Type of Submission
AHFME Symposium Abstract
This study compares casino operations in Nevada with those in the Netherlands. Aggregate casino data of the state of Nevada, Clark County (where Las Vegas is located), and the Las Vegas Strip were compared with those of casinos in the Netherlands. Operation efficiency, profitability, solvency, and liquidity of casino firms in 1998 were examined. The data of Nevada casino operations were derived from Nevada Gaming Abstract (1998). Operational and financial information about Holland casinos was obtained from Annual Report '98 and Facts & Figures (1999), published by the National Foundation for Operating Casino Games of the Netherlands. The gaming industry in the Netherlands, measured by the number of casinos, total assets, gaming equipment, or revenue, was by no means comparable to the gaming operations in Nevada, Clark County, or the Las Vegas Strip. Holland casinos, however, demonstrated superior productivity and profitability. The comparison reveals that Holland casinos achieved much higher efficiency in per-slot and per-table gaming revenues on a daily basis. Holland casinos also far outperformed Nevada casinos in daily revenue per employee. Furthermore, Holland casinos' assets turnover and fixed assets turnover ratios were more than double what Nevada casinos accomplished in 1998. In terms of profitability, Holland casinos substantially surpassed their counterparts in Nevada in 1998. Specifically, Holland casinos realized better operating efficiency, profit margin, net income per employee, return on assets, and return on equity. While Holland casinos' labor expenses, gaming tax, and depreciation and amortization costs, scaled by total revenue, were higher than those incurred in Nevada casinos, their marketing and promotion, interests, and non-labor operating expenditures were significantly lower than Nevada equivalents. In terms of financial conditions, nevertheless, Holland casinos seemed less strong in contrast with Nevada casinos. Holland casinos were more leveraged with debts. In particular, they were burdened with large amounts of short-term liabilities. Holland casinos' liquidity ratios were much lower than those of Nevada casinos. The comparisons between casinos in Nevada and the Netherlands show that Holland casinos were better positioned in generating revenues and profits. This could be attributed, at least partially, to their favorable gaming market conditions. With continuous gaming expansions in Nevada, particularly along the Strip in Las Vegas, the Nevada gaming industry is facing a gradually saturated market. To raise its revenue-generating efficiency, the Nevada gaming industry may need to either slow down its expansion or step up its effort in opening new markets. To increase their profitability, Nevada casinos should not only lower their expenditures on marketing and promotion and interests, but also significantly reduce their non-labor operating expenses. On the other hand, Holland casinos need to improve their financial positions. To sustain a healthy growth, Holland's casino industry should lower its liquidity and solvency risks while maintaining its superior operating performance.
"Comparitive Aanlysis Of Nevada And Holland Casino Operations,"
Journal of Hospitality Financial Management: Vol. 9
, Article 10.
Available at: https://scholarworks.umass.edu/jhfm/vol9/iss1/10