Las Vegas has always had the reputation as being a vibrant and unique city. When people go to visit Las Vegas, they often leave saying, “What happens in Vegas, stays in Vegas,” for a reason. This phrase stems primarily from the gambling scene, when people spend lots of money hoping to leave rich. This is the foundation of the gambling business, and there are many factors that play into the economics of a successful Casino.
In a place like Las Vegas, where everything is expensive, the casinos are able to charge what they want to play games because they know that the casinos are one of the attractions for tourists to partake in. The casino’s have to upkeep their buildings and appear to be professional, so that people want to come back and develop new clients.
There are not very many costs that casino’s have to bear. They simply have to keep their casinos modern, and pay their employees. More significantly, however, they have to pay a certain amount of money to the government. Since casino’s do not “manufacture” goods, they do not have to bear that cost. Casinos work in many ways like an insurance company. The casino relies on the fact that most people will not win big money, so when someone does win, they can afford to pay them out. It is an industry based on odds. When there are enough people (supply) to pay money at the casinos, the more money they have to give out to people, and the better the reputation the casino has.
A poor economy, however, has the potential to impact the revenue casino’s make. When the economy is in the middle of a recession, people are less likely to gamble their money, because they are unsure about when they will be able to make the money back. According to an article from the New York Times called, “Lost in Las Vegas,” Las Vegas was impacted severely due to the economy. It said, “Then, about two and a half years ago, as you may recall, the entire American economy collapsed. And with it went Las Vegas: those mega-hotels, where millions of people gambled away money they didn’t have, were suddenly empty; so were the newly built, now foreclosed-upon McMansions. Today the city’s unemployment rate is 14.9 percent, possibly the highest in the nation. Las Vegas had been humbled.” When there aren’t enough people going to the casinos, they cant afford to give out that much money. It is an ongoing cycle; whenever the economy is doing well, the casinos do well.
Overall, the economics of the casino industry are much more complex that many other industries. The casino industry is a high risk, high reward industry for both the customers, and the employees of the casino. When a casino is doing poorly, the casino will most likely lay more employees off. Casinos have such a crucial part in making money for the state, so often times the government will help them out when times are bad, but the economics of the casino industry are very shaky as a whole.
http://travel.nytimes.com/2011/02/06/travel/06lasvegas.html?pagewanted=1&sq=hotels&st=cse&scp=7
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