Why Las Vegas Casinos Won't Gamble On Cannabis
In June 2023, real estate entrepreneur Alexandre Rizk opened The Lexi on West Sahara Avenue, just off The Las Vegas Strip as Sin City's first cannabis-friendly hotel. The 46-year-old Rizik thought he had a 'genius, million-dollar idea.'
Smoking weed is only allowed on The Lexi's fourth floor, where every room is outfitted with air filters and every suite is numbered 420. The Lexi was the second cannabis-friendly hotel Rizk had opened after the Clarendon in Phoenix, Arizona, and he had ambitious plans to expand his weed-hotel concept under his Elevations brand across the West, from California to Oregon and become the 'Kimpton of cannabis.'
Rizk soon realized that being cannabis-friendly was not really an edge in Las Vegas: While cannabis consumption is officially banned in casinos and on The Strip, enforcement is very lax. Rizk says many well-known properties turn a blind eye to their patrons' vaping and other pot use.
Within five months of launching The Lexi, Rizk knew he had made a mistake as occupancy topped out at 30% and he started losing bids to host weddings and other group events to competitors who don't cater to cannabis consumers. Rizk sold the Clarendon and is in the process of rebranding The Lexi. After he stopped advertising the property as cannabis-friendly, occupancy jumped 15%.
'Unfortunately, this venture could cost me my entire career,' says Rizk, who personally invested $5 million into the 64-room, adults-only hotel, which he bought with other investors for $12 million in 2022. 'It brings a stigma to the property that it is a pothead gathering and most people don't want to be associated with it.'
Despite Rizik's cautionary tale, Las Vegas is perpetually wrestling with how to integrate cannabis and casinos, particularly now that gaming revenue has declined this year. Visitor volume in Las Vegas is also down 6.5% from January 2025 through April 2025, according to the Las Vegas Convention and Visitors Authority. Even visitor satisfaction has declined. Eighty-seven percent of visitors in 2024 said they were 'very satisfied' with their visit, down from 94% of visitors in 2019, according to the 2024 Las Vegas Visitor Profile Study.
Meanwhile, gaming revenue from casinos on the Strip is down 3.3% during the last nine months compared to the same period last year, according to the Nevada Gaming Control Board. In 2024, casinos on the Las Vegas Strip collected $8.8 billion from games alone, a 1% decrease from $8.9 billion in 2023. While total revenue from gambling, hotels, food and drink and attractions along the Las Vegas Strip hit a record of $22 billion, up 6.8% over 2023, profits tanked 40% compared to 2023.
But cannabis is not the answer.
The city, where 42 million tourists flock every year to indulge in legal vices, already hosts several major cannabis conferences every year, including MJBizCon, Women in Cannabis Expo and the Nevada Cannabis Awards Music Festival. The state legalized medical marijuana in 2001 and recreational marijuana in 2020, but thanks to federal law and Nevada gaming rules, casinos cannot invest in or be a part of the state-regulated marijuana trade without risking losing their gaming license. Nevada's legislators have gone further and instituted rules that ban dispensaries within 1,500 feet from a licensed casino and forbids them from delivering legal orders on The Strip.
More than anything, gaming operators have a lot to lose by sanctioning cannabis use. In 2024, Wynn Resorts generated $2.6 billion in revenue from its two Vegas properties, Caesars Entertainment's eight properties in Vegas posted $4.3 billion in revenue and MGM Resorts' eight properties brought in $8.8 billion in revenue. These three companies combined make nearly half as much as the entire $32 billion in sales the U.S. cannabis industry posted in 2024. All casinos on The Strip generated $22 billion last year.
In other words, doing business with the cannabis industry would be a death sentence for casino operators. Soo Kim, the chairman of Bally's Corporation, which is building The New Las Vegas Stadium on the former site of the recently demolished Tropicana to be the home of the Athletics baseball team once they relocate from Oakland, says incorporating cannabis into any casino is a nonstarter.
'Gaming is part of the federal banking system, so the problem with cannabis is that [gaming operators] cannot be in it because it is federally prohibited,' he says.
And even if federal law does change and casinos can legally open a cannabis consumption lounge within the property, Kim says he is still not high on the idea.
'I'm not sure it would be a big draw to the business,' says Kim. 'I don't see it right now.'
Seth Schorr, CEO of Fifth Street Gaming, which operates the Downtown Grand Hotel and Casino in Las Vegas, does not share Kim's skepticism. Schorr says casinos should find a way to capitalize on cannabis, but admits that it is 'no silver bullet.' Still, Schorr believes 'you need all the tools in the toolbox, even if it helps with just a few points. It's important in Vegas to think about the next ten years and cannabis has become an acceptable form of entertainment.'
Despite The Lexi's troubles, a plurality of gamblers who participated in a poll published by the Cannabis Policy Institute at the University of Nevada, Las Vegas in May said they want to enjoy cannabis and gambling at the same time. The poll found that about 40% of respondents would gamble at a casino that allowed cannabis consumption, while 29% would not want to and 30% said a pro-cannabis policy would not tip the scales either way. Fifty-nine percent of respondents said their gambling habits would not change if allowed to gamble and ingest cannabis, while 24% said they would gamble more and 19% said they would gamble less. And 70% said they would be in favor of a hotel and casino having a designated cannabis consumption area.
Riana Durrett, a gaming attorney and the director of the University of Las Vegas' Cannabis Policy Institute who helped conduct the survey, says she understands why the two 'sins' of cannabis and gambling are siloed to prevent gaming operators from running afoul of federal law, but she says Nevada's strict rules go beyond protecting the city's multibillion-dollar gaming industry from violating the Controlled Substances Act. Durrett says gaming regulators and operators who are not willing to at least ask questions about how the two industries can be more symbiotic are pushing aside the fact that in America today more people consume cannabis daily than alcohol.
'We do a good job at regulating vice: you can gamble, you can visit a sex worker, you can consume cannabis, but we have these overly broad artificial barriers between cannabis and gaming that are not even effective,' she says, explaining outright banning legal marijuana gives the black market a good hand at casinos. 'We need to have a realistic discussion and approach to how to license the activities that are already happening and obtain the revenue that's being lost to the illegal market.'
Brendan Bussmann, the managing partner of B Global, a consulting firm focused on gaming and hospitality, says Las Vegas' greatest skill is its ability to offer entertainment to the masses, but that the anything-goes debauchery Sin City is famous for is like a David Copperfield show—largely an illusion.
'Yes, you can have gaming here, and yes, you can have fun in a host of different ways,' says Bussmann, 'but we're not here to say there are no rules.'
Bussmann compares the cannabis conversation to prostitution, which many mistakenly believe is legal in Las Vegas. In fact, it is illegal in Clark County, but legal in about 20 licensed brothels across six of Nevada's 17 counties.
'You can easily 'go over the hump to Pahrump', the closet place to Las Vegas where prostitution is legal,' says Bussmann, 'but that was designed on purpose to [clean up] the act of gaming' from its start as a Mafia-controlled enterprise to one now owned by corporate giants.
When it comes to risk, it would be foolish for any one casino to delve into the federally illegal world of weed, even though 39 states have some kind of regulated sales.
'[Cannabis] is in direct violation of federal law, so gaming cannot take the same liberties that other businesses may,' says Bussmann. 'And while the voters of Nevada have approved this, no conversation should even consider it.'
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