How do Vegas Casinos make money?

I have seen in the other post that almost all of you get rooms, food, shows comped at multiple casinos..How do they make any money if they just keep gving?

 

The amount they win off of degenerates far exceeds the comp slip. Makes me wish I was in Vegas.

 

100%!
Everything they give away is "soft" comps, which cost them next to NOTHING, and considering the ratio of winners:losers in the casino is like 99:1, then believe me, NOTHING they're giving out is "free"

 

And for that 1 person they give out "free stuff" to there's 99 other people who have no idea how comps even work.

 

The amount comped is only a percentage of what you theoretically lost during your play there (there can be times you will actually win money, and times you will lose more than your theoretical loss, but over a large enough sample of time, it should even out to close to it). Also, as referenced earlier, a lot of the comps they offer don't cost them as much as they the value they put on it to deduct from your comp balance, decreasing the percentage of your theoretical loss given back to you even further.

 

You can look at their financial statements and see that most casinos only deduct around 20% of gross gaming revenue for promotional allowances (comps). And that's calculated at retail per their accounting guidelines, the actual cost to the Enterprise is much lower. It's also a non-cash expense, just a shift of revenue recognition from the casino to other departments.

The people on this board aren't really a good cross-section of visitors. Especially the frequent posters. We're mostly degens who go to Vegas often and also understand the comp game better than your average visitor.

 

I had an old boss who said that casinos pay out 8% and give 8%.

 

I just want to point out how casinos really make money...
They're like a huge bank (true!)
they do millions of transactions per day and they take a cut of EACH...voila, there's the revenue
That "cut" is called House Advantage and it varies from 1% - 15%...so I would say the "average" is 8%...imagine EVERY DAY getting 8% on transactions of $1M...so $80k PER DAY...and that's probably just a small casino...

 

Those things do cost them money, just not as much as what as retail value.. If I was not in a suite last week and somebody else would pay them a few hundred a night instead... that is money. That bottle of wine I had for dinner cost them money. etc.etc.

But, I will agree that the free room cost me about $800 a night. The bottle of free wine cost me a few hundred more than what I pay at home.

 

Also keep in mind those who gamble tend to tell us all about their wins - but aren't as vocal about their losses.

Bill

 

gamblers are liars. everybody says they 'break even.' funny stuff.

 

It's a very simple and time old business model - speculate to accumulate.

There is another aspect as well. You don't really think the value of a massage is $150 do you? It's the cost attached to it so that it spends your comps quicker. That ten grand bottle of wine probably cost the casino a few hundred dollars - note, these are just examples not something to argue over. Some stuff is legitimately expensive, but a lot of it is marketing spin for revenue protection.

 

Then added to what everyone has said is the latest revenue addition, the ultra bars and clubs. With what they're charging for bottle service and "prime tables", their bottom line gets fat in a hurry.

 

A casino host no longer at the casino said you can comp a buffett or room and be almost 100 % certain you are not going to be giving away the last serving of an offering or the last room in a sold out hotel. Thus it "costs" the casino no actual dollars in real time but allows them to take the "value" of the comp for their own purposes. As an earlier poster said, valuable comps are made but not at a cost to the casino of the "retail" value given to the item / service.

 

Case in point. My Parents were just flown to Reno and given 5 nights at Harrah's.
What's the real cost to Harrah's? The tickets for the plane? Well I assume that casinos that offer free flights have deals with specific aircrafts, meaning instead of 250 for a round trip ticket per person, maybe it only costs the casino 150? Even at the full normal cost it would be about 500 to fly my parents in and back home.
Then you take into consideration the hotel room. The hotels in both Reno and Vegas are huge with many rooms. I don't know how often they are full, but when they are not full the rooms are just sitting their empty anyway.
But, I believe an average night at Harrah's is $100 (ish) so let's say it costs Harrah's about $1000 to bring in Mr. & Mrs. Sinner and put them up for 5 nights.
My parents have a budget of about $500 a day (that they fail to stick too anyway) and since they are Total Rewards members and want to rack up as many points as they can, they spend most of their time (and money) on property. So the first two nights Harrah's has made their money back, and they still have 3 nights left to get whatever else they can out of my parents.

Just to be clear, if this sounded at all like I was saying that comps are for suckers (something I've heard before) I'm not. I think that's nonsense. My Parents chose to spend a bunch of money gambling and dining on a vacation that they weren't even planning to take until the casino offered it to them.

IMO it's sort of a win/win, because even though they didn't win any big bucks while they were there, I'm sure more comps are right around the corner for them.

 

They give away alcohol to loosen one's inhibitions, purse strings and impair judgement. The same reason men buy women drinks at a bar, just replace purse with G.

Leonard Tose sold the Eagles and lost it all in Atlantic City, he sued claiming it was the booze that made him lose. The judge disagreed.

I read that someone asked Steve Wynn "how do you win at a casino" and he replied "own one".

 

The simple answer to the OP's question is that casinos make money because 99.9% of people that gamble lose, and some lose HUGE amounts.

Think of comps as like a "cash back" program. The casinos are only comping players a small fraction of what that player lost.

Sure we all have winning trips or winning gambling sessions, but if we are being totally honest, 99.9% of us are in the red when it comes gambling over our lifetime.

 

Keep in mind that this past year was one of the first years in which gambling was less than 50% of the revenue. A lot of money are made via clubs and restaurants.
Think people are paying $400 for a bottle of booze that usually costs $20 in the store so they can give you a few $30 room.