Americans' Willingness to Gamble Suggests Resilience in the US Economy
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Americans are hitting the casinos at record levels, and that could be a sign the US economy remains on solid footing.
The Nevada Gaming Control Board said the state's casino industry generated a record $1.4 billion in revenue in July, representing a year-over-year increase of about 7%.
"The 'Reader's Digest' version of what drove this month's record win is slot win, which although wasn't a record, it was the third-highest total all-time for the state and the second-highest total for the Strip," said Nevada Gaming Control Board economist Michael Lawton.
The return of international travel is also helping boost Nevada's casino revenues, with more than 290,000 foreign tourists arriving and departing through the Harry Reid International Airport in July. That's the largest number of foreign travelers since the start of the COVID-19 pandemic in March 2020.
The solid month makes it increasingly likely that the state will experience a third straight year of record annual casino revenue. Nevada casinos generated gross gaming revenue of $14.8 billion in 2022, and $13.4 billion in 2021.
Strength in the industry could serve as a broader signal to investors that the US economy is doing just fine, and that a potential recession is not on the horizon. That's because when consumers are feeling uneasy about their finances, they're less likely to book a trip to Las Vegas and gamble their savings away.
"Las Vegas Strip revenue has been a pretty good leading/coincident indicator of the US consumer. Note the slowdowns in 2000 and 2007, before the last two recessions," Chanos with an attached table of historical casino revenues.
Las Vegas casino revenue grew just 2% in 2007 after a three-year period of double-digit growth, then fell about 10% in both 2008 and 2009.
Meanwhile, Las Vegas casino revenue grew just 7% in 2000 after a solid three-year stretch of growth. Then in 2001 and 2002, revenue fell 2% and 1%, respectively.
As long as Las Vegas casino revenue continues to hit new records and grow, an economic recession may be nowhere in sight.
