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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Nevada gaming revenues hit $1 billion in May

29 June 2015

Who needs baccarat?

Gaming revenue statewide topped the $1 billion mark in May — Nevada’s first billion-dollar month since December 2013 — thanks to regular table game players and slot machine customers attracted to the Strip by a slew of special events during the month.

Statewide, casinos collected $1.003 billion from gamblers, a 3.3 percent increase over May 2014. On the Strip, casinos collected almost $601.2 million during the month, an increase of 1.4 percent.

The figures were released Friday by the Gaming Control Board.

Analysts dismissed the percentage increase, saying the state and the Strip were up against a tough comparison. In May 2014, gaming revenue jumped 8.2 percent statewide and 17.3 percent on the Strip.

“The results were much stronger than the headline number would suggest given an extremely tough hold related comparison in Strip baccarat,” Well Fargo Securities gaming analyst Cameron McKnight told investors. “We were encouraged by strong slot and non-baccarat table growth.”

The various special events contributed to a record 3.74 million tourists coming to Las Vegas in May, according to the Las Vegas Convention and Visitors Authority. The previous single-month record was 3.688 million visitors in March 2014.

The gaming revenue increase on the Strip was the result of table games and slot machine activity, not high-end baccarat revenue. Table games excluding baccarat saw revenue grow 22.9 percent to $191.1 million and wagering increased 22.7 percent. Slot machine revenue increased 11.9 percent to $272.5 million, while the amount wagered on games grew 6.2 percent.

Control Board Senior Research Analyst Michael Lawton said slot machine volume has increased in 10 of the last 12 months.

“That’s the long-term trend we’ve been waiting to see,” Lawton said.

Brent Pirosch, the director of gaming consulting for CBRE in Las Vegas, said the Strip hadn’t reached the $600 million threshold since December 2013.

“This was also the biggest May performance since the halcyon days of 2006 and 2007, and, outside those heady years, this May generally compares well above any other May in Strip history,” he said.

As for baccarat, revenue from the game declined 36.1 percent in May to $109.8 million and wagering fell 7.4 percent to $956.6 million. A year ago, baccarat revenue on the Strip increased more than 85 percent.

Several analysts said the soft baccarat numbers might be attributed to the decline in high-end baccarat play in Macau.

Since last year, the Chinese government has been cracking down on corruption by junket operators who bring high-end customers to Macau’s casinos. Although the junket operators have zero influence on the Strip, analysts there may be small out being witnessed in Las Vegas.

“The high-end baccarat comparison was very challenging,” McKnight said. “All in, we think the results were encouraging given the growth in slots and non-baccarat tables.”

Meanwhile, the championship fight between Floyd Mayweather Jr. and Manny Pacquiao at the MGM Grand Las Vegas on May 2, plus the two-weekend Rock in Rio concert series, brought thousands of visitors to the market. An Ultimate Fighting Championship card took place in late May at the MGM Grand.

“We believe the second quarter is off to an encouraging start for Strip operators, particularly those less dependent on the high-end internationally-sourced baccarat segment,” said Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski.

“Additionally, we would note strength in traditionally domestically-sourced games often produces healthier returns across the various non-gaming segments, including lodging and food and beverage, which should benefit Strip operators’ second quarter results,” he added.

For the first five months of the year, gaming revenue is up 2.3 statewide and 1.6 percent on the Strip. Only one market, the North Shore of Lake Tahoe, is down for the calendar year.

Visitor volume in Las Vegas increased 4.8 percent in May. For the first five months of the year, more than 17.4 million visitors have a come to Las Vegas, an increase of 1.3 percent over the 2014.

Citywide hotel occupancy in May reached 91.2 percent and the average daily room rate was $130 a night, up 2.1 percent.

Three Clark County markets — downtown, North Las Vegas and the Boulder Strip — all experienced double-digit gaming revenue increases during May.

Gaming taxes collected by the state in June that were generated in May grew 14.3 percent from a year ago to $62.8 million.

For the fiscal year, gaming tax collections are up 2 percent.
Nevada gaming revenues hit $1 billion in May is republished from CasinoVendors.com.