Gambling is a tough business to predict, very fitting considering the nature of the industry. With the first annual decline in gaming revenue for Macau, four casinos shutting their doors in Atlantic City, and the slot industry consolidating a few companies, 2014 was a year full of stories in the gaming industry, to say the least.
While the Las Vegas Strip is still recovering from the recession, signs are pointing in the right direction for a full rebound. The Gaming Control Board’s Fiscal 2014 Gaming Abstract shows Strip casinos were up 5 percent in overall revenue, at $16.3 billion. Gaming revenue came in at $5.99 billion, 36.7 percent of the total number, and up 4.2 percent over 2013. The number is still down, however, 7.7 percent from the apex of $6.5 billion in 2007.
Although gaming is slowly climbing back to where industry professionals want to see it, non-gaming revenue has been through the roof. Gaming on the strip has been less than half of total revenue since 1998, and has accounted for 40 percent since the mid 2000’s. That chasm may grow wider as the trend towards non-gaming continues.
If nothing else, the numbers are there. The number of tourists in 2014 is predicted to top a record 41.1 million, and is set to grow by another 500,000 in 2015. Conventions booked for 2015 are also estimated to bring in 15,000 more attendees from a year ago.
Caesars Entertainment Corp. made headlines by introducing the Linq retail, dining, and entertainment area, which is now fully open. MGM Resorts International recently launched several restaurants between New York-New York and Monte Carlo in the Park development. The company currently is awaiting the 2016 unveiling of their 20,000-seat sports arena.
Last year saw many Strip resorts add and remodel nightclubs and restaurants. The Cromwell and SLS Las Vegas, which both heavily feature non-gaming amenities, opened last year as well.
As far as gaming is concerned, baccarat was the main factor in what kept Strip casinos gaming results afloat. While gaming revenue increased 2.3 percent in 2012, baccarat grew 8.7 percent. 2013 saw Strip gaming revenue grow 4.8 percent, baccarat soared 16.6 percent. Last year saw gaming revenue decline 1 percent, while baccarat slipped 4.5 percent.
Deutsche Bank gaming analyst Andrew Zarnett recently told investors MGM Resorts, traded on the New York Stock Exchange, will see the largest growth in value compared to any other gaming company if the non-gaming trends continue. The company operates 10 Strip casinos, which feature over 41,000 hotel rooms and two convention centers. Zarnett said cash flow from the company’s Bellagio are only 5 percent off MGM’s 2007 peak, the best result on the Strip.
