California’s Neighboring Casinos Suffer 6% Revenue Decline

Photo: Las Vegas / (Public Domain)

In the United States, Las Vegas casinos are the gambling hot spot of the country, drawing in thousands of tourists from across the world, including from right here in California. However, according to the monthly revenues posted by Nevada casinos at the end of May, the summer has kicked off with a surprising statewide decline in revenue.

Revenue Down for the Sixth Consecutive Month

The Nevada Gaming Control Board recently published their monthly reports of casino gaming and gambling revenue in the state for the month of May, which showed some disappointing figures. Collectively, the casinos operating within the territory of Nevada experienced a revenue decline of almost 6 percent compared year-on-year to 2018. May was also the sixth consecutive month in which revenue percentages were down, and the losses were the largest reported so far in 2019.

The total gaming revenue for the state in May 2019 amounted to a little over $981.8 million. And while that seems like a vast sum of money, it was down by 5.96 percent from the $1.04 billion in revenue generated by Nevada operators during May 2018. The largest losses seemingly came from the 50 casinos on the Las Vegas Strip included in the report. Earnings for Sin City’s casinos topped at $517.3 million for May 2019, a drop of about 11 percent compared to the $581.5 million generated last year.

What’s behind the drop in revenue?

The culprit? The classic card game baccarat. It may be the game of choice with gamblers in other gaming regions like Macau, but it seems in Vegas, people have had their fill. Revenue for the game was down by a total of 55 percent across Nevada and Vegas Strip casinos for the month of May. Could it be that instead, players have flocked to online platforms, a medium that offers different strategies to play and win at baccarat, as well as increased accessibility to players who would ordinarily feel out of place on a busy casino floor?

Interestingly, however, if the figures included in the monthly reports did not relate to baccarat, the total gambling revenue collected in the state would be slightly higher compared to last year. Slot machine revenue, for example, was up by 1.5 percent across the state for the month of May — the eighth consecutive month for revenue increases in this vertical. Tourism in Vegas also increased by 1.7 percent this month, with visitor volume at a reported 3.69 million, so the monthly figures weren’t all bad news.

Coming in Second to New Jersey

With the recent legislation changes to sports betting in New Jersey, it seems that Nevada has already begun playing second fiddle in revenue generated from this lucrative vertical. New Jersey has almost three times the population of Nevada, so it could spell trouble for the gambling capital in the months and seasons to come. Even though Nevada’s total sports betting handle for May came in at $317.6 million, the actual total profit made by operators was $11.3 million (another decrease of 45 percent year-on-year). In comparison, the New Jersey handle totaled $318.9 million, with revenue this around $15.5 million.

According to the Nevada Gaming Control Board, however, May is usually a slower month for the sports betting vertical in Nevada, with March Madness and football wagering a “significantly more robust market.”

Caesars’ Merger a Success

Meanwhile, in other Nevada casino-related news, Eldorado Resorts Inc. has successfully negotiated a merger with Caesars Entertainment, recently finalizing a deal totaling $17.3 billion. The deal includes both cash and stock as well as Eldorado agreeing to assume Caesars’ long-term debt of $8.79 billion. Combined, the two operators have become the U.S.’s largest gaming company and will be Caesars moving forward.

Prior to the merger, Caesars Entertainment was, of course, the world-famous brand behind the iconic Caesars Palace on the Vegas Strip. There are currently 53 U.S. properties and five international properties within its portfolio. Eldorado has a market value of $4 billion and owns 26 properties across 12 different U.S. states. Interestingly, the new company will be headquartered in Eldorado’s previous base of Reno rather than on the Strip or in another Vegas property. Eldorado Resorts Inc. will be the majority shareholder, owning 51 percent of the new company, and Caesars Entertainment will hold the remaining 49 percent.