The Las Vegas Strip has been the heart of gambling in the U.S. for decades, but it's not as casino centric as you may think. Over the last 20 years, resorts have focused more on non-gaming activities like hotels, restaurants, entertainment, and shopping.
When investors are buying gambling stocks like MGM Resorts (MGM -0.69%), Caesars Resorts (CZR -1.35%), and Wynn Resorts (WYNN -1.21%), they are getting businesses involved in a lot more than just casinos.
Las Vegas is more than the casino
Wynn Resorts, MGM, and Caesars break down their numbers into casino, food and beverage, hotel, and other sources of revenue. I've lumped the final three sources of revenue into non-casino revenue. You can see below that the casino only makes up about a quarter of the revenue generated on the Las Vegas Strip in each company's most recently reported quarterly earnings.
| Company | Casino Revenue | Non-Casino Revenue | % of Revenue from Casino |
|---|---|---|---|
| Wynn Las Vegas | $135 million | $426 million | 24.1% |
| MGM Resorts LV Strip | $499 million | $1,538 million | 23.4% |
| Caesars Las Vegas | $315 million | $827 million | 27.6% |
Source: Company earnings reports and SEC filings.
The massive resorts in Las Vegas have figured out how to maximize revenue for guests who want to do more than gamble. Hotel stays are a huge piece of that, but food and beverage and entertainment are booming as well, especially as traffic recovers from the worst effects of the still ongoing pandemic.
Regional casinos are a different story
Interestingly, resorts outside of Las Vegas are very different. The casino floor accounts for around 75% of revenue with non-casino revenue sources being relatively small. These regional properties often have fewer hotel rooms and don't have the same entertainment draw as Las Vegas does. Again, these are results from each company's most recent quarterly earnings report.
| Company | Casino Revenue | Non-Casino Revenue | % of Revenue from Casino |
|---|---|---|---|
| Wynn Boston Harbor | $157.1 million | $53.1 million | 74.7% |
| MGM Resorts Regional | $734 million | $226 million | 76.5% |
| Caesars Regional | $1,098 million | $357 million | 75.5% |
Source: Company earnings reports and SEC filings.
This revenue share breakdown is what Las Vegas' results looked like decades ago, but it's not how they look today.
A new way to look at Las Vegas
Gambling revenue in Las Vegas has long been a good proxy for how companies are performing on the Las Vegas Strip. But today, there's a lot more going on in Las Vegas that has even more impact on the bottom line.
For investors, the takeaway is that casino companies aren't as reliant on gamblers and high rollers as they once were. That leaves more hotel rooms and restaurant space for paying customers, which may not sit well with people used to getting freebies at the casino, but that's the reality of where the business is today. The casino is important to Las Vegas, but this is a food and entertainment town now, and that's what drives the bottom line.
