When you want to get a snapshot of the economy, what do you look at? Is it the stock market, the latest job reports, or perhaps the unemployment rate? Well, Vegas has a few indicators of its own, and one of the most important is just how many of their worst deadbeat gamblers are paying casinos back the money they’ve lost on credit markers.
Vegas Starting to Come Back
Right now, the signs are pointing up for the Las Vegas economy. When the housing bubble started to hit around 2006, the gambling industry was taken down as hard as any, as many regular players tightened their budgets and found themselves with significantly less disposable income as a result. As the economy has slowly started to recover over the last few years, those visitors have begun to not only come back, but spend more, with numbers only now starting to rival those seen in those pre-recession days.
That also means that U.S. casino companies can start expecting to actually bank more of the money that their high-rollers lose in the casino. During the recession, four major U.S. casino corporations – Wynn Resorts, Las Vegas Sands, Caesars Entertainment and MGM Resorts International – announced that they expected to recover far less of the outstanding debt owed to them, but those estimates have once again come back in line with the numbers from the years before the recession started.
To many gamblers, this world of casino gambling debts may seem very different than their own Vegas experiences. After all, most players can’t get a casino to let them play one dollar on credit, let alone the millions that high rollers are given on a regular basis. But for casinos in Las Vegas, Macau and other high-end destinations, giving credit to their wealthiest patrons – known as “whales” – is just a part of doing business. It may not be one they’re particularly happy about, but casino companies would find themselves at a huge disadvantage compared to their rivals if they suddenly stopped giving large lines of credit to their best customers.
Money for Nothing and Your Checks for Free
The problem with giving away that money, of course, is that you may never get it back. Major casino companies routinely write off tens of millions of dollars in bad debt each year, with the Las Vegas Sands having an allowance of $492 million in what they call “doubtful accounts” – old debt they may never be able to recover. Caesars Entertainment has over $200 million in doubtful accounts, while Wynn and MGM both have around $100 million. That’s a lot of money, but still small change compared to the overall gambling profits these companies rake in each year.
Casinos are very limited in how they can try to recover their money, which helps explain why so much money never gets recovered at all. It’s common for casinos to negotiate settlements with gamblers who can’t repay their debts, and sometimes, cases even end up in court. Collection is even harder when gamblers are based overseas: for instance, in China, gambling debts aren’t even legally enforceable. Still, it’s clear that more gamblers are paying back their debts now than just a few years ago. At the end of 2008, just after the full force of the economic crash hit Las Vegas, Wynn Resorts estimated that fewer than half of their debtors would ultimately pay up. Today, that number is closer to two-thirds – and that’s a more pessimistic outlook than many of their competitors, with the Sands believing they’ll recover as much as 75 percent of their outstanding debt.
But at the end of the day, wealthy gamblers definitely get away with things that you or I never could. One industry analyst, Matthew Jacob of ITG, notes that debt forgiveness has simply become another high-roller perk, one that sometimes may even be expected by the players involved. Just as a casino may fly in a whale on their own private jet, offer them the best comped suites, and ply them with fine food and liquor on the house, not having to pay up at the end of your trip – or at least, not having to pay it all up – is just another way one casino wins these heavy hitters’ business over another.