Las Vegas Sun

March 29, 2024

5-minute expert:

Gaming towns not exactly three of a kind

Las Vegas, Atlantic City and Macau are separated by thousands of miles but linked by a common factor: Their economic identities are grounded in casino gambling. But while the cities are affected by some of the same trends, their casino industries differ significantly.

Las Vegas long has been the pre-eminent gambling city in terms of name recognition and historical identity. Over the past decade, however, Macau has sprinted far ahead of Las Vegas in gambling revenue. Both Las Vegas and Atlantic City were hit hard by the economic downturn at the end of the 2000s.

Las Vegas generally is recovering from that slump. Atlantic City, meanwhile, has been left in the dust.

Nevada, USA

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New Years fireworks explode over Las Vegas Strip casinos in this view from the High Roller observation wheel Thursday, Jan. 1, 2015.

Las Vegas Strip

Number of casinos at the end of 2014: 41

The Strip accounts for the bulk of gaming revenue in Clark County and almost 60 percent of gaming revenue generated in Nevada.

But focusing only on gambling ignores the larger picture of what’s happening on the Strip. While other places — namely, Atlantic City — have struggled amid a proliferation of casinos nationally, the Strip has been reinventing itself to rely less on gambling and more on other ways of making money.

“The Strip has sort of matured or developed into a market where gaming isn’t the primary driving force for revenue,” Union Gaming Group analyst Chris Jones said. “Right now, the most important thing for all operators is room revenue.”

Why? It’s an area of high growth and high profitability, Jones said.

China

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Macau

Number of casinos at the end of 2014: 35

Macau has a long history of gambling, but it wasn’t until the early 2000s that its gaming economy really took off. That’s when the Chinese government broke up a monopoly that had controlled the market.

China allowed new operators to build casinos, and revenue skyrocketed from $2.8 billion in 2002 to $43.9 billion last year, about seven times the revenue on the Strip.

And unlike Las Vegas, Macau didn’t see a major dip during the global financial crisis.

But the market has sputtered recently, with its eighth consecutive month of year-over-year gaming revenue declines.

Why the sudden downturn? In a nutshell, China’s government has led a crackdown on corruption that’s keeping away some gamblers who otherwise would spend a lot of money in Macau.

“Macau has become collateral damage with respect to the broader anti-corruption crackdown,” said Grant Govertsen, a Union Gaming Research analyst in Macau.

New Jersey, USA

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Atlantic City

Number of casinos at the end of 2014: 8

Last year was a bad year for Atlantic City, and that’s putting it lightly.

Four of the city’s 12 casinos closed, taking with them about 7,600 jobs. A fifth casino, the Trump Taj Mahal, was in jeopardy but was saved by billionaire Carl Icahn.

Icahn since has grappled with the casino workers’ union over how best to keep the struggling property afloat. He says it is losing millions of dollars every month and remains open only because of his financial support.

Atlantic City has become a victim of tough regional challenges. Its customer base was cannibalized by casinos in nearby states. And, unlike Las Vegas, it failed to transform itself into an entertainment hub with nightclubs, shopping and fine dining.

The city has lost more than 47 percent of its gaming revenue since 2006.

There is a bright spot, however. In January, revenue for Atlantic City’s remaining casinos was up about 19 percent from the previous year.

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