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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Nevada and Strip gaming revenues decline in February

1 April 2015

Maybe it was baccarat. Maybe the calendar was to blame.

In other words, analysts looked to make sense out of February’s gaming revenue results in Nevada where Strip casinos declined 4.4 percent and every reporting market in the state saw either a gaming revenue increase or flat results.

The Strip’s down month led to a statewide gaming revenue total of $916.1 million in February, a decline of almost 1.1 percent. Clark County revenue as a whole was off 1.7 percent because results other area locations, including a 10.6 jump in Laughlin, helped offset Strip declines.

The Gaming Control Board released the February results Tuesday.

The Strip had $531.3 million in gaming revenue during the month compared with $555.7 million in February 2014.

The statewide and Clark County declines in February followed solid increases in January. Statewide, casino revenue was up nearly 7.8 during the month while the Strip has a 15.4 percent increase.

Brent Pirosch, director of gaming consulting for the CBRE Global Gaming Group, had a simple explanation. He believes January and February should be compared on a combined basis. The dates of the lucrative Chinese New Year are a moving target. Last year, the holiday began on Jan. 31. This year, the holiday started on Feb. 19.

“Some of January’s collections may have been pushed into February, and some of February’s collections may be pushed into March,” Pirosch told the firm’s clients in a research report. “This collection scenario is similar to last year.”

On the Strip, baccarat revenue of $120.9 million was down 22.6 percent, which fueled much of the month’s decline. The amount wagered on baccarat fell 21.8 percent to $982.5 million despite the Chinese New Year holiday.

Gaming Control Board Senior Research Analyst Michael Lawton said baccarat volume has declined in six consecutive months. The revenue from baccarat has been down six out of the last seven months.

Gaming analysts speculated the downturn in baccarat business is an off-shoot of the downturn in baccarat play in Macau, where the Chinese government crackdown on corruption has targeted the region’s high-end junket operators who send players into Macau casinos.

“We do not expect the soft baccarat results to come as a surprise, as the weakness in Asian sourcing has been well-documented,” said Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski.

Deutsche Bank gaming analyst Carlo Santarelli said “baccarat volume had a negative influence on the numbers.”

Pirosch said February’s baccarat result coupled with January’s revenue of $147.2 million ensured the Strip surpassed the 2014 combined number. February’s hold percentage for baccarat — 12.4 percent — matched the figure from a year ago.

The declines in baccarat wagering, however, concerned Pirosch.

“Baccarat volumes are where they were in the recession era,” he said. “If the math kicks back in to the players’ favor, substantial declines could be on the horizon.”

Excluding baccarat, Strip gaming revenue was up 3 percent, helped by 5 percent increases in slot machine revenue. Lawton said slot revenue was up in every reporting area of the state and the amount wagered on the game has shown three straight monthly increases.

Sports betting revenue of $12.8 million was a 50 percent decline from a year ago. Sports book winnings from football dropped 70 percent to $4.7 million primarily because of the Seattle Seahawks failing to score a touchdown at the end of the Super Bowl and losing to the New England Patriots.

A year ago, the Super Bowl brought in $19.7 million in revenue. This year, the books collected $3.3 million.

There was good news in Northern Nevada where casinos in Reno, coming off a 14.2 percent gaming revenue increase in January, grew gaming revenue almost 3.4 percent in February.

Nevada collected almost $58 million in gaming taxes during March based on February gaming revenue, a decline of 1.64 percent from a year ago.

For the first nine months of the fiscal year, gaming tax collections are up 1 percent.