Locals returning to the slots
Las Vegas Strip casinos are still struggling to bounce back from this spring’s COVID-19 shutdowns, but the same does not seem to be true for Nevada’s off-strip casinos. According to a Forbes report, the smaller casinos not in the heart of tourist alley are drawing local customers and are thus starting to find success where the sprawling resorts are not.
And this doesn’t just apply to casinos. Other off-Strip venues that offer gambling machines, like taverns and even grocery stores, have been seeing brisk business lately.
“I cannot believe what I saw—every slot machine was taken.”
“I cannot believe what I saw—every slot machine was taken,” professional sports bettor Bill Krakomberger told Forbes of a recent grocery trip. “There was actually a wait to play video poker at Smith’s. I was shocked.”
Chad Beynon, an analyst at Macquarie Capital, said that local residents are willing to go out and gamble because they have been able to stay afloat financially for four main reasons: federal government stimulus payments, the housing market has held, the big casinos have paid furloughed workers, and retirees weren’t relying on employment income.
South Point owner looking to 2022
South Point Hotel and Casino is a “tweener” casino, in a sense. While it is a large casino resort and technically on Las Vegas Boulevard, it is well south of the Strip-proper and very much caters to local gamblers.
Speaking with the Las Vegas Sun about the difficult year, South Point owner Michael Gaughan said: “We do a lot of business in the local market, and the people here have been taking care of me. We’re not making a whole lot of money, but we’re not losing any.”
He added that he thinks things will get back to normal for Las Vegas by 2022.
I don’t think it can get any worse.”
“I’ve been here since 1952 and this is probably the worst thing that’s ever happened to (Las Vegas). I don’t think it can get any worse.”
Gaughan said that the Strip casinos have a lot of work to do to get back to where they once were. At this point, it is just about survival, about keeping as many employees on the job as they can.
Strip casinos need tourists for recovery
August financial results reflect the diverging fortunes of off-Strip and Strip casinos. According to a Macquarie report, gambling revenues for the Las Vegas Strip resorts fell 39% in August year over year, while revenues rose 10% for the “suburban” casinos.
The difference lies in the customer bases of the different casinos. Strip resorts rely heavily on tourists and conventions. During the COVID-19 pandemic, those revenue sources have dried up.
Airplane traffic is down 60% from last year; nearly half of visitors to Las Vegas arrive via plane.
The Fitch Ratings Service disagrees with Gaughan in the time that will be needed for recovery. Whereas he thinks everything will be alright by 2022, Fitch believes it will take through 2024, predicting that the Strip’s gaming revenues will still be down 20% in 2022.