Las Vegas Casino Report Indicates Much-Increased Earnings

A recently released report concluded that, in 2005, the major casino complexes of Nevada earned the highest profits in their 50- some year history. The profits were, combined, $4.5 billion.

Before taxes, depreciation, loan payoffs, and other expenses that cut into profits, the major Nevada casino resorts had earnings of a gargantuan $21.36 billion. This figure, called the EBITDA by economists, is the one that industry analysts look at most closely in order to gauge the health of a business or region.

These figures, both the post- expenses number and the EBITDA, are indicative of the boisterous health of the Nevada casino industry, even since last year. The pre- expense profits last year were $19.59 billion, while the earnings after all of the appropriate deductions were $1.33 billion.

Generally, federal taxes can claim as much as a third to half of the revenues of a casino resort.

Casino industry insiders attributed the increase in earnings to two main causes: increased gambling by both out- of- state tourists and Las Vegas residents, plus the construction of several new casino complexes.

Casino experts said that gambling revenues accounted for approximately half of the earnings. The rest of the earnings were from hotel room and restaurant profits.

Expenses also increased over the past year, although, proportionally, by a very small amount. Complimentary services to high rollers, for example, increased almost 5% from last year, to $204.9 million. Advertising also increased slightly, by 1.9%, to $408.3 million.

Most of a casino complex’s gross revenue is actually used to finance what industry experts call “cost of sales” expenses. Cost of sales items refer to everything that the casino complexes use in their daily running, from decks of cards and food to stock the casino restaurants, to employees’ salaries.

Most of the profits from the Las Vegas casino industry, by far, were made by casino complexes on The Strip. In total, the casino complexes on The Strip had pre- tax and expense earnings of $12.9 billion, and an after- expenses take of $1.15 billion. The casino complexes located further downtown grossed $1.1 billion and has profits of $49.1 million.

The report was released Thursday by the Nevada Gaming Control Board. It was based on data from the 268 Las Vegas casino complexes that gross over $1 million each. These casinos make up the overwhelming majority of the Las Vegas casino industry.

Representatives of the casino complexes and others in the casino industry were overjoyed by the report’s conclusions. "This is almost half a billion dollars growth in net revenue," said Gaming Control Board representative Frank Streshley. “We had tremendous growth in revenue across the board, but we didn't see the same large increase in expenses."

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