Annual report shows dramatic fall of casino profits

By Cy Ryan

Friday, Jan. 16, 2009 | 10:13 a.m.

CARSON CITY – Profits at Strip casinos tumbled by more than 50 percent in fiscal 2007.

The state Gaming Control Board released its annual “Nevada Gaming Abstract” Friday, showing that the 266 casinos statewide that grossed $1 million or more in gaming revenue ended up with a 68.6 percent decline in net income. (Net income is computed before federal taxes and extraordinary expenses.)

“There was less revenue but a higher cost of doing business,” said Frank Streshley who compiled the report for the board. Total revenues to the casinos fell by 1 percent but the general and administrative costs rose 16 percent.

This was not surprising, he said because the national economic decline started in January 2008, he said. This report covers from July 1, 2007 to June 30, 2008.

Profits in the 40 casinos on the Strip totaled $709.3 million, down 57.3 percent. The rate of return fell from 10.8 percent in 2007 to 4.5 percent in fiscal 2008.

Gambling in the Strip casinos accounted for 39.7 percent of the revenue, followed by food that brought in 25.8 percent and the rooms at 14.7 percent. Bar business was 5.2 percent of the total revenue.

The slot machines on the Strip took in $3.3 billion, or 53.9 percent of the total gambling revenue. Gambling pit revenue hit $2.6 billion, or 42.1 percent of the gaming win. Poker and pan had 1.9 percent of the total $6.2 billion casino revenue. And the sports books were 1.3 percent.

For the first time ever, Streshley said, the casinos on the Boulder Strip suffered a loss. The 32 casinos registered a loss of $6.1 million. The rate of return was a negative 0.5 percent, compared with 11.6 percent last year.

Downtown Las Vegas clubs reported $30.8 million in net income, down 54.2 percent. The rate of return was 2.8 percent, down from the 5.9 percent of the 2007 fiscal year.

The 11 casinos in Laughlin posted profits of $49.8 million, down 51.3 percent. The rate of return was 5.4 percent, down from 10.8 percent.

Taking the biggest hit were the 54 casinos in the balance of Clark County, including Mesquite and North Las Vegas. They reported a net loss of $146.2 million, down 235.9 percent from the previous fiscal year.

Streshley said there were several major transactions in Southern Nevada that added to the costs of operations. Two companies switched from public to private ownership that resulted in increased debt and higher interest rates.