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December 19, 2014

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Report: Casinos lost money for second time in history

CARSON CITY – For only the second time, Nevada casinos posted a loss – but this time it was the biggest.

The state Gaming Control Board today released its “Gaming Abstract” for fiscal year 2009, which ended June 30, showing a net loss of $6.7 billion among the 260 major casinos in Nevada.

Clubs along the Las Vegas Strip, which makes up 53 percent of the gambling revenue in Nevada, registered a $4.1 billion loss. The only bright spot, from a financial standpoint, was that people drank more. Sales of booze rose by 2.5 percent while revenue tied to casinos, rooms and food dropped. But 36 percent were recorded as “comp” drinks.

“It was a horrendous year,” said Bill Bible, president of the Nevada Resort Association, which represents several casinos on the Strip. He said many of the casinos had three and four waves of layoffs to cut cost during this national recession.

The only other time Nevada gaming companies reported a loss was in 2003, of $33.5 million, said Frank Streshley, chief of tax and licensing for the board. The business downturn came in the middle of the national recession.

Every market except Elko County, with its strong mining business, showed a loss for the fiscal 2009, Streshley said.

“Although we have seen some improvement recently, this reflects a tough fiscal year,” Streshley said. He said there was a national and global recession, and high unemployment. At the Strip, he said there were fewer visitors and they were “spending substantially less.”

The 260 statewide casinos that grossed more than $1 million or more in gaming revenues posted $22 billion in gross revenue, down 12 percent from the prior fiscal year. And in fiscal 2008, the clubs registered a win of $721.1 million.

The $6.7 billion loss is before federal income tax and extraordinary items. And the casinos paid $778.7 million in taxes in fees, or 7.4 percent of their gaming revenue.

In a breakdown, the report shows downtown Las Vegas casinos suffered a $54 million loss; Laughlin casinos reported a $158.8 loss; Boulder Strip casinos registered a loss of $823.3 million and the casinos in the balance of Clark County posted a $1.3 billion loss.

On the Strip, Streshley said the $4.1 billion loss reflects a 686 percent drop from the previous fiscal year, when the clubs reported a profit of $709.4 million.

The report shows there were 98,711 employees at the Strip casinos, down from the 114,465 workers in fiscal 2008.

Streshley noted this downturn comes only two fiscal years after the Strip reported a strong $1.6 billion in net income.

Bible said casinos on the Strip and downtown closed rooms and towers and reduced expenses “but there were still terrible numbers.”

On the Strip, casinos reported $178 million in bad debts in the gambling portion of the business. That compares with $112 million in fiscal 2007. The casinos reported $1.3 billion in complimentary expenses that includes drinks, rooms and food.

Statewide, total general and administrative expenses hit $14 billion. Streshley said more than $5 billion of that were casinos writing down the value of assets.

The control board said Washoe County’s 32 casinos reported a combined net loss of $47.4 million; Elko County clubs were registered a net income of $36.1 million. The south shore of Lake Tahoe with five clubs reported a net loss of $259.6 million and the Carson Valley area with 14 casinos generated a net loss of $8.6 million.

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