty-two states have a casino, and people across the nation are coming to Las Vegas for its other amenities, said Matthew Maddox, chief financial officer for Wynn Resorts.

“They are not sitting at the blackjack tables at 2 a.m.,” said Maddox, one of the five members of the Economic Forum that must judge how much tax revenue the state will collect in the next two fiscal years.

The state Gaming Control Board produced figures Friday at the meeting of the Forum that showed 62 percent of the revenues at Strip casinos come from rooms, entertainment, food, drinks and retail sales in fiscal 2011, up 1 percent from the previous year.

Michael Lawton, senior research analyst for the control board, said, “You can gamble anywhere, but they can’t offer what’s in Las Vegas and Reno.”

“Spending patterns are changing,” Lawton told the forum. His chart showed that since 1999, the nongaming revenues have surpassed the games and slots.

And baccarat is showing the greatest strength in the casinos. “Baccarat figures are volatile,” said Lawton, who predicts baccarat win will increase 5 percent this fiscal year and increase an estimated 3 to 4 percent in the coming biennium.

Maddox said the Wynn properties market to the high-end players. He said the casinos “overly rely on 150 international customers willing to wager millions of dollars.”

The major customers come from China and Mexico, Maddox said.

Slot machine revenue is expected to rebound in the coming two fiscal years. It is down this year, but Lawton expects the win to grow in the coming two years by 3 to 4 percent.

The number of slot machines fell from 165,995 to 158,788 in the past year, Lawton said.

But Russell Guindon, deputy fiscal analyst for the Legislatures, said slot machines now offer a variety of games compared with the old model of pulling the handle and waiting for cherries or a jackpot.

Lawton predicts that tax revenue from gaming will increase by 3.3 percent next year and by 5.3 percent by 2015.

Janet Rogers, deputy state budget director, is not that optimistic. She said the national economy still is shaky and is forecasting 2 percent growth followed by 3.4 percent growth.

Guindon is predicting a stronger recovery with a 4.1 percent increase in fiscal 2014 and a 3.4 percent the following year in statewide gaming win.

The Economic Forum will meet Nov. 29 to predict how much the state will collect from all taxes in the coming two years, and that figure must be used in budget preparation.

And Maddox said the Legislature, if it plans to raise taxes, should look at mining and not casinos, which had a bad downturn during the recession. He called mining the most profitable industry and said the casinos have had problems.

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