Thursday, Feb. 6, 2003 | 11:16 a.m.
CARSON CITY -- Nevada's 249 casinos posted a $33.5 million loss -- at least on paper -- last fiscal year ending June 30, the first time the industry has not made a profit in at least the last 15 years.
A key driver in the loss was a one-time accounting maneuver by the Strip casino resorts that increased their expenses -- only on paper -- by $339 million. That's the amount of non-cash asset write downs the casino companies used to reflect the declining value of their casinos. Factoring out that accounting move, the state's casinos would have reported a profit of $305 million, down 45 percent from the previous year.
Not counting the accounting asset writedown, Strip casinos would have earned $94 million, down 76 percent.
The state Gaming Control Board released its annual report today showing profits, after the asset writedowns, dropped 106 percent compared to the 2001 fiscal year. The profit-loss report is before federal taxes and extraordinary expenses.
Frank Streshley, senior research analyst for the board, said the decline was due mainly to the drop in business after 9/11.
"There was a decline in tourists nationally and internationally," said Streshley.
The 39 casinos along the Las Vegas Strip reported a loss of $245 million, down 163 percent from the prior fiscal year. Streshley said that in five of the last six years the Strip casinos have been experiencing a decline in net income -- and a loss last year.
While the Strip clubs reported a total loss, other casinos in Clark County posted a profit, although much smaller than during the previous year.
Bill Bible, President of the Nevada Resort Association, said the numbers "reflect the troubled economy and the events of 9/11"
"It's an indication of a very bad year," said Bible. But he added some companies made profits because they were better able to complete than others.
"The events of 9/11 were devastating," he said. "And it shows the fragile nature of Nevada gaming and its dependence on tourism."
He said there also will be increasing competition from California's Indian gambling industry in future years.
Bible, a former state budget director, said the report "shows the unwise tax policy of how the state depends on gaming revenues."
Statewide, the board said annual revenue of the casinos fell 4.4 percent, or $802 million, to $17.3 billion, from the prior year. These figures include revenue from gaming, rooms, beverages, food and other casino businesses.
The casinos reported a negative 0.2 percent return on their revenues, said the board.
The board said casinos reported $15.6 million in bad debt expenses, up from $8.5 million of the prior year or an 83.4 percent gain.
Gaming revenue on the Strip fell 8 percent. For the fourth straight year, gaming revenue made up less than 50 percent of all casino revenue on the Strip, reflecting greater spending by tourists on shopping, dining and entertainment.
And for the first time, the big casinos, which gross more than $72 million a year on the Strip, reported that revenue from the slot machines produced more than table games. The report showed those 22 locations gained 50.8 percent from the coin-operated devices compared to 45.8 percent from the pit games.
These mega casinos reported a $422.4 million profit in the 2001 fiscal year but that fell to a $176.4 million loss or a minus 2 percent on revenue.
Downtown Las Vegas clubs reported profits of $581.700, down from the $20.7 million last year. They registered a 0.1 percent return on revenue.
Total revenue in "Glitter Gulch" clubs fell to $1.1 billion, down 1.5 percent from the previous year. Revenues from the gaming declined 1.6 percent but accounted for 60.9 percent of the total revenue.
The nine casinos in Laughlin posted profits of $25.7 million, up from $22.4 million a year ago. The clubs combined earned a 2.6 percent rate of return on their revenues.
The 29 clubs on the Boulder Strip posted $40 million in profits, up from $24 billion in the fiscal 2001. The return on revenue was 4.5 percent, said the gaming board.
The board reported the 55 casinos in the balance of Clark County registered $72.9 million in profits, a 4.6 percent return. Last year this group posted a $53.3 million loss.
Washoe County casino profits fell to $9.3 million in fiscal 2002, down from $73.2 million of the prior year; South Lake Tahoe Clubs reported $25.6 million in profits, down from $43 million of the prior fiscal year.
Clubs in Elko County registered $17.7 million in profits, up nearly $2 million from the prior fiscal year. Casinos in the Carson Valley had profits fall from $8.4 million in 2001 to $7.3 million in 2002.
Streshley said statewide expenses before interest, taxes, depreciation and amortization totaled $2.9 billion or a 16.8 percent return. These were down 13.7 percent from the prior fiscal year.
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