Casinos Are Moving Beyond Basics

Las Vegas gaming revenue dropped $600 million from 2007 to 2016 but room revenue increased $800 million. Properties are promoting luxury rooms, upscale dining and high-end shows over inexpensive buffets and cheap rooms, said gambling expert David Schwartz. He predicts by 2023 Strip resorts will generate $2 billion more from rooms than gambling.

Gambling represents just one-third of the total revenue of the Las Vegas strip, according to recent figures, according to David Schwartz, director of the Center for Gaming Research at University of Nevada-Las Vegas. Schwartz added gaming revenue in Las Vegas decreased by 0 million in 2016 compared to 2007, but room revenue was up 0 million. The reason, Schwartz said, is casinos, instead of offering inexpensive rooms and loss-leading buffets, now focus on people willing to spend on a once-in-a-lifetime experience including luxury rooms, high-end dining and celebrity shows.

Schwartz said, “If the current trend continues, by 2019, rooms will make about as much money as the casino floor, in 2020 they will surpass it, and by 2023, Las Vegas Strip resorts will make about $2 billion more from their rooms than their gambling.”

Freelance online gaming researcher and writer Steve Ruddock said the “Massachusetts Model,” as he calls it, will be the norm in the future. The state authorized casino gambling in 2011 in a way that integrates the casino into the local economy through jobs and economic development. “From the procedures governing licensing, to robust regulations, to responsible gaming programs, everything Massachusetts is requiring its casinos to do is meant to maximize the benefits casinos offer and minimize the negatives

This means: Keep the focus on non-gaming revenue streams,” Ruddock said.

For example, casino operators who receive a license are granted exclusive rights to a zone. But first, a proposal was required to guarantee a minimum investment. It also had to win approval through a voter referendum. The Massachusetts Model, Ruddock added, assured winning casino proposals invested in the project for the long term.

Another key difference, Ruddock said, is Massachusetts casinos are non-smoking. Also they offer innovative responsible gaming programs that the industry has long fought against, he said. “Casinos might be tempted to return to their old ways. That would mean going after the low-hanging fruit, gaming, instead of continuing to reinvest in their properties and turning them casinos of the future where hotel, retail, dining and entertainment far outpace gaming revenue.”

Ruddock noted MGM, which has not yet opened Massachusetts casino, announced it will offer the responsible gaming programs, GameSense, at all of its U.S. casinos by the end of the year.