Where do the casinos' highest earnings and profit margins come from?

Where do the Las Vegas casinos generate their largest source of earnings, not revenue (e.g., gaming, food/beverage, rooms, nightclubs, retail, etc.)? Second, where do the highest profit margins come from in the Las Vegas gaming business (e.g., gaming, food/beverage, rooms, nightclubs, retail, etc.)?

The answer to these questions is a bit tricky, as you'll see. When it comes to accounting, especially for large companies, often the "bottom line" isn't as black and white as we might like it to be.

So we put your query to two gaming-industry alumni: University of Nevada-Las Vegas Distinguished Fellow Alan Feldman, formerly of Mirage Resorts and MGM Resorts, and former Stratosphere president Richard Schuetz.

Feldman says that casino department generates the highest profit margin. As for revenue, he tells us that the gambling comes in second. "Only room revenue tops casino revenue."

Schuetz elaborates, “One thing that makes it difficult is all of the internal accounting among departments. That is, a high-end restaurant might do very well (on paper), but a large percentage of its guests are comped. In fact, in many of the high-end restaurants that do a lot of comp traffic, the prices are inflated to give comped guests the feeling that they're getting something special. The reality of the accounting is that this is an expense to the gaming departments and revenue to the restaurant. The restaurant looks successful, but without the comp traffic, it would go broke.

“It also depends on the nature of the facility,” Schuetz continues. “For instance, during a big convention, a convention-oriented hotel can charge a fortune for a room, whereas when it's slow, the rooms are heavily discounted. The cost side of offering a hotel room has little to do with the rate paid; it has to be cleaned whether the guest pays $50 or $500. In one instance, it's highly profitable and in the other, it isn't.”

He concludes: “To really answer the question, no one in Vegas is thinking about closing the casino and keeping everything else open, which is to suggest Vegas in still in the gambling business.”

For further enlightenment, Schuetz recommends this article from Las Vegas Then And Now.

No part of this answer may be reproduced or utilized in any form or by any means, electronic or mechanical, without the written permission of the publisher.

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Thomas Dikens Apr-09-2023

Casino Profit

Before MGM bought the Mandalay Bay I asked a Pit Boss where the most profit came from.  I couldn't verify her answer, but she said the Night Clubs produced the most profit, and then said, I can't remember the exact order but Restaurants,  Rooms and Shows, were 2, 3 and 4.  She said gaming was 5th.  She went on saying gaming was close to just a break even and was there as a courtesy to the guests and bring people in to drive the other profit centers.  Interesting answer.   Despite all the internal accounting tricks and how the corporations present results, I am sure the Senior Executives know the "real" answers and use that information to drive profits.  It is complex, a casino may offer poker room and not show a big profit there but how much profit is generated by the poker players' spouses and friends who play slots, eat, etc.  In the pre corporation era, it was clearer, the casino didn't want revenue coming in with credit cards - cash at the tables and the skim were much better.

CLIFFORD Apr-09-2023

CRAZY

ABOVE CAN'T BE TRUE NOW...NO LOUNGES TO SPEAK OF AND GAMBLING TURNS A DOLLAR..."JUST LIKE PRINTING MONEY."

kinosh Apr-09-2023

Penny slots

Here are some gaming numbers

Nevada casinos' net winnings in October 2022:
Blackjack $130.6 million
Craps $37.3 million
Roulette $33.0 million
Baccarat $66.4 million
Sports $56.9 million
Penny slots $307.8 million
[Source: Nevada Gaming Control]

That Don Guy Apr-09-2023

Total 2022 Strip Gambling Profits

Here are the profits for gambling on the Strip over all of 2022, in millions of dollars:
2,245 - Multi-Denom Slot/VP
1,551 - Penny Slots
1,144 - Baccarat
999 - Blackjack
439 - $1 Slot/VP
379 - Roulette
319 - Craps
169 - Poker/Other Card Games
131 - Ultimate Texas Hold'em
131 - 25c Slot/VP
104 - Other Table Games
97 - Other Machines
93 - Pai Gow Poker
87 - 3-Card Poker
80 - Football
60 - Mini-Baccarat
53 - $5 Slot/VP
48 - Online Sports Bets
42 - Basketball
33 - Baseball
32 - $100 Slot/VP
27 - $25 Slot/VP
18 - Soccer/MMA/Other Sports
15 - 5c Slot/VP
12 - Let It Ride
11 - Horse Racing
6 - Pai Gow (Tiles)
6 - Hockey
2 - Parlay Cards
2 - Keno
Total Gaming Profit $8,287,963,000

Lotel Apr-09-2023

Parking?

Seems like they are trying to make parking a big  source of revenue today  . Las Vegas just nickel and dimes you every chance they can now . I have cut back on my trips and days  there.

VegasMatt26 Apr-09-2023

You'd Think

You would think that the gift shops would generate the most profit. I stayed four nights at the Flamingo this February and I grabbed a bottle of Diet Pepsi from the vending machine for $3.00 on my floor on the way to my room.
Later I stopped at the gift shop to get some soda and snacks, I grabbed a back of chips and three bottles of Diet Pepsi. When I saw $ 5.19 on the register for one soda I asked the clerk if that was right as I had the small bottle of soda.
She said yes the 20oz bottles are $5.19 plus tax. I said no thanks and walked down the street and stocked up at Walgreen's for only $2.50 a bottle.

I know its VEGAS, but seriously $ 5.19 for a 20 bottle of soda almost a bigger ripoff than the pizza joint at MGM butt f***ing customers a whopping $ 39.99 for a 16" large pepperoni pizza. Talk about a high profit item !!!

Ray Apr-09-2023

Of course it's the casino

The last sentence of the answer says it all. Has any casino-hotel ever closed the casino? No. But they have closed shows, lounges, restaurants, etc. And gambling is the only thing that makes the place enough money so they will offer you comps. Does anyone give you a free room because you bought a ticket to a show?

[email protected] Apr-09-2023

To VegasMatt25

ALL that is on you bro. I've been to Vegas since the 80s and the next time I buy a soda/chips/beer or anything else snack or drink wise inside a casino hotel will be the first. Same for any convenience store. I stock up on every snack or drink I need for the entire stay in a stop or two or three at a grocery store or better yet Dollar Tree.

Question of the Day - 09 April 2023

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