Business booming for Nevada casinos, state report shows

Thursday, May 25, 2000 | 10:53 a.m.

CARSON CITY -- Nevada casinos enjoyed more business last fiscal year but they earned smaller profits, at least on paper.

The Nevada Gaming Control Board reported today casinos took in $15.3 billion from gaming, rooms, food and other activity, an increase of 10.9 percent from the 1998 fiscal year. But net income, computed before federal income tax and extraordinary expenses, fell to $876.5 million, down 22.7 percent.

But this may not be an apples-to-apples comparison. There were changes in reporting by the casinos in the handling of their expenses. For instance, a publicly traded corporation that owned a casino may have pushed its interest debt down to the casino, instead of holding it at the corporate level, thus changing the bottom line.

Some of the highlights of the board's annual report include downtown Las Vegas clubs reversing two years of losses to post a profit. For the first time ever on the Strip, gaming winnings accounted for less than 50 percent of the total take. And the publication showed the big casinos on the Strip were posting the best profit levels while the smaller ones struggled.

The board's publication called "Nevada Gaming Abstract" said the 238 casinos statewide that grossed more than $1 million posted a 5.7 percent return on investment, down from 8.2 percent from the previous fiscal year. These figures are based on the unaudited reports submitted by the gaming clubs.

Board spokesman Frank Streshley said the 38 casinos on the Strip reported profits of $538.4 million, down 32.9 percent or $264.4 million from the prior fiscal year. This was the third consecutive year of decline of net income.

But the Strip casinos enjoyed increased business. They took in $8.6 billion, 16.1 percent higher than the previous year.

"For the first time in any market, gaming revenues have made up less than 50 percent of the revenues," Streshley said in talking about the Strip casinos. The win from the tables and slots accounted for 48.1 percent of the total revenue.

Return on investment on the Strip was 6.3 percent compared to 10.9 percent in fiscal 1998.

The report shows that the "mega casinos" were the most profitable. The 20 casinos that reported revenues of more than $72 million for the year posted a profit of $697.8 million or a return of 9.3 percent.

Those with revenues of less than $72 million produced a total loss of $159 million or a minus 14.6 percent on investment.

Downtown Las Vegas casinos posted a profit of $8.2 million, up 1,060 percent. Last year the clubs had a loss of $854,000. While total income was down in the "Glitter Gulch" area, the casinos shaved administrative and other expenses to post a profit, the first since fiscal 1996.

Revenues for Laughlin casinos rose 6.1 percent to $789.8 million but net income fell to $39.2 million, down 14.8 percent. The return on investment was 5 percent.

The report said clubs on the Boulder Strip produced $747 million in total revenue, which resulted in profits of $44.4 million, down 23.3 percent from the prior year. Return on investment was 5.9 percent.

Total revenue from Washoe County casinos increased by 1.9 percent to $1.7 billion. That produced $76.8 million in profits, a drop of 22.2 percent from the prior year. Return on investment was 4.3 percent.

South Lake Tahoe casinos reported $520.4 million in total revenue, up 9.1 percent. Net income dropped 8.7 percent to $31.8 million but still posted a 6.1 percent return on investment.

Elko County casinos reported $311.4 million in revenues up 5.8 percent. And the bottom line increased by 57.1 percent to $36 million. Return on investment in Elko was 11.7 percent.

Clubs in the Carson Valley area increased their profits by 88 percent to $6.1 million on revenues of $122.5 million, which was an increase of 11.1 percent. The clubs reported a 5 percent return on investment.