Gambling in Las Vegas

I have not watched the movie 21 but I read the book, Bringing Down the House, on which it is based. Unlike many people with reservations about whether gambling is properly considered a legal industry, I am fascinated with the economics that underlies the casino business. Las Vegas is proof in my view that some of the worst fears about gambling is often overstated and may be unfair. Without overstating it, the success of enterprises in Las Vegas proves that this industry ought to be lightly regulated and subjected to a tax as other economic activities.

According to this piece in the Economist, demand for gambling in Las Vegas casinos is considerably lower too as a result of the general downturn in the US economy. Occupancy rates as the famous hotels has dropped from the customary range of 90%-95%. There's more reason to worry because this has coincided with an expansion period that may cause an oversupply of rooms. No one would doubt that the appropriate response would require that a reduction of costs be undertaken especially noting that return on capital has maintained at 14-15% more recently.

This merely confirms to me that gambling and the entertainment in Las Vegas is subject to the same laws of economics which show that the high returns will create an incentive for new entry into the market. The more profound one is that demand for gambling services is elastic and responds to the other conditions in the market that affect income. And just to add to it, more credit to Harrah's for hiring a former professor of economics as manager. One more option for employment opportunities for professors who have taught that banning gambling may be popular but certainly inefficient and bound to fail. As the piece confirms, Las Vegas is even less dependent on the casino operators even if it is unclear that this is a definite trend.