The Turbocharged Economic Impact of Formula 1 Racing in Las Vegas

A High-Stakes Gamble Pays Off for Sin City

Las Vegas, a city that thrives on spectacle and high-stakes entertainment, has added a thrilling new chapter to its storied history with the arrival of Formula 1 racing. The inaugural Las Vegas Grand Prix in 2023 was more than a motorsport event—it was an economic juggernaut that reshaped the city’s economic landscape. From attracting a global audience to creating jobs and driving innovation, the event showcased the transformative power of Formula 1.

With record-breaking revenues and long-term investments, Formula 1 has proven to be a pivotal force in diversifying Las Vegas’s economy. Here, we take a deep dive into the impressive numbers, immediate impacts, and lasting benefits of this high-octane spectacle.

What were the economic highlights of the Las Vegas GP?

A 113-page report analysing the pros and cons of hosting the Las Vegas GP in the city has been explored by Clark County officials.

A mammoth report produced by various Clark County agencies was debriefed amongst officials, with the economics of the report put together by Las Vegas firm Applied Analysis.

The report stated that the Las Vegas GP produced the largest global TV audience in Las Vegas history, and made a total economic impact of $884 million.

This includes $77 million in state and local taxes, which is the highest figure ever recorded for a single event in Las Vegas.

Gambling companies and casinos reported allegedly mixed results, with some casinos reporting plenty of footfall of high-end customers, with other casinos reporting the race weekend had scared off regular customers.

However, there were plenty of challenges and obstacles too. The report detailed various government agencies, law enforcement, and public works issues flagged – such as from water boards, the fire departments, and public transportation.

County staff spent over 17 thousand hours working on the Grand Prix, with 89 percent of these costs paid through licenses, fees, and permits.

Racing to Record-Breaking Revenue

The Las Vegas Grand Prix generated economic figures that left even the city’s seasoned event organizers astonished. According to data from Applied Analysis, the event created a total economic impact of $1.3 billion, making it one of the most lucrative events in the city’s history. Here’s how the numbers break down:

• Direct visitor spending: $884 million, as fans from across the globe splurged on accommodations, dining, and entertainment.
• Jobs created: 7,700, providing a significant boost to local employment.
• Tax revenue: $94 million, with a portion allocated to state and local services.

These figures not only underscore the financial power of Formula 1 but also highlight its potential to rival—and even surpass—other iconic events such as the Super Bowl.

Las Vegas is becoming a sports and entertainment hot spot

The Grand Prix in Las Vegas is not just a sporting event; it's a showcase of the city's prowess in delivering luxury experiences beyond gambling, especially in the sports and entertainment worlds.

"That consumer that's coming in for a sporting event or that consumer that's coming in for a concert is spending more than a traditional average visitor to Las Vegas," Aguero said. "And so that is something that is phenomenal that we have seen emerging for some time."

Boxing and mixed-martial arts events attract celebrities and high-end consumers to Vegas, and tickets to the local NFL games command high prices because visiting-team fans travel long distances and spend more.

The Las Vegas Convention and Visitors Authority said tourists spent an all-time high of $44.9 million in 2022, and total economic output related to visitor spending reached a record $79.3 billion, a 25% increase from the previous record set in 2019.

While spending on key categories like gaming, shopping, and rooms was down in 2022 compared to 2019, entertainment was the one category that saw the biggest boost.

Despite the record spending by tourists in 2022, the number of visitors fell from 42.5 million in 2019 to 38.8 million, the LVCVA said. However, per-trip visitor spending grew 33.4%, to a record $1,156 in 2022.

Revving Up Tourism: A Record-Breaking Weekend

Tourism, already the lifeblood of Las Vegas, experienced an unprecedented surge during the Grand Prix. Over three days, more than 315,000 fans flocked to the city, filling hotels and injecting new energy into the Strip’s economy.

• Hotel occupancy: Peaked at 94%, with most luxury accommodations booked to capacity.
• Average nightly room rates: Soared to $600, compared to the usual $225 in November, reflecting the high demand.

Beyond hotels, local businesses such as restaurants, bars, and entertainment venues reaped the benefits of this influx. High-end establishments reported record-breaking sales as visitors indulged in Las Vegas’s world-class nightlife and dining options. Even smaller businesses, such as souvenir shops and local eateries, saw a noticeable uptick in revenue, thanks to the diverse crowd Formula 1 attracted.

The Global Spotlight on Las Vegas

One of the most significant benefits of hosting Formula 1 is the global exposure it provides. Broadcasts of the race reached millions of viewers worldwide, showcasing Las Vegas as more than just a gambling hub. The event portrayed the city as a modern, cosmopolitan destination capable of hosting cutting-edge international events.

This kind of visibility has long-term implications for Las Vegas:

• Increased foreign investment: The global attention can attract investors looking to capitalize on the city’s growing appeal.
• Tourism expansion: The race inspired new visitors to plan trips to Las Vegas, ensuring sustained growth in the tourism sector.
• Business relocations: Companies may see Las Vegas as an attractive location for their headquarters or events, thanks to its proven ability to host high-profile gatherings.

A Long-Term Investment in the City’s Future

While the immediate economic impact of the Grand Prix is impressive, its long-term benefits are even more transformative. The Las Vegas Grand Prix is not just a one-time event; it’s part of a larger strategy to position the city as a global leader in entertainment, sports, and innovation.

• 10-year contract: Las Vegas is set to host the Grand Prix annually through 2032, creating a reliable source of revenue and opportunities for the city.
• $500 million F1 facility: This permanent structure will serve as a hub for motorsport activities and year-round events, contributing to job creation and tourism.
• Infrastructure upgrades: Investments in roads, transportation, and public facilities not only supported the race but also improved the city’s infrastructure for future use.

These initiatives reflect Las Vegas’s commitment to leveraging Formula 1 as a catalyst for sustainable economic growth.

Shifting Gears: Diversifying the Economy

Formula 1 has helped Las Vegas break free from its traditional image as a gambling-centric city. By embracing sports and technology, the city is charting a new course toward economic diversification:

• Sports tourism: The Grand Prix complements existing sports franchises, such as the NHL’s Vegas Golden Knights and the NFL’s Las Vegas Raiders, establishing Las Vegas as a premier sports destination.
• Technological innovation: Formula 1’s emphasis on cutting-edge technology, from aerodynamics to data analytics, aligns with Las Vegas’s ambitions to attract tech talent and investment.
• Educational opportunities: Partnerships between F1 and local institutions can inspire STEM programs and foster the next generation of engineers and innovators.

F1 spectators can drop 6 figures or more on viewing experiences

While F1 is known for attracting affluent spectators, the Las Vegas race comes with a steep price tag.

Three-day, standing-room tickets for the race sold for $500 and were snapped up within minutes, while grandstand seats started at $2,000 each. "Heritage" tickets, which offer premium hospitality, sold for $5,000 each.

The Nevada Independent reported that the average ticket price for this year's Las Vegas Grand Prix was $1,667, making it the most expensive F1 race in the world. This year's Miami Grand Prix was the second-most expensive, with an average ticket price of $1,113. Meanwhile, the average ticket to the Hungarian Grand Prix was just $184.

Challenges on the Track

Despite its overwhelming success, the Las Vegas Grand Prix wasn’t without its challenges. Addressing these issues will be crucial for ensuring the event’s future viability:

• Traffic disruptions: Extensive road closures and construction created significant inconvenience for residents, particularly those living near the Strip.
• Local business impact: While large hotels and entertainment venues thrived, some smaller businesses reported decreased foot traffic due to restricted access.
• Environmental concerns: The event’s carbon footprint, including emissions from international travel and race infrastructure, has drawn criticism from environmental advocates.

To mitigate these concerns, Formula 1 organizers are exploring sustainable practices, such as carbon offsets and eco-friendly event planning, while working to minimize disruptions for residents.

Vegas' F1 race impact will have a ripple effect throughout the area

While the race's economic impact will be huge in Las Vegas and the surrounding areas, Aguero noted that local governments and residents will also benefit from a huge tax windfall.

"This will be the single largest tax-collection event in Nevada's history by a fairly healthy margin," Aguero said. "We believe the net impact of Formula 1 will be about $87 million in tax revenue."

Half of that will come from hotel room and sales taxes directly linked to the F1 race and other live entertainment events that week, he said.

And so far, the cost of hosting the race appears to be minimal for the city and Clark County. Liberty Media, the American company that owns F1, recently said that they have spent approximately $400 million on construction and infrastructure improvements on top of the $240 million they spent on acquiring local land.

F1 has asked the county to help pay for the infrastructure portion, which is about $40 million, but that is still up in the air.

F1 also created the Las Vegas Grand Prix Foundation to help area charity groups and is supporting the "Million Meals Project," which aims to provide 1 million meals to local residents in need.

Economists have noted a recent surge in consumer activity and enthusiasm for experiences like live concerts and sporting events.

"As we emerged from the pandemic, our consumer research made clear it was the perfect moment for us to capitalize on pent-up travel demand," Kate Wik, the Las Vegas Convention and Visitors Authority's chief marketing officer, said in a press release. "We're thrilled to see not only the strong rebound in visitation but also the significant impact our visitors have on our state's economy."

A Community Affair: Bringing Residents on Board

The Grand Prix wasn’t just about economic gains—it also fostered a sense of pride among Las Vegas residents. Community outreach programs and local vendor opportunities helped integrate the event into the city’s cultural fabric. Educational initiatives tied to Formula 1’s technology and engineering aspects have also emerged, inspiring students and local innovators alike.

For local artists and performers, the event provided a global stage to showcase their talents, adding a distinctly Las Vegas flair to the international motorsport spectacle.

The Checkered Flag: A Win for Las Vegas

In its debut year, the Las Vegas Grand Prix proved to be more than just a motorsport event—it was a transformative force for the city. The economic benefits, measured in billions of dollars and thousands of jobs, have cemented Formula 1 as a cornerstone of Las Vegas’s future.

As the city continues to evolve into a global hub for sports, entertainment, and technology, Formula 1 serves as a shining example of how innovation and investment can drive lasting growth. With engines roaring and fans cheering, the Las Vegas Grand Prix is poised to remain a highlight of the city’s calendar for years to come.

Las Vegas has always been about bold bets, and this one is paying off in spectacular fashion. With its mix of glamour, excitement, and economic opportunity, the Las Vegas Grand Prix is driving the city into a future filled with potential—full throttle and unstoppable.

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