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Michael McLellan

Why Casinos Are Struggling to Contain Costs

by Michael McLellan | Dun & Bradstreet Editor

April 21, 2015 | No Comments »

Casino-Roulette_shutterstock_245913100_990pxMost gamblers and casual observers assume casinos make money hand over fist. But even with billions in revenue, some large gaming companies are suffering net losses as a result of the high cost of doing business.

Boyd Gaming operates more than 20 gaming entertainment properties, including several Las Vegas-area casino hotels. Boyd reported $2.7 billion in revenue for fiscal 2014, down from $2.89 billion the previous year. Yet the company suffered a net loss of $53 million in 2014 and a net loss of $80 million in 2013.

Caesars Entertainment Corporation owns or operates more than 50 casinos in 14 US states and five countries. Among its many properties located on the Vegas Strip are Caesars Palace, Paris Las Vegas, and Planet Hollywood. Its revenue was $8.5 billion in fiscal 2014, but Caesars walked away from the table with a $2.8 billion net loss.

China Still Booming

While Las Vegas has been slower to recover from the economic downturn than other markets, gaming companies with operations in Asia have been growing.

Through its majority-owned Sands China subsidiary, Las Vegas Sands operates the Venetian Macau on the Cotai Strip (the Chinese equivalent of the Las Vegas Strip), as well as two other properties in Macau (the only place in China where casinos are legal).

Wynn Resorts, the brainchild of gaming mogul and former Mirage Resorts chairman Steve Wynn, operates luxury casino resorts in Las Vegas and South China’s Macau. Wynn Resorts actually makes most of its money in China, where the economy is still booming. Wynn Resorts brought in more than 70% of its revenue from Macau in fiscal 2014.

Marketing and Advertising Gold

One of the biggest costs of doing business for the large casino operators is advertising, marketing, and public relations as they try to differentiate themselves from each other. Here’s a quick summary of what Boyd, Caesars, Las Vegas Sands, and Wynn Resorts forked out during fiscal 2014:

  • Boyd’s advertising and marketing promotion costs totaled about $50 million
  • Caesars spent $270 million after spending $208 million the previous year
  • Las Vegas Sands spent about $140 million
  • Wynn Resorts spent more than $23 million

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