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Best of Howard Stutz

Gaming Guru

Howard Stutz

A parallel universe? Reno outpaces Las Vegas in gaming revenue

11 June 2013

LAS VEGAS --Remember the original “Star Trek” television series episode titled “Mirror, Mirror,” in which members of the Enterprise crew were transported to a parallel universe with an alternate reality?

That was Nevada in April.

Reno bailed out Las Vegas.

Nevada gaming revenues fell less than 1 percent during April, but double-digit increases from Reno and Washoe County casinos saved the state from a larger decline.

The Gaming Control Board said Monday that gaming revenues collected by casinos statewide were $854.3 million, down 0.16 percent compared with $855.7 million collected in April 2012.

On the Strip, gaming revenues fell 2.34 percent to $448.6 million, compared with $459.4 million in the same month a year ago.

However, gaming revenues in Reno grew 15.36 percent to $44.1 million, compared with $38.3 million in April 2012. Reno’s casino market has been hurt over the past few years by the recession and business lost to Northern California Indian casinos.

Washoe County on a whole, which included a 2.99 percent increase from North Lake Tahoe casinos and a 5.8 percent decline in Sparks, grew gaming revenues 10 percent.

April, fueled by increased business brought by bowling’s USBC Open Championships, became Reno and Washoe County’s second straight positive month.

“The state was down about $1.4 million, the Strip was down $10.8 million, but Washoe County was up $5.4 million,” said control board senior research analyst Michael Lawton. “The bowling tournament marked the first time both the men’s and women’s events were taking place in the same month.”

Reno’s fortunes flipped with Las Vegas, where declines in baccarat and slot machine revenues ended two straight months of increased gaming revenue reports.

Still, for the first four months of the year, overall gaming revenues are up 4.7 percent on the Strip and 1.8 percent statewide.

Analysts did see some positives from April. Slot machine wagering was up 1 percent while table game play, other than baccarat, grew almost 8 percent. Also, April 2013 had one less weekend day than April 2012.

“While headline declines indicate a softer start to the second quarter, the slightly weaker calendar and positive trends in nonbaccarat and slot volumes keep us positive on the Las Vegas recovery,” Macquarie Securities gaming analyst Chad Beynon told investors.

JP Morgan gaming analyst Joe Greff said he expects the Strip to experience an “uneven” recovery with “some positives and some negatives” throughout the year.

Baccarat revenues and wagering on the Strip both declined in April. Casinos collected $64.6 million in revenues from the game, a decrease of 1.8 percent. Gamblers wagered $538.9 million on baccarat, down 17.2 percent from a year ago.

In April 2012, baccarat revenues grew 15.7 percent and wagering was up 32.6 percent.

“The comparison was going to be really tough coming in,” Lawton said.

For the first four months of the year, baccarat revenues on the Strip are up 20.7 percent.

Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said he wasn’t concerned about the overall April figure because he believes the Strip is positioned to build on recent visitation recovery momentum.

“Slot volumes, often a good gauge of domestic-sourced Strip health, improved modestly year-over-year,” Wieczynski told investors. “As we shift ahead into the busy summer travel season, we expect gaming volumes to be heavily tied to occupancy and rate trends, as a deceleration in the convention schedule places more responsibility on leisure travelers to drive summer results.”

Clark County as a whole in April saw gaming revenues decline by just less than 1 percent. The Strip’s decline, along with a 7 percent drop in gaming revenues downtown and an 11.45 percent drop in North Las Vegas, were offset by an 11.48 percent hike in Laughlin and a 5.77 percent increase along the Boulder Strip, which includes Henderson.

South Lake Tahoe casinos saw gaming revenues increase 14.48 percent.

Gaming tax collections in May, based on April’s gaming revenues, declined 2.78 percent to $47.2 million.

For the first 11 months of the fiscal year, gaming tax collections are up 3.25 percent to $621.3 million. Lawton said the figure is $2.1 million, or .35 percent higher, than the projections from the state’s Economic Forum with one month left in the fiscal year.