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Howard Stutz

Nevada's biggest casinos lose $6.8 billion

19 February 2010

LAS VEGAS, Nevada -- Nevada's highest-grossing casinos generated a net loss of almost $6.8 billion in fiscal year 2009, victims of declining gaming revenues, reductions in hotel rates and reduced consumer spending.

The Gaming Control Board, which released the Gaming Abstract Income statement Friday, said the net loss was by far the largest ever for Nevada.

The last loss was in 2002, right after the Sept. 11 terrorist attacks, when casinos lost $33.5 million, said Gaming Control Board Tax and License Division Chief Frank Streshley.

The abstract is a profitability measurement combining financial information from 260 Nevada gaming licensees that grossed $1 million or more in casino revenue during the fiscal year ended June 30.

The casinos generated a net loss of $6.778 billion from total revenue of more than $22 billion. Total revenue includes the money spent by customers on gaming, hotel rooms, food, beverage and other attractions.

The net income or loss is the money retained by casinos after expenses have been paid, but before deducting federal income taxes and before accounting for other expenses.

Streshley said the fiscal year record for casino profits was $2.297 billion in 2007. In fiscal 2008, as the national and Nevada economy began to sink, casinos in the abstract recorded $721 million in profits.

Nevada casinos paid $778.7 million in state gambling taxes and fees, representing 7.4 percent of their gambling revenue.

Streshley said the 2009 fiscal year covers the last half of 2008 and the first half of 2009, where statewide monthly gaming revenues declined by double-digits in nine of the 12 months.

"The time period included the two most difficult periods ever experienced by the gaming industry," Streshley said.

During the fiscal year, the total revenue of $22 billion was a 12 percent decline from fiscal 2008 when there were six additional casinos with $1 million or more in gaming revenues.

Comparing the two fiscal years, gaming revenues declined by 12.7 percent, revenues from hotel rooms fell 16.6 percent, restaurant revenue dropped 9.3 percent, and revenue from other areas, such as retail, spas and other amenities, was off 9.6 percent.

Streshley said the decline in hotel revenues was troubling because it came from two fronts: lower room rates coupled with reduced occupancy.

The abstract, he said, showed that casino customers who came to Nevada were not spending as they did in the past.

The losses during the fiscal year weren't entirely cash.

Bad debt expenses increased 125.6 percent while casino companies took more than $5 billion in non-cash write downs or impairment charges on their operations. Streshley said those write downs drove up general and administrative expenses by 241 percent.

In fiscal 2009, gaming revenue accounted for $10.5 billion, or 47.8 percent of the casinos' total revenue. The 260 casinos included in the report paid $778.7 million in gaming taxes and fees, which equated to 7.4 percent of their gaming revenue.

Clark County had 149 casinos grossing $1 million or more in gaming revenue during fiscal 2009, which generated a combined net loss of $6.5 billion from total revenues of $19.2 billion. Washoe County had 32 casinos in fiscal 2009, which reported a combined net loss of $47.4 million from total revenues of almost $1.6 billion.

In fiscal 2009, 71 publicly owned casinos grossed $12 million or more in gaming revenue. The casinos, owned by 20 publicly traded corporations, accounted for 77.8 percent of the total gaming revenue generated statewide during the fiscal year.