How Much Do Las Vegas Casinos Make?
Gambling businesses have always fallen on the shady “underdog” side of the business world. They are neither the first nor the second option people choose to go to for financial services and loan applications. Most of them decide to be prudent about their hard-earned money, and rightfully so. Yet, the Las Vegas casinos have seemingly defied all the odds and acted as the city’s symbol – one of the main attractions and a magnet for people from all walks of life.
People that consciously choose to put their luck to the test are numerous. To put it into perspective, last year, the American Gaming Association (AGA) estimated that around 150 billion dollars were used as gamble money throughout the world in one year in legal and illegal settings.
How Do Casinos Make Money?
The usual casino atmosphere is made for big wins. The players are free to choose their games at the table or the machine strip, all based on their pressure “pockets.” There are games for both professionals and rookies, offering each one a special bonus. However, the big question that arises is how do these casinos make money?
The first and most basic way for gambling houses to make some cash is through the Handle. Regardless of how the game is or what it entails, the Handle is the most crucial point of the gaming operation where the gambler has to put money in bets. For example, in table games, all the players put their chances on the Handle, made of either cash or chips. The funds could go two ways: the player can lose the bet or win it.
People often confuse the Handle with the drop. The latter is any credit amount that has been traded for chips. The game of blackjack is an excellent example of this. Acting as the drop, there is a metal drop box that is located at the end of the table. The bills are dropped by players into the box. The two terms, handle and dropbox, hence are often used interchangeably.
Can External Factors Influence the Handle?
The basic concept of the Handle is to increase bets and hence, boost in-house profits. Casinos get an influx of profit by increasing their house edge, time spent on each game, and the average chance placed. If the players are few or there are not enough bets played, the Handle is eventually less, affecting the profit margin.
Looking at the casino business model, the overall Handle is reached by the time spent on each bet and the capacity used. That explains why most casino games in Vegas are based on the time spent on them rather than the wins or losses. A casino with, for example, 100 explodiac slot machines is only profitable if they are in use for hours in the end.
The average bet on most casino games is the same, with the minimum amount being a prerequisite for most table shots. However, it is sporadic to find a blackjack game with a minimum of 2 or 5-dollars’ bet. Now let’s do some simple mathematical calculations. Players want to continue with the minutest amount, but the casino rules may indicate that the game’s minimum requirement is $25. The casino expects to make good money with just a simple game of blackjack. If its bets on $2 per round with 375 hands to each player with a total of six, the total wagers will amount to $750, excluding the double downs and the splits. The game may lose its highest shot with a lack of players, but a high bet amount increases the chance of attracting wealthy customers and making the casino money.
As mentioned before, like the ones in Vegas, a casino can win in the long run due to their calculated “house edge.” That edge exists in every slot, table game, or lotto in a land casino or online. The stats don’t depend on the establishment itself since the house edges for some of the most popular games vary not so greatly but a little from 0.5% to 40%. The casino having a statistical advantage over winning a game is mainly the “house edge.” The theoretical advantage that any casino owner in Nevada has is what makes the game a gamble. The outcome is almost always unknown, with the player having equal chances at winning or losing each time. The more a player loses, the more a casino gains profit over it.
However, there are two sides to the house edge. A casino’s total win is the amount of money a player leaves while placing all the bets. That pool of money can be damaging if the player wins more than what the casino is holding, or it could be positive if the casino makes money. In the end, the holding percentage of the drop indicates the casino’s win or loss.
The Most Profitable Las Vegas Casinos
The stance may seem pretty straightforward from afar: people placing bets in different gambling games, and upon losing, the money bid goes to the Vegas casino banks. The chances, however, are also paid off for the gamblers. One may think that casino owners are putting their money at stake by betting off players, but that is not the case.
Since 1999, the revenue generated by non-gaming amnesties has been more than the total accumulated profits in Nevada. By the time gaming platforms made a base on land casinos, in 2013, the direct gaming income had constituted only one-third of the revenue earned by Las Vegas Casinos.
Research conducted by the former director of UNLV’s centre for Gaming research, David Schwartz, in 2018 showed that the average Vegas Casino visitor spent around $434.70 per night with almost $300 spent on non-gaming attractions and only $149.29 placed on bets. Furthermore, the need for people to visit casinos mainly for a fun adventure and new experiences without gambling is on the rise with the coming generation. In the 2014 US survey, 51% of the American millennials responded to visiting casinos for their fun and not gambling.
Bring on the Stats!
Now that the whole picture has been represented, let’s get down to the exact numbers.
The following facts show how much major Las Vegas casinos earn per year:
- In 2019, the total revenue generated by the casino and entertainment resort company, Wynn Resorts, was approximately $6.61 billion.
- Circus Circus Casinos Inc. has a modest annual revenue of $115.91 million.
- According to a 2019 report, The Caesar’s Entertainment, standing behind the famous Caesar’s Palace, has generated around 4.45 billion dollars in its annual revenue, with more than $4 billion coming in from non-gaming sources.
- The owner of the Venetian, also known as Las Vegas Sands, reported to have generated a consolidated revenue of worth $13.74 billion in 2019, while the expenses to run the casino decreased by a margin of 14% to $3.70 billion.
In 2017, the fiscal year, the gaming revenue did quite a number on the Las Vegas strip area by generating a profit of more than $72 million. The average daily income of a single casino was up to $1.8 million, with $634.5 coming from the gaming bets alone.
Large money exchanges happen every year at some of the largest casinos in the world, such as those in Las Vegas. The monetary decisions made at the local casino aim to boost the annual income as a form of a business structure. In contrast, others are made to extend the payer’s comfort. The profits made in the gambling industry are far higher than in the local businesses of the country.