Las Vegas Strip, which once reached its performance peak after the COVID-19 pandemic, is now facing a loss for the first time within the fiscal year. According to the latest data released by the Nevada Gaming Control Board on June 27, the state's total gaming revenue in May was $1.29 billion, a 2% decrease year-over-year. The performance of the Las Vegas Strip was even more dismal, with a 4% decline year-over-year, totaling only $713.7 million, leading to a cumulative decline of 3.3% for the fiscal year 2024. If June fails to see a significant rebound, the Las Vegas Strip will experience its first annual negative growth since the pandemic.
Visitor traffic is also weak. Data released by the Las Vegas Convention and Visitors Authority shows that the total number of visitors in May decreased by 6.5% year-over-year, dropping to 3.41 million. Passenger volume at Harry Reid International Airport also fell by 4% year-over-year to 4.9 million, marking the seventh decline in the past nine months.
There is a divergence of opinions within the industry. Optimists point out that this year's Super Bowl, multiple new venue constructions, and the summer off-season impact might only be short-term adjustments; however, pessimists worry that macroeconomic factors, rising operational costs, global trade frictions, and the rise of gaming industries in other regions could pose long-term threats to Las Vegas. Brendan Busman, a consultant at B Global Advisors, noted that the current challenges "depend on the perspective you choose to view them from."
Compared to the pandemic period, there are currently no lockdowns or stimulus funds, and physical casinos have instead expanded significantly. Upcoming casinos in Chicago, New York, and other places may further divert tourists. This year, US President Trump has frequently imposed tariff pressures, impacting global markets and the tourism industry. Data shows that passenger traffic from Mexico and Canada at Reid Airport in May decreased by 17% and 27%, respectively.
On the macroeconomic level, the Federal Reserve has delayed cutting interest rates due to inflation and tariffs, leading to a decrease in consumer spending willingness. Fed Chairman Powell stated that the rise in tariffs has impacted their policy decisions.
Meanwhile, the local market around Las Vegas is performing impressively: Downtown, North Las Vegas, and Mesquite have grown by 1.5%, 1.4%, and 4.6% respectively, with the overall local market growing by 5.3%. In contrast, the high room rates and resort fees on the Las Vegas Strip are gradually driving tourists towards more cost-effective options. In May, the average daily room rate in the area reached $212, with some resorts charging additional fees of over $50 per night.
Macquarie analyst Chad Benyon noted in his report that the profit expectations for the Las Vegas Strip in the second quarter are trending downward, while local businesses like Boyd Gaming and Red Rock Resorts are more likely to meet profit expectations. In the earnings call conferences of various operators, although executives are optimistic about booking data, some companies have delayed capital expenditure plans, such as Wynn Group delaying a $375 million renovation project for the Encore Hotel.
To make matters worse, regulatory pressures are intensifying. Resorts World Las Vegas, MGM, and Wynn have been fined a total of $24.5 million for violating anti-money laundering regulations. Although these violations were initially discovered by federal agencies, they have severely damaged the reputation of Nevada's gaming regulation. There is concern within the industry that the regulatory system of Las Vegas, long considered a "benchmark" in the industry, is showing vulnerabilities.
At the same time, the Nevada Gaming Control Board is facing frequent changes in leadership. Chandi Sundel, who took office in January this year, is a new member, while former city court judge George Assad is currently the longest-serving commissioner. Mike Dreitzer, former CEO of Gaming Arts, has replaced Kirk Hendrick as the new chairman, marking the fifth change in chairmanship in six years.
As tourist preferences change, peripheral markets rise, macro uncertainties intensify, and internal regulatory challenges escalate, the Las Vegas Strip stands at a turning point. This once symbol of American gaming prosperity is now facing the challenge of reshaping its positioning and sustainable development.
