Casino operators may want to add more non-gaming amenities in 2015. This will strengthen customer spending after a year of slow casino revenues. Additional development could include hotels, restaurants, shopping malls, and nightclubs.
The above chart shows that non-gaming revenues started to dominate gaming revenues. Las Vegas revolved around gaming. Over 55% of its revenues came from the casino category in 1990. However, non-gaming revenue accounted for ~64% of Las Vegas’ total revenue mix in 2012.
Over the past ten years, the gaming market developed into a casino resort destination. Hotel, entertainment, retail, and dining facilities became important revenue drivers for casino companies—like Las Vegas Sands (LVS), MGM Resorts (MGM), and Wynn Resorts (WYNN).
Importance of non-gaming amenities
Non-gaming amenities started to have a significant impact on the casino companies’ overall performance. Non-gaming amenities also impact ETFs—like the VanEck Vectors Gaming ETF (BJK). BJK tracks the performance of casino stocks.
With casinos expanding into new jurisdictions, competition among major casino operators increased. This competition shows that it’s important for casinos to offer amenities that drive profitability.
Keith Smith, CEO of Boyd Gaming (BYD), said during the 3Q14 earnings call that “We recognize the consumers are spending their discretionary dollars differently today and that demand for non-gaming activities is increasing. And as we’ve noted previously, we’re now targeting some of our capital spending to take advantage of that trend.”
In the next part of this series, we’ll discuss why casino REITs are gaining popularity in the US.