Corporate earnings aren’t always interesting but they offer insight into why a business operates in a certain manner. It’s not something we think about while hitting the casino, but Las Vegas casinos are corporations. In the business world, they’re not very different from Aetna, Cablevision, Hasbro or any corporation. They’re just in a different sector than those other companies. It’s easy to forget that $LVS, $MGM, $WYNN and so on are corporations.
Las Vegas casinos aren’t operated the same as they were in the 1950’s. Besides changing with times, the operators of casinos report to different people. A public company must show year over year increases in revenue and profit. If those numbers are lower than expected, the price of the company will go down and people lose jobs.
MGM Resorts International
With that in mind, it’s understandable that the corporations operating Las Vegas casinos are always looking for new ways to increase revenue and profit. Last year MGM Resorts International announced the Profit Growth Plan. The plan was made so that they could decrease expenses and seek new forms of revenue. Paid parking was introduced to help increase revenue while streamlined amenities would help cut expenses.
It was somewhat shocking to see that MGM Resorts International was cutting alcohol costs when Vital Vegas learned that they were using 1.25 ounces of booze instead of the traditional 1.5 ounces. If you’ve ever had a mixed drink in a casino this doesn’t come as a big surprise. On a related note, this is part of why I switched my casino drinks to whisky or scotch. They could short pour all they wanted but I wouldn’t be filling up on a mixer.
Last year you may have noticed that MGM Resorts International, Caesars Entertainment and the Cosmopolitan started to limit complimentary drinks at casino operated bars. Customers are now required to spend a certain amount of money in order to receive complimentary drinks at some casino bars. You can read about my experience with this new policy at Caesars Palace here.
Well, the mainstream media finally picked up on this trend and reported on MGM Resorts International using a drink ticket system based on how much is played. The Cosmopolitan has multiple policies in place and Caesars Entertainment is using a light for bartenders to know when you’ve played enough for complimentary drinks. You can see the KNTV report here.
There have been complimentary drink policies at casino bars for years. It’s customary to tip $1 per complimentary drink, so bartenders have been disregarding the wishes of their boss. That’s not going to be possible at most casinos. Expect this kind of cost-cutting to continue.
Oh yeah, MGM Resorts International raised resort fees again. You’ll now pay anywhere from $23-$36 plus tax per night above the advertised price at an MGM Resorts International hotel in Las Vegas. The rates seem to increase a couple times a year, so don’t look for these rates to last very long. Here are the current pre-tax resort fees for MGM Resorts International hotels:
$32 resort fee per night: Aria, Bellagio, Delano, Mandalay Bay, MGM Grand, MGM Signature, The Mirage, Vdara
$30 resort fee per night: Monte Carlo, New York-New York
$26 resort fee per night: Excalibur, Luxor
$21 resort fee per night: Circus Circus
Last year Wynn Resorts (corporate name for Wynn, if you didn’t know what) announced that they would be changing around the casino floor at their Las Vegas properties. The idea was to prominently display the casino games that made them more money. They moved games with a lower house advantage to locations where they weren’t so prominent.
Well, the results are in and it looks as though the move is paying off for Wynn Resorts. In addition to moving craps to a secondary location, they decreased the free odds to 2x (from 3x-4x-5x). Business Insider has quotes from Steve Wynn as he spoke to investors about gaming in Las Vegas:
“Now, to give you an example, when someone has a three-four-five crap game, the house advantage is 37 basis points, 38 basis points. When you go to double odds, the house advantage is 58 basis points or 57 basis points. Now, that doesn’t sound like a lot. That’s a very narrow margin of a house advantage mathematically. However, 20 basis points is a 60% or 70% increase in the margin of a dice game, so that the outcome in terms of profitability was based upon a rather granular analysis of each game.
“We made a bunch of changes. And in so doing, we were able to overcome in terms of profitability what would ordinarily have been a massive loss of top-line revenue. So the gaming industry is a little deceptive in many respects. It takes a very sharp analysis and very high degree of self-awareness because when you take rooms away from the casino block and you can sell them for cash, our margins in the hotel rooms are very high as they are in slot machines. Casino table games in Las Vegas, if you were to do an analysis, would have a profit margin in the teens at best.”
He’s speaking to people who want to see increased revenue from customers. His manner of speech is crude but it’s appropriate for the audience.
On that same phone call, Steve Wynn discussed Wynn Paradise Park and said “I don’t give a damn if they put a nickel in the slot machine. I want them to pay my admission. I want them to stay in my rooms. I want them to drink my booze and eat our food . . .”
Ultimately this line of thinking makes sense for investors. They may not care where the revenue comes from as long as it’s coming in. In the most recent earnings report only about a third of Wynn Resorts’ revenue was from gaming. Welcome to the new Las Vegas!
Pub 365 at Tuscany Suites
Pub 365 at the Tuscany Suites, down the street from Bally’s and The Cromwell, is a great option if you’re looking to get away from the corporate annoyances on the Vegas Strip. The beer menu is one of the most impressive for a video poker bar that you’ll find in Las Vegas. Most of the beers are complimentary while you’re gambling. Regardless of comps, the prices are cheap starting at $4. The food is good too but not sweating the video poker overlords for a complimentary craft beer is nice.
The South Tower and Monaco Tower at the Riviera will be imploded on August 16th between approximately 2 a.m. and 2:30 a.m. In case you forgot, the land will be used for the Las Vegas Convention Center to expand. Don’t expect buildings to go up for a while. The land is going to be used for an outdoor expo area next year.
Sharknado 4: The 4th Awakens
Airs tonight on SyFy. A good portion of the movie takes place in Vegas. I cannot wait for this! Enjoy the trailer.
Here Now, Coming and Going
Cracker Barrel is officially open at The Silverton. Las Vegas is losing its collective mind as another chain store opens.
The Linq poker room will be closing in the next few weeks. I’m waiting to hear about the future plans for the space. Maybe they’ll add one of those Royal Derby horse racing machines I wrote about last week.
Scott from Vital Vegas was bouncing around Harrah’s and noticed that they’re renovating the sports book. He loves sports and can’t wait for the work to finish.
Thanks For Everything, Norm
After 17 years, Norm Clark has left the Las Vegas Review-Journal. Norm was an excellent reporter and one of the most accurate gossip columnists in the country. Ironically, the Las Vegas Review-Journal recently hired Robin Leach as a gossip columnist. Norm will be missed. Thanks for the great work over the years. Best of luck in the future.
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