People are often skeptical of the claim that California generates more gaming revenue than Nevada, but then nod with understanding when they hear the components—California Lottery (aka the numbers racket) $3 billion, tribal casinos $8 billion, cardrooms $1+ billion and another $250 million from horseracing—over $12 billion total. In comparison, Nevada casinos generated $10.8 billion of gaming revenue in 2016.
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Traditionally, non-gaming amenities like food and beverage and hotel rooms were giveaways to attract gamblers to venues with the hope of capturing their gaming activity surrounding their visit. That all changed in 1989 when Steve Wynn opened the Mirage Resorts—the Strip’s first new resort in almost two decades—with a functioning volcano, white tigers and an over-the-top Polynesian motif. In the three decades since, gaming in Las Vegas has evolved beyond slots, craps and card games to a full recreational escape with world-class shows, dining, spa, nightclub and shopping activities. In fact, most of the growth in the gaming industry has come from non-gaming amenities such as these. For example, in 2016, MGM Resorts saw 75% of its revenue from non-gaming sources. Wynn Resorts boasts three (XS, Tryst, Surrender) of the top-grossing nightclubs in the United States, generating over $150 million per year in annual revenue.
While gaming has expanded in California over the last two decades, the non-gaming experience at casino resorts in the state has lagged that offered in Las Vegas. California casinos and cardrooms still generate most of their revenue from gaming activities and, although many have upgraded their facilities and offer dining and other spa/resort amenities, they still don’t offer the full complement of amenities offer by Las Vegas properties. For example, there are seven unique Cirque du Soleil shows in Las Vegas, yet none at California gaming resorts. Likewise, there are multiple world-class restaurants and retail shopping venues affiliated Las Vegas resorts; a world class chef has yet to connect with a California casino and the typical retail experience is limited to gift shops and outlet malls.
There’s a reason why 43 million visitors attended Las Vegas in 2016—Sin City resorts invest in the amenities that guests demand. Given the proximity to California, it’s not surprising that residents of the Golden State make up the largest percentage of out-of-town visitors to Nevada. In 2016, over 20% of those guests arrive from a California point of origin;11 almost 45,000 cars a day cross the California-Nevada state line on US Route 15 at Primm Valley Casino Resorts. It follows that there’s a huge opportunity for California casino resorts to retain those 8 million casino patrons (and their spending) by adding the non-gaming amenities enjoyed at Las Vegas resorts. At some point, expect California gaming operators to wake up and realize that they’ll have broader appeal (and higher revenue) if they offer a complete recreational experience to today’s gaming patrons.
About the author
Kyle Kirkland is the current president of the California Gaming Association, the 501(c)(6) non-profit trade association that represents California cardrooms. Mr. Kirkland is President and General Manager of Club One Casino, a 51-table cardroom in Fresno and holds the same positions for two smaller cardrooms. Mr. Kirkland’s background includes work in the consulting, finance, music and gaming industries, and he has served on the boards of several public companies. Mr. Kirkland holds an A.B. degree from Harvard College magna cum laude in Economics and an MBA degree from the Graduate School of Business at Stanford University. He can be contacted at email@example.com.