Last time I was in Vegas (years ago), I met lots of foreigners, so the foreigner thesis seems attractive. But the internet says they are just 12% of visitors, so even a 20% decline isn't enough to explain more than a quarter of the Vegas decline.
The other type of person I met in Vegas was kinda working class middle americans. I think their spending is declining for other reasons (their overall consumer spending is dipping after all. makes sense that they might cut vacations to vegas first).
Third thesis would be the broad legalization of sports betting, prediction markets, and widespread crypto based-gambling. I think this one is probably second order.
He specifically mentions Canada and how it can only contribute to a small portion of the decline.
But more than that, his discussion of baccarat revenues being up and the common association with high rollers from Asia counters a hypothesis that international tourism is a cause of revenue decline at all. Volume of people? Sure. Revenue? Those data points say it’s not highly relevant.
This is definitely a part of it, and I’m surprised it didn’t get more attention in the piece. But as A_Hamilton points out there probably is a decline is working class Vegas folks. The overall experience is incredibly expensive and all really boring last time I went pre-pandemic. It’s cheaper just to fly internationally and have a good time elsewhere. Vegas is expensive and doesn’t really offer that much outside of nature (good hiking and rock climbing) and gambling if that’s your thing.
Often times, the "casino-ification" of the economy (beyond the specifics of Las Vegas) seems to suffer from the short-term-profits-over-long-term-value proposition. Sports leagues seems a great example of this. They work hard these days to extract maximum value from existing fans while often ignoring how these fans became so devoted in the first place. European Soccer's Super League idea fits into this box to me, as does a lot of recent choices the NBA has made. The whole-hog embrace of sports gambling by leagues across the spectrum surely also fits in here.
Agreed on the NBA, with the meaningless play in games (for a league where over half the teams make the playoffs!) and the use of coaches’ challenges jam even more commercial breaks in
This was a long article which could have been summarized by saying that economists forecast an 8% drop in foreign tourists to the U.S. in 2025 compared to the prior year. Done.
No mention of the fact that many cities, particularly in the East Coast have built/are building casinos of decent quality, which leads to someone like myself who lives in DC asking : Why deal with flying (and all of the negatives that come with air travel today) to Vegas, and instead just drive the 20-30 minutes to the MGM nearby?
Given that gambling as a whole is growing consistently YoY in the US I would guess that Vegas’s decline is more about mobile sports betting crowding out in person gambling than anything else.
I think the short term profit vs long term consumer value tension is interesting. I can imagine that we’re at a low point where we’ve gotten very good at maximizing short term profits but only started to get detailed long time horizon data on people’s psychology.
1) There are more and more ways to gamble at home. Casinos are located close to many people, with no need to spend a gazillion dollars staying at Vegas resort.
2) Sports betting is ubiquitous online now. No need to go to Vegas.
3) Travelers have tons of options. If you're going to spend the kind of money you now have to spend to really enjoy Vegas, you can go to Europe...Hawaii...other places.
I intuitively feel that this is the same phenomenon as Walt Disney World no longer catering to the middle class, and suspect that WDW is going to have a similar hit. It’s not about gambling, but about how relentless optimization at the same time that there are just more rich people by volume means that the incentives trend upwards—sometimes to the point of killing the golden goose.
This strikes me as asking the wrong question. The impressive thing about the "More vacancy in Vegas" is not the small extrapolated dip in 2025 but the relentless upward progress since 1970. Even the over 19 million visitors in 2020--more than in the virus-free 1989--is more success than failure.
Why has Las Vegas been immune from the boom-and-bust bankruptcies of Atlantic City, Native American casinos, and pretty much every other gambling venue in the US? Even Reno has been more volatile. Macao has had uninterrupted success, but only since 2002. Monte Carlo has its ups-and-downs, but not as extreme as Atlantic City.
Of course, there have been spectacular Las Vegas bankruptcies, and dull ones, of individual casinos--but always because some newer, better casino was taking their customers.
I don't deny the micro-reasons cited in this post--and I think on-line gambling is the biggest one, despite Las Vegas capturing a piece of the action--but I have faith in the Las Vegas brand to turn the slowdown into a launchpad for the next leap forward.
I'm also a big fan of Las Vegas off the strip. To me the heart of the city was the Gamblers' Bookstore, the Blackjack Ball and the private poker games at the Las Vegas Country Club--along with wonderful cheap Mexican and Asian restaurants, alt-Norte music scene and a cheerful street vibe. This has eroded and I miss it more than anything on the strip.
This is pretty compelling. I’m the type of visitor that Nate is focusing on - not wealthy, has fun gambling once in a blue moon but is budget conscious about it.
I haven’t been to Vegas since the kids were born - so over a decade now - but it isn’t impossible to imagine regular trips every year or two, like my buddies and I used to do.
But: just telling me that Blackjack now pays 6:5 instead of 3:2 is enough to keep me away. That’s the most fun part of the game! And when you add in everything else becoming actually expensive? Really forget it, as in “not even a non-gambling trip to see shows and relax” forget it. Being able to gorge yourself on food and booze without having to scrimp was a big part of what made it worth such a long trip in the first place. And EVERYONE HATES HIDDEN FEES. Hotels have to learn this.
Is there anything in your dataset that can tell us if Trump’s “Germany circa the 1930s anti-immigrant rhetoric” is discouraging foreigners from visiting the U.S.? It seems foreign visits to the U.S. are down across the board.
Well, my game of choice, horse racing, has seen a long, secular decline going on thirty-five years now as new generations of gamblers substituted alternative means of entertainment. It’s not all that surprising to me that Las Vegas might suffer from generational changes in tastes and preferences. The gambling menu just seems to keep expanding into new markets (even if we call gambling “trading event contracts” now.)
But maybe 2025 is just a pullback from a peak? “Vegas” has long been a cyclical industry. Some claim Vegas’s long-run visitor volume and spend are still near historical highs, even with the 2025 softness. Perhaps?
Let’s just hope Vegas doesn’t go the way of horse racing.
There is short term greedy and long term greedy; the latter is way better. Maybe they think it is like boiling the frog slowly; it won't notice but it seems they are noticing. An ALGO optimized world is short time greedy but it doesn't feel good and makes you look for alternatives.
One thing I was wondering reading this:
1) Hasn't international tourism been down?
2) I imagine it's down more for lesiure than for business travel.
3) part of 1/2, but Canada specifically was alienated (still is?)
Last time I was in Vegas (years ago), I met lots of foreigners, so the foreigner thesis seems attractive. But the internet says they are just 12% of visitors, so even a 20% decline isn't enough to explain more than a quarter of the Vegas decline.
The other type of person I met in Vegas was kinda working class middle americans. I think their spending is declining for other reasons (their overall consumer spending is dipping after all. makes sense that they might cut vacations to vegas first).
Third thesis would be the broad legalization of sports betting, prediction markets, and widespread crypto based-gambling. I think this one is probably second order.
He specifically mentions Canada and how it can only contribute to a small portion of the decline.
But more than that, his discussion of baccarat revenues being up and the common association with high rollers from Asia counters a hypothesis that international tourism is a cause of revenue decline at all. Volume of people? Sure. Revenue? Those data points say it’s not highly relevant.
This is definitely a part of it, and I’m surprised it didn’t get more attention in the piece. But as A_Hamilton points out there probably is a decline is working class Vegas folks. The overall experience is incredibly expensive and all really boring last time I went pre-pandemic. It’s cheaper just to fly internationally and have a good time elsewhere. Vegas is expensive and doesn’t really offer that much outside of nature (good hiking and rock climbing) and gambling if that’s your thing.
Often times, the "casino-ification" of the economy (beyond the specifics of Las Vegas) seems to suffer from the short-term-profits-over-long-term-value proposition. Sports leagues seems a great example of this. They work hard these days to extract maximum value from existing fans while often ignoring how these fans became so devoted in the first place. European Soccer's Super League idea fits into this box to me, as does a lot of recent choices the NBA has made. The whole-hog embrace of sports gambling by leagues across the spectrum surely also fits in here.
Agreed on the NBA, with the meaningless play in games (for a league where over half the teams make the playoffs!) and the use of coaches’ challenges jam even more commercial breaks in
Vegas wouldn’t be the first time an industry got greedy and enshittified their product as a result.
What is the impact of online sports gambling? Wouldn’t that be expected to reduce visits to Vegas?
This was a long article which could have been summarized by saying that economists forecast an 8% drop in foreign tourists to the U.S. in 2025 compared to the prior year. Done.
No mention of the fact that many cities, particularly in the East Coast have built/are building casinos of decent quality, which leads to someone like myself who lives in DC asking : Why deal with flying (and all of the negatives that come with air travel today) to Vegas, and instead just drive the 20-30 minutes to the MGM nearby?
Given that gambling as a whole is growing consistently YoY in the US I would guess that Vegas’s decline is more about mobile sports betting crowding out in person gambling than anything else.
I think the short term profit vs long term consumer value tension is interesting. I can imagine that we’re at a low point where we’ve gotten very good at maximizing short term profits but only started to get detailed long time horizon data on people’s psychology.
Think Nate is overthinking this.
1) There are more and more ways to gamble at home. Casinos are located close to many people, with no need to spend a gazillion dollars staying at Vegas resort.
2) Sports betting is ubiquitous online now. No need to go to Vegas.
3) Travelers have tons of options. If you're going to spend the kind of money you now have to spend to really enjoy Vegas, you can go to Europe...Hawaii...other places.
I intuitively feel that this is the same phenomenon as Walt Disney World no longer catering to the middle class, and suspect that WDW is going to have a similar hit. It’s not about gambling, but about how relentless optimization at the same time that there are just more rich people by volume means that the incentives trend upwards—sometimes to the point of killing the golden goose.
Pigs get fat, hogs go to slaughter.
This strikes me as asking the wrong question. The impressive thing about the "More vacancy in Vegas" is not the small extrapolated dip in 2025 but the relentless upward progress since 1970. Even the over 19 million visitors in 2020--more than in the virus-free 1989--is more success than failure.
Why has Las Vegas been immune from the boom-and-bust bankruptcies of Atlantic City, Native American casinos, and pretty much every other gambling venue in the US? Even Reno has been more volatile. Macao has had uninterrupted success, but only since 2002. Monte Carlo has its ups-and-downs, but not as extreme as Atlantic City.
Of course, there have been spectacular Las Vegas bankruptcies, and dull ones, of individual casinos--but always because some newer, better casino was taking their customers.
I don't deny the micro-reasons cited in this post--and I think on-line gambling is the biggest one, despite Las Vegas capturing a piece of the action--but I have faith in the Las Vegas brand to turn the slowdown into a launchpad for the next leap forward.
I'm also a big fan of Las Vegas off the strip. To me the heart of the city was the Gamblers' Bookstore, the Blackjack Ball and the private poker games at the Las Vegas Country Club--along with wonderful cheap Mexican and Asian restaurants, alt-Norte music scene and a cheerful street vibe. This has eroded and I miss it more than anything on the strip.
This is pretty compelling. I’m the type of visitor that Nate is focusing on - not wealthy, has fun gambling once in a blue moon but is budget conscious about it.
I haven’t been to Vegas since the kids were born - so over a decade now - but it isn’t impossible to imagine regular trips every year or two, like my buddies and I used to do.
But: just telling me that Blackjack now pays 6:5 instead of 3:2 is enough to keep me away. That’s the most fun part of the game! And when you add in everything else becoming actually expensive? Really forget it, as in “not even a non-gambling trip to see shows and relax” forget it. Being able to gorge yourself on food and booze without having to scrimp was a big part of what made it worth such a long trip in the first place. And EVERYONE HATES HIDDEN FEES. Hotels have to learn this.
Is there anything in your dataset that can tell us if Trump’s “Germany circa the 1930s anti-immigrant rhetoric” is discouraging foreigners from visiting the U.S.? It seems foreign visits to the U.S. are down across the board.
Well, my game of choice, horse racing, has seen a long, secular decline going on thirty-five years now as new generations of gamblers substituted alternative means of entertainment. It’s not all that surprising to me that Las Vegas might suffer from generational changes in tastes and preferences. The gambling menu just seems to keep expanding into new markets (even if we call gambling “trading event contracts” now.)
But maybe 2025 is just a pullback from a peak? “Vegas” has long been a cyclical industry. Some claim Vegas’s long-run visitor volume and spend are still near historical highs, even with the 2025 softness. Perhaps?
Let’s just hope Vegas doesn’t go the way of horse racing.
There is short term greedy and long term greedy; the latter is way better. Maybe they think it is like boiling the frog slowly; it won't notice but it seems they are noticing. An ALGO optimized world is short time greedy but it doesn't feel good and makes you look for alternatives.
If I can't make comments here, I'm O-U-T.