Carson Valley casinos among few making a profit
Despite the fact that total revenue for Nevada’s major casinos increased more than $1 billion in fiscal 2011, the 256 hotel/casinos making more than $1 million reported a net loss for the third straight year.
Only two areas in the state reported making a profit, according to the annual abstract published by the Gaming Control Board. The Carson Valley area, which includes Douglas County outside of the Lake Tahoe Basin as well as the capital, was one of them. The area went from a $436,000 loss in FY2010 to a $533,000 profit for fiscal 2011 – a swing of $969,000 and the area’s first profit since FY2006. Compared with the previous year, revenues increased and expenses decreased $2.8 million.
Overall, the state’s major casinos’ net loss rose from $3.4 billion in 2010 to $3.9 billion in FY2011. However, total revenue from gaming, rooms, food, beverages and other sources increased from $20.8 billion to $22 billion.
The difference was in general and administrative expenses reported by the state’s major gaming operations, which increased 22.5 percent – $624 million. That total includes $643 million worth of asset writedowns and impairment losses – primarily decreases in the value of those properties’ buildings and other physical assets. Another $767 million is from accounting adjustments for such things as bankruptcy reorganizations. While those figures dramatically reduce the profitability of major resorts, they are essentially losses on paper that don’t really affect profit unless the resort sells the assets involved.
The biggest culprit was general and administrative expenses in the “balance of county” resorts in Southern Nevada, where that “Other G-A” expense rose $1 billion in fiscal 2011.
One reason for the large writedowns in that area is that many of the resorts there were built during the peak boom years and valued at high levels until the recession hit.
Nevada tallies results not by individual casino, but by region: Reno/Tahoe in Northern Nevada, and six subregions in Southern Nevada – the Vegas Strip, Laughlin, North Las Vegas, Downtown, the Boulder Strip, and everything else, called Balance of County.
Besides Carson’s gains, the other area reporting a profit for the year was Elko, which is still being fed by the mining boom. Elko resorts reported a net income of $44.97 million.
The 41 major resorts on the Las Vegas Strip actually did better than the previous year. While still reporting a $2.2 billion net loss, that is a smaller net loss than the $2.57 billion in fiscal 2010. Revenues on the Strip increased more than $1.2 billion to $14.49 billion.
Those 41 resorts generate 66 percent of the total revenue from gaming, rooms, food, beverages and other sources in the state. And revenue from all of those categories was up on the Strip in fiscal 2011.
Gaming Control Board Analyst Mike Lawton said the gaming portion of that total revenue has now fallen to just 38 percent for those resorts. He said all those other categories are increasing faster than the gaming portion itself.
“Spending habits have changed,” he said. “People are spending more in other areas.”
For the state as a whole, the gaming portion is 46 percent of total revenue – $10.16 billion.
The loss reported by Washoe County casinos rose sharply in fiscal 2011, from $27.5 million to $44.5 million. While expenses decreased by more than $27 million, revenues fell by $69 million to $1.42 billion. Reno’s chronic problem is the Indian casinos in California siphoning off business, a problem shared by South Shore casinos at Lake Tahoe, which reported losses totaling $24.7 million for the year on revenues of $344.5 million. While still a loss, that’s significantly less of a loss than the $90.4 million in the red they were for fiscal 2010.
It was South Shore’s fourth consecutive net loss and the seventh in the past 10 years.
The good news statewide, according to Lawton, is that the numbers indicate a slow but measurable recovery, since every revenue category was up compared with the previous year.
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