Question of the Day - 12 September 2025

Most of the mega casinos on the Strip have already sold off their land to real estate investment trusts. Only Wynn/Encore, Treasure Island and Circus Circus, Sahara, Strat, Fontainebleau, and Casino Royale own the land that's under them. 

Casinos have traditionally been operator-owned properties; up until the last 30 years or so, casinos were considered to be in the sin business. In the 1960s-'70s, Ray Kroc had easy access to bank loans and most other financial markets to fund McDonald's explosive growth. Sam Walton had the same for Walmart. But Jay Sarno was forced to borrow from the Teamsters Union and other entities that might have been using a front for their murky funding sources, so they wanted the building and business to be tied to the same loans.

Today, MGM and Caesars hotel-casinos are owned by real estate investment trust Vici Properties. They're leased on a "triple-net" basis. This means that the REIT owns the land, the buildings, and everything in between. The "triple" in the leases also means that the tenant is responsible for everything that's part of the buildings, from landscaping to lightbulbs, and pays the property taxes and insurance, along with whatever modifications are undertaken. 

It's a great deal -- for the landlord. Most businesses in this country that don't own their land operate under triple-net leases. Even the biggest ones, like the casino companies, and Walmart and McDonald's, pay rent to separate companies in the real estate business. They do it mostly for tax purposes, as real estate professionals manage the properties. Selling the land also frees up a bunch of a company's money and its ability to borrow. 

Simply put, the REIT model helps casinos be more modern in their money management.