Of Bandits and Big Fish

With the December 2012 financial numbers recently released by the Gaming Control Board, it’s finally time to close the book on 2012. What kind of year was it for Nevada’s casinos?

From a physical standpoint, the industry continues to shrink. The number of table games in the state dropped by about 2 percent, and slots fell by 3 percent. Since the year 2000, Nevada’s lost about 820 games and 33,000 slots—about the equivalent of 10 mega-sized Strip resorts. Partially this is because of casinos closing, but it’s also because the advent of multi-denomination slots has allowed casinos to provide more options with fewer machines. The shrinking footprint has serious implications, because it means fewer jobs and less tax revenues in the form of annual fees, even if revenue-based collections remain the same. That sounds trivial, but 33,000 machines means about $8.25 million less in annual fees a year.

The Strip spent the year stuck in neutral. An overall revenue bump of 2 percent was less than most expected, and that was driven by an increase in high-end play, with slot win flat. Baccarat players prevented decreases in revenue for the third year running, a reminder of how the casino ecosystem has shifted from a dependence on a broad market of smaller-scale gamblers to a reliance on high-rollers, who can be fickle—and whose luck can overwhelm the house.

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