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31 December 2015
By Howard Stutz
Nevada gaming revenue rebounded in November, with the state and Strip recording just their second monthly increases in the past six months.
The Gaming Control Board said Wednesday Nevada casinos collected $944.3 million in gaming revenue in November, a 7.76% increase from a year ago.
On the Strip, gaming revenue jumped 5.38% to $535.6 million.
With one month left in 2015, gaming revenue statewide is up less than 1% with just three reporting markets — the north and south shore of Lake Tahoe and the Strip — showing year-over-year declines. Strip gaming revenue is down 1.2% through November.
"As has become the story for the last several months, (high-end play) is to blame with baccarat continuing to perform poorly," Macquarie Securities gaming analyst Chad Beynon told investors.
Baccarat revenue of $109.9 million was off 14.3% from last November with the amount wagered down 27.8% to $748.9 million. Analysts have said the Strip's baccarat results have experienced volatility in the past few months because of a slowdown in Chinese players.
"This drag should moderate given mostly easing baccarat growth comparisons," J.P. Morgan gaming analyst Joe Greff said.
Meanwhile, slot machine wagering boosted Strip casinos. Statewide, slot machine revenue grew 13.2% to $596.4 million even though volume was relatively flat at $8.5 billion.
Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski cautioned investors not to read too much into the Strip's gaming revenue totals. He said increases in nongaming areas, such as total visitation, convention business, revenue per available room figures, and property-level margins offer a clearer picture of the Strip's overall health. Strip casinos collect more than 60% of their revenue from nongaming sources.
"We encourage investors to keep in mind gross gaming revenue represents only one, and decreasing in relative importance we might add, source of cash flow for Strip resort operators," Wieczynski said.
Sports wagering was a bright spot in Nevada during November. Revenue grew 32.1% to $42.8 million while wagering of $557 million was a single-month record.
The biggest statewide gainers in November were in Clark County.
Downtown Las Vegas gaming revenue jumped 25%, North Las Vegas was up 23% and the Boulder strip increased 21.5%. Clark County as a whole saw gaming revenue increase 8.4%. Mesquite was the only Clark County market to report a gaming revenue decline in November.
Beynon said the strong numbers reported in the locals market — the balance of Clark County was up 9% — bodes well for Boyd Gaming Corp., which also has three casinos downtown.
"Boyd is seemingly becoming more of a growth stock, with four consecutive quarters of cash flow growth," Beynon said.
Gaming taxes collected by the state in December, based on November's gaming revenue total, grew 30.7% to $62 million. For the first six months of the fiscal year, gaming tax collections are up less than 1%.
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