by Steve Norton
CEO, Norton Management

Are Casinos Chasing Millennials On A Fool's Errand? | Seeking Alpha

Today's article by Howard Klein has much good data about the Las Vegas visitor today, and how millennials are not holding up their end, when it comes to casino gaming. And slot manufacturers are trying to come up with skill games, that mimic the type of video games this group played at home. But it is a tough job, because at a typical slot, a patron plays 10 or more games per minute, and adding true skill requires minutes, not seconds per game. So our new skill games still rely on a lot of luck.

But, I don't share Howard's concern about the casino industry, because casinos, especially those on the Vegas Strip, have been learning for many years that all profit doesn't have to come from the casino. In fact at the 24 larger Strip casino resorts, over 70% of departmental profit comes from rooms, restaurants, retail and conventions; not the casino. And casino win has declined from over 70% to less than 35%.

So when Howard mentions our new young players spending too little time at the casino and more at the bars, we need to remember that beverage departments have a much higher profit margin, than the casino. And the operation that produces 40% of a Strip resorts profits, is the room's department.

And the Strip has leaned an important lesson, that Atlantic City and other casino resorts have not copied, that is conventions and trade shows fill mid week rooms at full rates; no comps or 80% discounting required; like in Atlantic City (or Las Vegas 40 or 50 years ago. Last year (12 months ending 6/30/16), the 24 largest Strip resorts enjoyed a 93% occupancy, at a $173 average room rate, and less than 20% was comped to valuable gamblers. So casino profits have been largely replaced by other departments, and new ones are springing up, to offer E-Sports and different types of entertainment.

Other gaming jurisdictions, need to again follow Las Vegas' lead.