Las Vegas gaming boom to continue

Jul 12, 2005 2:07 AM

 

The recent boom in Las Vegas gaming isn’t likely to bust anytime soon, according to a recent study that predicts gambling revenues to climb to $15.8 billion over the next four years.

The rest of the country will also enjoy solid gaming growth, according to the Global Entertainment and Media Outlook Study released by Price, Waterhouse Coopers, which estimates gambling revenue nationwide will jump from last year’s $47.3 billion to $64.1 billion in 2009.

Those estimates include only the reported revenues raked in by the nation’s commercial casinos and "racinos," and does not include pari-mutuel betting, lotteries and online gambling.

The fastest growth will occur in Nevada, fueled by an improved economy and new casino openings such as Wynn Las Vegas, the consolidation of giant gaming operators (Harrah’s with Caesars, and MGM with Mandalay Bay), and new construction such as The Venetian’s new Palazzo, currently being built across the street from Steve Wynn’s new hotel.

"As exciting as the growth prospects for gaming remain, everyone here in Las Vegas sees real excitement in the explosive growth of non-gaming revenue, which has been growing at a much faster pace," Alan Feldman, spokesman for MGM Mirage, told MarketWatch.

Indeed, non-gambling amenities can help boost casino profits by attracting visitors who might not otherwise visit a casino.

Notable non-gaming attractions include the new Ferrari dealership at Wynn Las Vegas, which began charging admission (you get a cap for the money) when crowds began to line up outside the store, and the Forum Shops at Caesars Palace, renowned as being the most profitable retain mall in the country.

At some top hotels, the combined revenue from guest rooms, entertainment, dining, stores, spas and the like bring in more money than the casino.

The profit margins may not be as large or as dependable as the gaming revenue stream, but neither is the risk: A high rolling table player or two can occasionally get hot enough to dent the casino’s bottom line. But the sale of a diamond bracelet (or even a hamburger) will almost always add to the bottom line.

Gaming jurisdictions outside of Nevada are also expected to enjoy solid growth. Atlantic City’s gaming take is expected to grow from $4.8 billion last year to $6.3 billion by 2009, and the regional casinos in the Midwest and the South will see revenues rise from $13.4 billion to $16 billion over the same period.

The largest piece of the gaming pie will be shared by the nation’s tribal casinos, whose gaming revenues should top $26 billion by 2009, versus the $18.5 billion in 2004.