Posted on: June 24, 2022, 11:34h.
Last updated on: June 24, 2022, 12:19h.
Downtown Las Vegas casino owner Derek Stevens is the latest gaming executive to sound a warning bell on inflation and a possible recession.
In Thursday comments before the Nevada Gaming Commission (NGC) the owner of Circa, the D, the Golden Gate, and the Downtown Las Vegas Events Center said his three casinos are starting to feel the pinch of inflationary pressures and waning consumer confidence.
We’ve seen the impact of inflation on slots, tables, and beverages for the last 10 weeks. The restaurant business has held up very well and hotels have been very strong and robust,” Stevens told NGC. “Some of that has to do with people booking their rooms and their flights out a distance. Restaurants and hotels have been strong, not just with us, but from what we’ve seen in all of Las Vegas. We certainly have a growing concern in regards to some of the telltale signs that we watch.”
He was appearing before the commission as the regulatory agency was approving the opening of a Circa sportsbook at the Legends Bay Casino in Sparks. That venue is Reno’s first new casino to debut since 1995 and is slated to open in August.
Stevens Says Devil Is In Details
The April reading of the Consumer Price Index (CPI) was 8.3% — one of the highest levels in four decades, but below the March report of 8.5%.
However, the declines didn’t last long, as the May CPI reading checked in at 8.6%, sparking concerns that neither the government nor the Federal Reserve has an adequate handle on soaring consumer prices. With travel and leisure, including casinos, considered a consumer discretionary industry, the group is highly vulnerable to inflation and would-be visitors deciding to tighten their purse strings.
Stevens says some of the data points he regularly examines, including ATM usage and other spending trends, indicate patrons are already dialing back spending.
“From April to May, the average withdrawal amount was down the most I’ve ever seen in my career –11%,” Stevens said. “That’s a telling sign. We noticed a significant reduction in uncarded play, and we’ve seen a reduction in the general spend on some of the last-minute, spur-of-the-moment items, like extra drinks or the pull on a machine. We have some concerns about inflation, but hopefully, things turn here by the time we get to the fall.”
Inflation Struggle Real for Gaming Industry
Stevens is far from the only gaming executive to recently mention inflation. With second-quarter earnings season looming, rising consumer prices could be a hot-button issue on casino operators’ conference calls.
Some operators are seeing signs of reduced spending among cost-conscious patrons, including in the Las Vegas local demographic. Likewise, regional casinos are among the contributors to the industry’s rebound from the coronavirus pandemic. But that strength could be tested, as gas prices remain high across the country, with no signs of near-term relief.
It’s possible Circa, which is the newest venue in downtown Las Vegas, sees improved spending trends when the 2022 football season starts. The property is home to the world’s largest sportsbook and is known for catering to professional bettors.