Most people think that running a casino is pretty much a license to print money. But is this true? Is casino revenue really that impressive - or is it more a case of the glamour and glitz masking shaky fundamentals?
Read on to find out the juicy details of Las Vegas revenue, and find out how much do casinos make in a day.
Average Daily Casino Profit
A casino's average daily profit depends on a variety of things - they are businesses like any other and some are run well and some not so well. Casinos do go bust from time to time, after all!
However, by looking at the financial reports of some of the biggest casino groups, we can get an idea of the profit the most famous casinos are making each day. One of these reports includes the average amount a typical casino visitor would spend on a casino.
Another factor is the Coronavirus pandemic. This hurt traditional casinos badly but did not impact online casinos in the same way. We will look at the revenues from 2019 so that the figures aren't distorted by this event.
The majority of its revenue comes from sports betting: in 2019, it generated a revenue of £2.14 billion ($2.95bn), of which 77% was from sports and the remaining 23% from casino games. Its profit before tax was £136 million ($187m), a margin of around 6%. By diversifying their offering, online casinos make a consistent profit.
This means Flutter made an average of £370,000 profit per day in 2019 or around half a million dollars. Of course, that is spread out over many different sites - but still very impressive, as this is solely from gambling.
888 is another massive online gambling operator, but they specialize more in casino games than sports betting. In 2019, they had revenues of $530 million, made up of $441m in online casino games and $90m in sports betting. Their 2019 annual profit was $45.3m - an average daily profit of $0.12m.
Land-based casinos are generally more profitable than online casinos. Let's look at some examples.
The Las Vegas Bellagio is one of the most famous casinos in the world. It's owned by the MGM Group, which also owns eight other casinos in Las Vegas, as well as numerous others across the US and in China.
According to MGM's 2019 annual report, the Bellagio made a pre-tax profit of $465 million. That's $1.27m average profit per day.
At the other end of the scale is the MGM Springfield in Massachusetts. It made an annual profit of $34 million, an average daily profit of just under a hundred thousand dollars. Still not too shabby considering it only opened recently.
The most profitable land-based casinos are in Macau, China. Check out the Venetian Macao: $1.4 billion dollars pre-tax profit in 2019, or $3.85 million average profit per day. The Venetian Macao is owned by the Sands Group and is the second-largest casino in the world.
So why do land-based casinos make more profit per day than online casinos? A big reason is because land-based casinos have many revenue streams in addition to their casino games.
Annual Revenue of Las Vegas Casinos
A significant part of the annual revenue of many Las Vegas casinos actually comes from non-gambling income. Things like:
- Restaurants & bars
- Shopping Malls
- Entertainment events
The 2019 MGM report breaks down the annual revenues of its nine Las Vegas casinos. Together they generated $5.8bn in revenue over the year. This was made up of $1.3bn casino revenue and $4.5bn non-casino revenue (rooms, food, drink, shopping, and entertainment). Of the casino revenue, $1.2bn came from slot machines and $800m from table games such as blackjack.
Slots are clearly big business for Las Vegas casinos. The MGM group's Las Vegas customers fed $13bn into their slot machines in 2019, with MGM's margin being just under 10%. Table games (e.g., roulette, baccarat, and blackjack) get less volume but are more profitable: $3bn was spent on MGM's Las Vegas table games, with MGM taking a 22% cut.
Poker makes up a very small proportion of a casino's revenue and takes up a lot of space. It would be more profitable for a casino to replace its poker room with slot machines. And in fact, this has happened in some places. However, most larger casinos offer it because they know poker players will also spend money on other casino games, as well as rooms and refreshments.
Hotel rooms are just as important as slots to the MGM group's bottom line, with an occupancy rate of 91% and annual revenue of $1.9bn. Food and beverage sales weren't far behind, with a revenue of $1.2bn over MGM's nine Vegas properties.
Of course, the annual revenue is just the money received before costs are taken into account. And casinos have a lot of costs, whether they are land-based or online.
Obviously, sweepstakes casinos generate revenue without focusing on the house edge. They use other means such as advertising, strategic partnerships, virtual currencies, power-ups, and other game enhancements.
Online Casino Expenses
Online casinos have lower expenses than land-based casinos. But that doesn't mean they are cheap to run! They still have plenty of overheads.
One of the biggest outlays for any online casino is marketing. There is a lot of competition, and it's a real battle to attract and keep customers. The Flutter Group spent £465 million ($640m) on sales and marketing in 2019 - that's 20% of their total revenues of £2.14bn ($2.95bn).
888 spent $162 million on marketing in 2019, nearly one-third of their total revenues.
As well as traditional advertising (TV, print and online), online casinos sponsor various events and professionals.
You won't get very far as an online casino if you have janky casino software. Customers just won't put up with it - they expect a certain standard and if you can't provide it then there are plenty of competitors out there who can.
You just can't risk one of your casino games crashing when someone's gambling on it.
And people expect variety too - 888 have around 1000 different casino games, for example.
It's not just the games either. Online casinos also collect data on their players' activity and use it to personalize each individual's experience, by recommending new games and offers. This requires state-of-the-art technology - and that's not cheap!
Online casinos need various licenses to operate. Gambling is heavily regulated in most jurisdictions. It's not just the cost of applying for all the right licenses, but the cost of the specialist staff needed to make sure you apply for the right ones in the first place.
It costs quite a lot of money to run a website that can cope with thousands of daily users. You need to buy your domains and pay for hosting. Many larger casinos will run their own servers. The bigger an online casino gets, the more expensive it is to run.
And online casinos have to go to great lengths to make sure all of the data is completely secure. There's a lot of money at stake, and you cannot risk hackers stealing from you - not just because of the financial cost but the reputational risk as well.
Online casinos get hit twice with taxes: first all their "sales" are subject to general gambling taxes, and then their annual profit is taxed like any other business. In the UK, for example, Flutter had to pay 21% of their gross revenue as "Remote Gaming Duty" - and then 17.5% of their profit as corporation tax.
Online casinos don't have as many staff as traditional land-based casinos, but they still employ plenty of people. As well as the marketing, legal and IT departments we've already touched on, they also need a big customer service department. And many online casinos actually employ dealers for "live" table games, which recreate the experience of being at a real casino.
Land-Based Casino Expenses
Land-based casinos have many of the same expenses as online casinos, but they have less IT-related costs and more costs relating to running a physical business.
Payroll is a big expense for land-based casinos. They need doormen, wait staff, bar staff, kitchen staff, dealers, floor managers, pit bosses, slot attendants, concierges, and security staff (including camera operators).
And most land-based casinos have hotels, so they need all the usual hotel staff too. And even if many casinos pay most of their staff the absolute minimum, meaning they have to rely on casino-goers tips to make a living wage, the staff costs still add up.
In 2020, the state of Nevada collected $622 million in gaming taxes from the casino industry. Casinos must pay 6.75% of their gross gaming revenues (i.e. the amount they win from their punters) - but there is a ballot in 2022 to increase this to 9.75%.
This is actually quite low compared to other jurisdictions - Monte Carlo casinos have to pay a 15% duty, for example.
And then there is the cost of various gambling licenses and other business taxes on top of this.
Casinos are famously windowless and open 24-hours a day - so they are entirely lit by electric light, constantly.
Lighting accounts for around a third of a Las Vegas casino's energy bills. And Las Vegas is also a very hot place, so casinos must be air-conditioned. And of course, slot machines need electricity too.
No wonder casino's utility bills are so large. Casinos account for a fifth of Las Vegas's electricity usage - and casinos use up to five times as much energy per square foot as a hospital.
A casino cannot afford a power cut either - it would plunge the entire property into darkness for one! So they need to have a reliable backup system in place. And that is expensive.
Comps are when a casino gives a guest something for free as a bonus for playing. What they'll give you depends on how much they value as a customer. Pretty much anyone can get free drinks, but casinos also give out free hotel rooms, airfare, show tickets - and even private jet flights for the highest rollers.
The idea is that the customers spend more on the tables than the cost of the comps - but it's still a big expense that needs to be accounted for.
Most people buy chips with cash when they go to a land-based casino. But nowadays it's easier than ever to get a marker instead - this is when the casino gives you a line of interest-free credit to gamble with.
You fill out a form, the casino checks your credit score and decides how much to lend you. Then you have to pay it back (usually within 30 days).
It used to be only the high-rollers who got markers, but now around a quarter of casino-goers make use of this sort of credit.
These markers are unsecured - there is nothing the casino can repossess if the borrowers don't pay them back. The casinos have to send letters and employ collection agencies to try to recover the debt - or even take the debtor to court.
But this doesn't always work, particularly if the customer is from another country - or if they borrow a lot of money.
Remember the saying "If you owe the bank a thousand dollars, that's your problem; if you owe the bank a million dollars, that's their problem." Well, it's doubly true for casinos.
Casinos have to maintain an allowance for "doubtful accounts" that they realise they probably won't get repaid. This is a lot of money - MGM's 2019 doubtful account allowance was $88 million.
Don't feel too sorry for the casinos though. They are only owed the money because the punters lost it at their tables! You can't win a bunch on credit and expect to cash out without paying back your initial loan.
How Casinos Pay Big Winners
Most casino games will only make you a big winner if you bet big or if you are lucky for a long period of time.
For example, some of the best table game odds you'll find is roulette paying out 36-to-1 if you can correctly guess the number the ball stops at - but clearly unless you wager thousands on this long-shot, winning is not going to change your life.
Progressive slots are where the truly life changing amounts are won. These are slot machines that take part of each bet and puts it toward a jackpot that builds and builds until someone wins it. And because it's so hard to win, the jackpot can build up to tens of millions of dollars. The biggest ever win was nearly $40 million.
Now, as you can imagine, the casino couldn't exactly give the lucky winner $40 million in cash. Instead most prizes over a certain amount (usually around $100,000 unless you are a high roller) are paid by wire transfer as either a lump sum or a structured settlement where the winner receives a certain amount every month or year.
The advantage of the lump sum is that you get all your money at once; the disadvantage being it will be taxed all at once.
The structured settlement will mean a steady income, but inflation will eat away at the value of your prize, and you'll essentially be giving the casino an interest free loan. There are companies that will buy your settlement from you, but it will be at a reduced price.
As you can see, casino daily profit numbers are pretty impressive - whether online or land-based. But they also cost a lot to run. It takes money to make money after all!
This article was published on February 21, 2022, and last updated on July 13, 2023.