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Howard Stutz

CASINO INDUSTRY: Bounty by the billions

5 January 2007

NEVADA –- Nevada's largest hotel-casinos relied less on gamblers than ever before while generating a net income of more than $2.1 billion during fiscal year 2006, the Gaming Abstract, a report issued Thursday by the Nevada Gaming Control Board shows.

The net income figure, based on total revenues of $24.1 billion for the 12-month period that ended June 30, was a 17 percent increase from a year ago, eclipsing the fiscal 2005 net income total of $1.8 billion. A year ago, total revenues were more than $21.4 billion.

The 2005 net income mark had broken a nine-year old state record.

The financial information included the net income from 274 casinos statewide that grossed more than $1 million in gaming revenue. The total revenue figure included the money spent by customers on gambling, food and beverage, hotel rooms and other attractions.

Statewide, gaming revenue was more than $11.8 billion, or 49 percent of the total revenues. A year ago, gaming revenue was 49.9 percent of the overall total, the first time ever that gambling income was not more than 50 percent of the overall figure.

Frank Streshley, the senior research analyst for the Gaming Control Board, said he believes that trend will continue, especially toward the end of the decade when MGM Mirage's $7 billion Project CityCenter and Boyd Gaming's planned $4 billion Echelon Place are expected to open. Both developments are expected to have a multitude of other entertainment offerings besides gaming.

"As we add more resort hotels with other amenities, you're going to see revenues from those type of activities continue climb on a larger scale," Streshley said.

Hotel room revenue statewide was almost $4.9 billion, or 20.3 percent of the total revenues. The figure was 14 percent higher than 2005. The category listed as other, which includes such activities as retail spending and spa treatment, grew almost 20 percent in fiscal 2006.

More than $4.6 billion was spent on food and beverage consumption statewide. Combined, the two categories were up 25 percent from 2005.

A year ago, the Gaming Abstract included the figures provided by 268 casinos. Some of the revenue boost in 2006 came from two new resorts in Las Vegas, the South Point, which had been known as the South Coast, and the Red Rock Resort in Summerlin.

During fiscal 2006, casinos owned by 22 publicly held corporations accounted for 80.2 percent of the total gaming revenue generated in Nevada.

"The figures really follow the pace of the gaming economy in Nevada," Streshley said. "Up until the last few months, we were on a two-year run with record gaming win with double-digit year-over-year increases."

In Clark County, 165 casinos grossing more than $1 million in gaming revenue, generated a combined net income of more than $1.86 billion on total revenues of more than $20.8 billion. Gaming revenue for Clark County was almost $9.9 billion, an increase of 11.7 percent from fiscal 2005.

Strip casinos accounted for more than $1.24 billion of the net income figure and more than $14.9 billion of the total revenues. Gaming revenues on the Strip in fiscal was more than $6 billion in fiscal 2006, an increase of 14.3 percent.

Streshley said Strip casinos grew both their occupancy and room rate figures. In fiscal 2006, Strip occupancy averaged 94 percent, up from 92.9 percent in fiscal 2005. The average daily room rate for a Strip hotel in 2006 was $137 a night, up from $125.38 in 2005.

The 275-page Gaming Abstract includes a number of statistics about the state's casino industry, including the average number of employees, room occupancy rates, revenue earned per room per day, and gaming revenue earned per square foot of gaming floor space.