Sep 18, 2018
In Las Vegas, The House Always Wins: The Big Business of Sin City
There’s nothing itty-bitty about the business of Sin City
Las Vegas is like very few places in the world.
Located in the heart of the blistering Mojave Desert in southern Nevada, it’s an oasis of twinkling neon lights and sparkling fountains. The Strip—the main Vegas drag that is flanked by dozens of casinos and resorts—is also a popular tourist destination, and is almost always mobbed with visitors. In fact, 43 million visitors annually flock to the city hoping for a rendezvous with Lady Luck.
That’s because Vegas, above all else, is a money magnet.
Las Vegas, founded in 1905 by ranchers and railroad workers was originally infamous for its embrace of gambling, prostitution, and organized crime. During the 1940s, drug sales, racketeering, and money laundering in and around the Las Vegas Strip’s numerous casinos was commonplace.
Today, however, things are a bit more tame. Visitors to Vegas might go see the Hoover Dam on the outskirts of the city, play the slots or some blackjack at the MGM Grand or the Venetian, and see the Blue Man Group at the Monte Carlo.
But even a relatively subdued trip to Vegas brings big bucks into the city. In 2016, the typical visitor spent an average $827. That’s roughly the same amount a customer might spend on a trip to Disney World.
A look at the average Vegas visitor
The most recent Las Vegas Visitor Profile, an annual report by the Las Vegas Convention and Visitors Authority, provides some key insights into how visitors to Las Vegas spend so much money.
Average length of stay
Sin City’s economy
Tens of millions of people visit Vegas every year, and most of them plan to spend money—on hotel rooms, all-you-can-eat buffets, and, of course, gambling. The Las Vegas experience has been fine-tuned over the years, as corporate interests have managed to turn the city into a one-stop shop for all sorts of vices, including gambling, and playing with military-grade weapons.
But gambling, of course, is Vegas’ main draw. While casinos exist all around the U.S., Las Vegas is one of the few places where so many large casinos and resorts are concentrated. That’s because, between 1931 and 1978, Nevada was the sole state in the U.S to legalize casino gambling. That exclusivity helped make Vegas an attractive tourist destination, a distinction it continues to hold even as legalized gambling has become more ubiquitous.
According to data from the Nevada Gaming Control Board, Clark County—which contains the Las Vegas Strip, downtown Las Vegas, and a few outlying areas in the Vegas metro area—is a gold mine for casinos.
Clark County, in 2017, by the numbers:
- Casinos grossing more than $1 million in gaming revenue: 161
- Total casino gaming revenues in Clark County: $9,589,605,525
- Total casino gaming revenues on the Las Vegas Strip: $6,038,883,957
Keep in mind that these figures are only revenues generated from casino games, including poker, craps, blackjack, and slot machines. When you add in revenues for hotel rooms, food, and other avenues of entertainment, sales swell considerably:
Getting a piece of the action
Millions of people visit Vegas to gamble, and they end up spending ample amounts of money in the process. Unfortunately, most gamblers tend to lose. The “house”—the term used to describe the casino itself, or the dealers running specific games—tend to have an advantage in most casino games. That means that your odds of winning are likely lower than you anticipate, even if you feel that you’re skilled at a particular game, like blackjack or poker.
There’s a reason that casinos are so profitable, after all.
Here are the games that put players at the biggest disadvantages, according to research from the University of Nevada Las Vegas Center for Gaming Research:
|Blackjack - average player||2%|
|Three Card Poker||3.4%|
While the average Vegas visitor has budgeted some money for gambling (often with the expectation that it’ll be lost), some people end up losing unfathomable amounts. A businessman from Nebraska lost $127 million over the course of 2007, which is believed to be one of the longest and worst losing streaks in Vegas history.
Although Vegas casinos are in a position to make a lot of money from cash-rich visitors, the industry does have its risks. An economic downturn such as the Great Recession, for example, can hit a place like Las Vegas particularly hard. The industry is also highly regulated, subject to both state and federal laws around gambling that place limits on the type of betting that can take place. At the same time, many people steer clear of the Vegas scene altogether, as they have moral objections to gambling and many of the other extracurriculars the area has to offer.
If you can’t beat the house, join ‘em
If you don’t like your odds at the tables, maybe you should switch sides?
Public companies own 62 casinos that generated 72.5% of the total gaming revenue generated in Nevada in 2017—more than $1.1 trillion, according to government data.
You can invest in companies that operate in and around Las Vegas—including companies that run casinos, hotels, and that sell food and drinks—on Stash.
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