Vegas residencies are more popular than ever, but the city’s changing demographic will force artists to be strategic before they go all in.

But it might be hard for everyone to keep this same energy. Vegas guests gamble less than they used to, much to the city’s concern. The Vegas entertainment machine also thrives on scarcity. If every mainstream rapper forgoes touring for residencies, the allure may wear off. Just like in real life, too much Vegas can be problematic for everyone.

From afar, everybody’s winning. Artists earn guaranteed money and perform in front of smaller crowds. Casinos get rich off the customers that come through the door. And fans get to see their favorite artists in a hot destination. It feels like one of Diddy’s Ciroc commercials has come to life.

The Las Vegas residency landscape has transformed in recent years. Britney Spears, Jennifer Lopez, and Lady Gaga have each earned eye-opening amounts of money. Their runs paved the way for hip-hop’s heavyweights to join in. And now that Drake and Cardi are locked in, expect more rappers to get in while it’s hot.

In the past month, Drake, Cardi B, and French Montana joined the wave of artists who have made Las Vegas their home away from home. Casinos in Sin City have lured in music’s top acts with lucrative residency deals. Drake’s partnership with The Wynn’s XS Nightclub guarantees him $1 million per show. After all is said and done, he will likely earn more per show than he did on tour last summer with the Migos.

Residencies are lead generation for gambling profits

Standard music venues rely on alcohol sales to drive profits. Ticket sales are a means for venues to sell fans $10 Bud Lights. But music venues in Vegas resort casinos take that to another level. Their goal is to get folks in the building, take their money at slots, tables, and everything else possible. Here’s a quote that entertainment lawyer Bernie Resnick shared with Forbes about the business model:

“Any star’s fee to play Las Vegas is fair because, bluntly, the casino promoters are not particularly concerned with who is on stage or in the ring. What casinos care about is whether the presence of the star will increase their nightly gambling profits, known as the ‘drop.’ If the star significantly increases the drop, the casino is justified in sparing no expense to stage a spectacular event.”

Guests who have enough disposable income to spend $209 on a Jennifer Lopez concertare more likely to increase the drop throughout their stay. That’s why The Wynn launched a bidding war to land Drake. The ticket revenue from Drake’s shows won’t cover his $1 million guarantees, but the casino hopes that the drop will.

Back in 2014, Planet Hollywood reported that its earnings rose $20 million in the first year of Britney Spears’ residency. It’s overly generous to attribute all those gains to Spears, but that’s a common issue with economic studies for most events. Also, Britney’s show succeeded in a vacuum. She had little competition in Vegas from other artists in her generation.

Despite its flawed perception, Planet Hollywood’s $20 million increase in earnings still carries weight. It influences more popular casinos—like The Bellagio or The Venetian—to try and replicate the same success with other artists.

Artists with millennials fanbases will face challenges

In 2017, millennials surpassed Generation X as Las Vegas’ largest touring demographic. This is a looming concern for casinos since millennials gamble much less than past generations do. Today’s rappers attract large millennial fanbases, so the gambling drop will be less significant than it was for past artists.

Vegas eagerly wants to offset the declining gambling revenue by offering millennials “experiences” and Instagram-able moments. Casinos have invested heavily in renovations and activities to cater to this generation. But can a new zip-line through The Strip make up for the declining number of guests who would drop $100 in a slot machine on a whim? Probably not. (I’ll be honest, the last thing I’m about to do after a Drake concert is ride a damn zip-line through Las Vegas Blvd)

If casinos can’t overcome the generational shift, the lucrative guarantees will shrink. Some casinos may look more favorably at artists with larger Generation X fanbases, like Janet Jackson or Usher. Both names could draw fans that are more likely to gamble, but that’s a temporary tactic that can’t overcome the changing landscape.

Newer artists may also grow tired of performing for the millennial fanbase in Vegas. These newer residencies are marketed towards fans who would spend $200+ on a Vegas residency show, then pay additional money for VIP access and other perks. These campaigns target the same type of the people who flew out to “Pablo Escobar’s private island” for the disastrous Fyre Festival. If an artist only cares about securing the bag, then it’s not an issue. But some rappers might gets frustrated performing for influencers who are just there to stunt for the ‘gram.

The Strip doing its best to cater to millennials (Photo via MintPress News)

Making the most of the opportunity

The Wynn and Drake might have struck the right balance. His ten shows at XS will be spread across the next two years. He can build anticipation for his shows and maintain his other business interests. It also decreases the likelihood of him competing with other rappers who might perform on the same night.

Artists like Drake will selectively choose their show dates. Vegas is busy during the summer for bachelor and bachelorette parties, big sports weekends, and holidays. Casinos will want big names for these weekends.

While Drake still has a large millennial following, his mass appeal may temporarily protect him from the demographic trend in Vegas. An average artist will feel it much sooner. These performers should consider alternative events that can be just as advantageous.

Professional conferences and conventions are some of the best money grabs out there. A few years ago, Salesforce paid the Foo Fighters a rumored $1.25 million to perform its annual Dreamforce conference in San Francisco. These events bring in thousands of high-net-worth individuals who are willing to spend both corporate and personal money.

Smaller acts should consider performing at events surrounding annual conferences by the National Black MBA Association, National Society of Black Engineers, and the Congressional Black Caucus. These events are much smaller than Dreamforce, but there’s a captive audience that already follows hip-hop. The musical acts that typically perform at these events are often B-list rappers and R&B artists from past generations. There’s an opportunity for more current artists to liven up the landscape and earn some money, just like they have in Vegas.

Before the year’s over, even more artists will announce residencies in Vegas. And soon after, expect a wave of journalists to write articles that say that “there are too many Vegas residencies and the market is saturated.” Those articles will be both right and wrong. They’ll be right because the pie is only so big, but they’ll be wrong because the lack of gambling will curb residencies before the saturation can truly set in.

The real question is which artists will stick around in Vegas as millennials continue to take over. Will artists from the 90s get called up to help squeeze the gambling money from their fans? Or will Drake and Cardi B overcome the declining trend? It might be neither, which is Vegas’ biggest fear.

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