January 28, 2009

How does Vegas make its money?

I have been a regular visitor to Vegas for several years now. I find it a fun vacation spot. Its warm, theres lots of stuff to do and its an easy trip from my home. Lately I've started to notice that I've been spending more and more in Vegas on food and accommodations. It used to be in the olden days that every casino in Vegas had fabulous hotel and food bargains to lure people into their casinos in order to lose money gambling. Today though it seems that the bargain food is a rare thing most often seen in the dive or off strip hotels. Every year it seems that buffet prices go up $1 or $0.50. I've wondered lately how much revenue Vegas gets off food and hotel compared to casino operations.

One of the major casino resort owners in Vegas now is MGM Mirage. They seem to own half the major strip hotels including MGM Grand, The Mirage, Bellagio, Treasure Island and Luxor among others. I'm assuming that MGM Mirage operations are pretty typical for Vegas and that other Vegas casinos would be more or less similar as far as how they make money. MGM Grand is a publicly traded company so their annual report gives details on their financial operations. The latest full annual report they have on their website is from 2007. Buried in the report on page 28 is the table below:

Looking at the 2007 numbers I broke it down into a pie chart for the major categories:

We can see that over 60% of the revenue comes from non-casino operations. Gambling only accounts for 40% of their revenue. Table games make less than slots. Rooms, food and entertainment each make more as individual categories than table games.

Keep in mind this is just the numbers for one major resort and I'm making an assumption that other casinos in Vegas have similar income distribution. But I think that is a pretty reasonable assumption.

Blog Widget by LinkWithin