Nevada abstract report highlights profitability woes in Las Vegas amid two megadeals

At the moment, there are two massive gaming acquisitions hanging in the balance, both of which could reshape the Las Las Vegas casino industry. But the latest profit report from the state regulator is perhaps an ominous sign for the potential buyers, especially on the Strip.

In May, Golden Nugget Casinos owner Tilman Fertitta paid $31 per share in deal to acquire Caesars Entertainment that included nearly $12 billion in assumed debt. Caesars’ stock has plummeted from highs of over $100 in 2021, but the billionaire entertainment mogul is confident he can unlock the operator’s broad-market potential.

That deal was followed soon after by a takeover offer from MGM Resorts’ largest shareholder Barry Diller that valued the business at $18 billion, nearly identical to Fertitta’s $17.6 billion all-in price for Caesars. In Diller’s case, the media tycoon is enamoured with MGM’s physical assets in a world of digital and AI-related hype. Neither deal is finalised — Caesars’ go-shop period runs through 11 July and Diller’s offer is just that.

In the meantime, the Nevada Gaming Control Board released its annual abstract report for fiscal year 2025 on Wednesday, which compiles key financial performance data from all 305 state licensees that grossed at least $1 million in gross gaming revenue for the fiscal year. Although the data is nearly a year old by now, it shows how acutely the market felt the effects of a downturn following multiple years of performance post-Covid.

For the period ended 30 June 2025, Las Vegas Strip casinos’ combined net profits plummeted 81% year-over-year to $154.2 million, out of total revenue of $21 billion (-4% YoY). With a combined gaming revenue of $5.5 billion, the Strip turned just 2.8% of gaming revenue and 0.7% of total revenue into profits.

Turnaround ahead for Las Vegas business?

The NGCB’s report of the Strip included 51 licensees that grossed more than $1 million in GGR during the period. Combined total liabilities, including long-term debt, were $50.7 billion for the group, and there were more than $2.2 billion in interest expenses for the fiscal year. Two statistics offered by the board — average return on invested capital and return on average assets — were both below 4%.

So far this year, things seem to be improving for Las Vegas, at least from a gaming perspective. GGR has been positive in three of the four reported months, including the most recent figures from April. But travel and tourism remain depressed, with international travel from Canada and domestic traffic from now-defunct budget carrier Spirit Airlines continuing to sow concern among stakeholders.

Optimists point to the numerous ongoing projects that are expected to drive future value for the market, especially on the sports side. The Athletics’ MLB franchise is building a stadium on the Strip to debut for the 2028 season and the city has been approved as a potential expansion site for the NBA. Those two franchises would add 81 and 41 home games per season to the calendar, respectively. This is in addition to a litany of one-off events, like F1, the Super Bowl, WrestleMania, the College Football Playoff and March Madness.

Of the $21 billion in total revenue on the Strip in FY25, only 26% came from gaming. More than $7 billion came from hotels, as well as $4 billion from food, $1.5 billion from beverage and about $3 billion from entertainment and other amenities.

Other state markets also noteworthy

With regard to the Caesars-Fertitta deal specifically, other markets in Nevada outside of Las Vegas are also important to consider.

In addition to Sin City, Caesars and Golden Nugget also currently compete in Laughlin and Lake Tahoe, and both markets fared no better performance-wise for the period. According to the abstract report, casinos in Laughlin posted a net loss of $54.7 million in FY25, a staggering drop of more than 750% YoY. That loss came from $348.2 million in gaming revenue and nearly $650 million in total revenue.

South Lake Tahoe also eclipsed $50 million in losses, although that actually represented a 65% improvement over the previous year. With both companies already operating in each market, some level of divestment is expected.

In acquiring Caesars, Fertitta will also become a major player in Reno, where the former is headquartered. Reno casinos’ net profits last fiscal year were $47 million, a 63% slide YoY. Notably, despite the profit decline, Reno was one of the few markets to post increases in total revenue ($1.5 billion) and gaming revenue ($660.3 million). So far in this fiscal year, Reno is on pace for YoY growth — its running total is 5.5% ahead of last year’s pace. The pace is well ahead of the Strip (+1%), downtown Las Vegas (+3.5%) and others.