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Nevada Gaming Abstract from Gaming Control Board

#1

Thanks for the second effort to get the link embedded - it really is an interesting article.

Casinos overall losing money BEFORE taxes is really something to me! Add in the 7.8% in taxes and gambling fees on their gambling revenue, and you're left to conclude that they'll go out of business unless they offset all this with their non-gambling revenue. Question in my mind is, are they doing that?

I would think they could make good money on their non-gambling activities IF they don't need to count all the comps as an expense in that part of their income. If they count it as an expense in the gambling sector of their accounting, and especially if they're allowed to expense it at the full retail value, I can start to see how they can lose money and still not suffer a real loss - it would be more on-paper type losses.

Who knows, with all the accounting tricks that businesses in general have, and with all the strange ways that casinos might account for their gambling revenues and expenses.

I always thought that any casino that lost money was either grossly mismanaged (and certainly many must be!) or something crooked was going on (which may still be possible too).

--BG

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10b. Nevada Gaming Abstract from Gaming Control Board
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Sorry, I can't seem to get the fancy HTML
editor to work.

http://gaming.nv.gov/modules/showdocument.aspx?documentid=7547

#2

Casinos overall losing money BEFORE taxes is really something to me!

"Owning a casino is a license to print money" is a folk truism that collapses in the harsh light of reality, which is that legal gaming is a capital-intensive, brutally competitive industry -- perhaps one of the most competitive on earth. That little blue slip of paper on the cage wall does not guarantee any profits, especially in 2013 with legal gaming seemingly everywhere,

It seems more than a few operators are due to learn this the hard way.

TC

[Non-text portions of this message have been removed]

#3

The Abstract might well have you thinking the average casino manager is shouting "we lose money on each room, but we make up for it in volume!"

Still, never try to interpret an income statement without a sensible cash flow statement in hand as well.

There have been plenty of "loss" businesses that generate a steady cash stream, and conversely, plenty of "profitable" businesses that have bled cash profusely. Over time, both statements (P&L and cash flow) necessarily tie to each other, but non-cash entries to an income statement can largely distort the true health of a business.

In any case, when you consider the relatively recent construction spate in combination with the current economic downturn, is it any wonder that many casinos (particularly those on the Strip) are showing a loss presently?

- H.

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--- In vpFREE@yahoogroups.com, Barry Glazer wrote:

Thanks for the second effort to get the link embedded - it really is an interesting article.

Casinos overall losing money BEFORE taxes is really something to me! Add in the 7.8% in taxes and gambling fees on their gambling revenue, and you're left to conclude that they'll go out of business unless they offset all this with their non-gambling revenue. Question in my mind is, are they doing that?