The coronavirus pandemic caused Nevada’s casino industry to experience a nearly $6.2 billion decline in total revenues for the fiscal year that ended on June 30, according to a report released Friday by the state Gaming Control Board.
But a 45.2% decline in the total administrative expenses – the result of two-multibillion-dollar Las Vegas Strip resort transactions by MGM Resorts International ahead of the pandemic – helped the state’s gaming industry achieve a net income of more than $2.89 billion in fiscal 2020.
The 12-month period included a 78-day casino shut down in an effort to slow the spread of COVID-19. Casinos statewide were ordered closed on March 18 by Gov. Steve Sisolak and were allowed to reopen on June 4. The state’s tourism industry saw little in the way of revenues for parts of March and June and all of April and May, but operators had expenses covering their resorts and other facilities.
On Thursday, the Control Board will release gaming revenue figures for the calendar year 2020.
The annual Nevada Gaming Abstract took into account the total revenues – gaming and non-gaming – collected by 267 casinos that grossed $1 million or more in gaming revenue during the fiscal year.
Gaming Control Board Senior Research Analyst Michael Lawton said the effects of the pandemic on businesses led to 23 fewer casinos reaching the $1 million mark compared to 290 casinos in the 2019 fiscal year.
Statewide, total revenues of more than $18.3 billion was a 25.2% decline from 2019, when the net income of $2.05 billion was recorded on total revenues of more than $24.5 billion.
On the Las Vegas Strip, total revenues were $12.1 billion, a decline of 26.7% from a year ago. Gaming revenues on the Strip fell 24.2% to $3.38 billion. However, the Strip reported a collective net income of more than $2.7 billion – a 162.1% increase from 2019 – due to the MGM Resorts’ transactions.
In November 2019, MGM Resorts and real estate giant Blackstone closed on the companies’ $4.25 billion sale and leaseback of the Bellagio, putting the Las Vegas Strip resort under new ownership but leaving the current operations, staff, and management in place.
A joint venture that is 95% owned by Blackstone Real Estate Investment Trust, a subsidiary of the New York-based Blackstone, will own the land and real estate associated with the hotel-casino. MGM Resorts, which owns 5% of the joint venture, pays annual rent of $245 million for Bellagio.
In February 2020, MGM Resorts completed the sale/leaseback of MGM Grand Las Vegas and Mandalay Bay, valued at $4.6 billion, to a new joint venture owned by two real estate investment trusts, MGM Growth Properties and Blackstone. MGM Resorts pays $292 million annually in rent to the landlords.
Because of the change in ownership to the three resorts, collectively the gaming industry’s total general and administrative expenses decreased by $4.55 billion compared to 2019 and reducing the line item to $5.5 billion in 2020.
Without the MGM Resorts transactions, the Abstract would have reported a net loss. The net income in fiscal 2020 marked the second straight 12-month period the state’s casino industry finished on the positive side of the ledger.
Total revenues cover the money casino visitors spent on gaming, rooms, food, beverage, and other attractions. Net income is the money retained by casinos after expenses have been paid but prior to payment of federal income taxes and the accounting for other extraordinary expenses.
Statewide gaming revenue of more than $6.7 billion was a decline of 25.2% from fiscal 2019. However, gaming accounted for 36.8% of total revenue, 1.1% higher than a year earlier. The Gaming Control Board said the 267 casinos paid just under $694 million in gaming taxes and fees, equating to 10.3% of their revenue.
While gaming was the highest single revenue item for the casino industry, hotel room revenues during the fiscal year accounted for $4.7 billion, or 25.7% of the total, and food accounted for $3.1 billion, or 17%.
Clark County as a whole, which includes the Strip, saw 157 casinos generate a combined net income of $2.9 billion from total revenues of almost $16.3 billion. However, other than the Strip, all Clark County reporting areas showed double-digit percent declines in their net incomes from 2019.
Washoe County, which includes Reno, saw 33 casinos report a net income of $21.3 million, a decline of 83.4% on total revenues of $1.1 billion.
The South Shore of Lake Tahoe had six casinos report a net loss of $65.8 million on revenues of $283.3 million.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgmaing.com. Follow @howardstutz on Twitter.
