Why Doesn't MGM or Caesars Have a Downtown Casino?

Why doesn't MGM or Caesars have a downtown casino? Seems like there's a divide between Strip, Downtown and local that rarely gets crossed.

There are many reasons for this divide.

The first is, believe it or not, taxes. They’re higher downtown. Once you go north of Sahara Avenue, you become subject to various City of Las Vegas surtaxes that add to the levy you’re already paying to be on the Strip.

The second reason is similar: money. There’s simply not as much to be made downtown. For example, this June, Strip casinos pulled in $735 million. Downtown, the takings were a comparatively paltry $70 million, less than 10%. Those kind of dollars don’t generate the return on investment that an MGM or Caesars requires.

Why? Because they build big. And that raises a variety of other downtown bugaboos.

Getting the footprint to build an MGM Resorts- or Caesars Entertainment-sized casino would be all but impossible. And space is necessary for both companies, MGM primarily because it lives and dies on convention business and Caesars because it caters to high-volume tourist traffic from its hub-and-spoke business model, whereby a vast web of regional casinos feed loyalty players into the mecca that is Las Vegas.

Nor is downtown a place where large showrooms can be built or that Millennials patronize, negating two of MGM and Caesars’ hottest draws: big-ticket entertainment and nightclubs. Attempts to bring the velvet-rope experience both to downtown and to locals casinos have been a bust.

We’d also note that while downtown has fine dining, it’s limited to about one restaurant per casino and, except for Circa’s Stadium Swim, large-scale amenities are at a premium.

So you can see why it isn't worth the cost to the big operators (and you might throw Wynn Resorts and Las Vegas Sands in here too) to try and reinvent themselves for downtown.

And if all that weren’t enough, it would be seen as going downmarket for these prestige brands. Simply put, it’s never going to happen.

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Sandra Ritter Aug-12-2022

Appreciate more info

$70M downtown vs $735M Strip. How many casinos in each location are we talking about?

Ray Aug-12-2022

Agree with Sandra

Not only how many casinos, but how many gambling positions? The casinos themselves would be smaller downtown. And maybe you can talk more about Circa, while it is still new, may be more comparable to strip casinos (compare IT in size, casino and hotel to strip properties)

Randall Ward Aug-12-2022

thanks

yay,that was MY question.  I kinda guessed about the prestige factor but never thought about the others.

[email protected] Aug-12-2022

They both did

At one time, both Binion's Horseshoe & the Golden Nugget were owned by Harrah's & MGMMirage respectively. I never understood why both companies didn't keep the properties, it would add another player base, to their ever growing empires.

Carl LaFong Aug-12-2022

gkbii

It's pure speculation, but I think that both of the downtown properties were sold and looked upon as "lesser than" in comparison to the Strip itself. When they could promote Caesars and Bellagio, for example, the little brothers downtown just didn't represent that same image.

Andyb Aug-12-2022

YOU ARE WORNG

The Golden Nugget was owned by MGM in the year 2000.  Here is from a very simple wiki search. I not only know this but was there during the transfer to MGM and all the issues it caused with the 24 Karat Club. From WIki: The company was acquired in 2000 by MGM Grand Inc., which then changed its name to MGM Mirage, for $6.4 billion

jay Aug-12-2022

Apples and Oranges

Retail revenue & profit is measured on a per sq ft basis.
So I don’t think you can compare DT with Strip based on sheer volume.
If you can get $12/sq profit at a 500sq ft location and $3sq ft at a 30000sq ft strip. 
The 500 sqft shack wins out. 

Neither Harahs in Laughlin or New Orleans have any decent or reoccurring entertainment. In that regards Foxwoods in Mass does fair better and food wise none of them really run more than franchised concessions. 

The Barbary Coast was a dump, and Bills Gambling hall was a slum - they were able to slap some lipstick on that pig and rename it the Cromwell. So the only thing down market is how they present the place.  It’s not the size

Hoppy Aug-12-2022

Captive on the Strip

If I want a change of luck, when in downtown Vega$, I can just walk next door or go across the street (alot safer than dodging cars on the strip). At night, on the Strip, you are almost captive to a casino. Too much down market on the overpasses. And with the variety of choices downtown, Caesars and MGM would add little.

Roy Furukawa Aug-12-2022

Mid-level Players

I think there is a market of mid-level guppies that don't quite qualify as whales in the gambling ocean that aren't really served well downtown, but not really served well on the Strip either. A big casino company could easily do a boutique hotel downtown like Circa is trying to do. I think if Circa successful, maybe someone else will move in to take away some customers from Derek Stevens.

Question of the Day - 12 August 2022

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