In Nevada, casino revenues are expected to reach $12 billion for 2021—an almost unthinkable outcome given the impact of the pandemic. But a report from Deutsche Bank analyst Carlos Santarelli says gaming revenues will contract in 2022, and conventions are the key to a robust economy going forward.
According to the Nevada Independent, Santarelli said comparisons for domestic gaming in regional markets and Las Vegas will “stiffen” in the second quarter of 2022 and beyond.
“We think the setup for the year is actually somewhat challenging,” with “limited room for error,” Santarelli wrote in a recent report. He added that the Las Vegas Strip recovery experienced could face a “modest contraction” during 2022.
In 2020, casino shutdowns and operating restrictions caused Strip revenues to plummet 43.3 percent compared to 2019—the lowest annual total since 1996. But through October, Strip gaming revenues are 3.5 percent ahead of the 2019 total by nearly $6.59 billion. Strip gaming revenue from slot machine play is up 13 percent this year compared to 2019. Slot wagering has also increased 12 percent.
Statewide, Nevada casinos have reported eight straight $1 billion gaming revenue months, tying a 14-year-old record. The total is 9.2 percent above 2019’s $12 billion figure.
It’s good news, but it could be a short-term surge, Santarelli wrote.
“The 2021 recovery in Las Vegas Strip gaming revenue surpassed even the most bullish predictions, driven primarily by a consolidation of travel domestically and elevated spending levels,” Santarelli wrote.
He said tourism was up because travel options were limited, but it’s “difficult to assume” that casino spending will continue to see elevated levels in 2022, especially as travel restrictions are lifted.
He pointed to meetings and conventions as a lifeline for 2022. Santarelli said Strip operators are “largely bullish” about the return of group business in the new year, and “is a key for the Strip.” While leisure and casino customer spend levels will “struggle to maintain current run rates … operators believe the medium-to-longer-term health of the market remains tied to the resumption of convention and group business.”
For now, the gaming industry is enjoying the fruits of a profitable year.
The American Gaming Association said combined revenue from slots and table games, sports betting and iGaming was $4.75 billion in October, the second highest monthly total ever behind $4.93 billion in July 2021, and the eighth month in a row that commercial casinos surpassed $4 billion.
According to the AGA, 24 of the 25 commercial gaming states that were operational in October 2019 saw a revenue increase, with New Mexico down less than 1 percent.
In related news, according to the Las Vegas Review-Journal, Nevada’s total economy is slowly returning to pre-pandemic levels, adding thousands of jobs in November and reporting a drop in the unemployment rate. The Department of Employment, Training and Rehabilitation (DETR) reported Friday that the state added 2,600 jobs in November, bringing the state’s total employment level up to 1,367,500.
Despite the decline, Nevada has the second-highest unemployment rate in the country. California ranks No. 1 with 6.9 percent while, nationally the rate stands at 4.2 percent, according to the Bureau of Labor Statistics.
Governor Steve Sisolak said in a news release that he’s encouraged by the uptick in employment and decline in unemployment.
“Nevada has now recovered more jobs than at the same point in the Great Recession, another sign that Nevada’s economy is resilient and continues to come back,” said Sisolak. “As we look to the new year, we will continue to focus on helping Nevada’s employers provide good jobs for Nevada families.”
