Associated Press
CARSON CITY, Nev. — A report on net profits for major Nevada hotel-casinos shows a big drop in their fiscal 2000 bottom line, to $496.8 million.
The annual Gaming Abstract, released last week by the state Gaming Control Board, says the resorts’ combined net profits dropped from $876.6 million in the previous fiscal year. Las Vegas Strip resorts accounted for the biggest chunk of the downward swing.
The drop in reported profits stems in part from decisions by major resorts to make sure interest and other big expenses that had been carried on corporate books are now on the ledgers of individual clubs within those corporations.
"It’s not a very big number," said the Gaming Control Board’s Frank Streshley as he released the net figures, adding that the accounting changes would seem to be a bigger factor than any economic trend.
Streshley noted that the report is for the fiscal year that ended last June 30, and does not reflect a recent slump in casino winnings linked to California’s energy crisis and a national economic slowdown.
The document — the only state report to show a combined net profit for the clubs — says the $496.8 million million in net profits before taxes works out to 2.8 percent of total gross revenue of $17.56 billion for the fiscal year.
On the expense side, the clubs reported year-to-year increases in many categories, including payroll, advertising, taxes, utility bills and other categories.
The biggest included a $377 million gain, to $1.1 billion, in interest expenses; and a $340.8 million increase, to $1.26 billion, in a catchall "other" category. That includes various legal expenses, architectural fees, insurance premiums, garbage bills and assorted other costs.
Other increases included complimentary services to high-rolling gamblers, which increased $37.3 million to $204.9 million from year to year; and entertainment, up $57 million to $203 million.
All those costs are listed under general and administrative expense, which totaled $6.57 billion. That’s up $1.39 billion from the previous year.
In the separate "cost of sales" accounting category, a $10.49 billion total was $1.16 billion higher than the previous year’s total.
"Cost of sales" includes the money spent on supplies for all hotel-casino operations and includes everything from new card decks for blackjack tables to food and alcohol for restaurants and bars.
The category used up about 60 percent of the gross revenue. That’s about the same as the previous fiscal year. General administrative costs took 37 percent, up about 3 percent.
The report is based on financial data from 243 casinos that each grossed more than $1 million during the year and account for almost all of Nevada’s casino revenues.
A breakdown shows big clubs on the Las Vegas Strip grossed $10.2 billion and netted $185.5 million.
Downtown Las Vegas resorts grossed $1.1 billion and reported net profits of $29.2 million.
Major clubs in the Reno-Sparks area grossed $1.98 billion and netted $87.4 million.
The $17.56 billion in statewide gross revenue in fiscal 2000 includes $9.3 billion from casino games, or 53 percent of the total — down from nearly 55 percent. Hotel rooms accounted for $3.16 billion, or 18 percent, up 1 percent.
Restaurant food accounted for $1.94 billion, or 11 percent; and liquor and other bar sales for $900.5 million, or 5.1 percent.
The net profit, which drops even further once federal income taxes are paid, is the money left over after various expenses and state taxes are deducted from gross revenues. The clubs paid $701 million in state gaming tax and license fees.
Depending on individual clubs, the federal taxes can take as much as half of the net revenue.
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