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Howard Stutz

Gaming Revenue: Super February for State Casinos

11 April 2006

The last few days of Chinese New Year and a raucous Super Bowl weekend gave Nevada casinos their highest February gaming revenue total ever and the second straight month that resorts collectively won more than $1 billion from customers.

February's statewide gaming revenue, released Monday by the Nevada Gaming Control Board, showed casinos reporting $1.03 billion in gaming win, a jump of 12.84 percent from the $909.5 million won in February 2005. On the Strip alone, casinos collected $551 million from gamblers, a 19.1 percent increase from $462.7 million a year ago.

In the year's first two months, Nevada casinos have won almost $2.2 billion, a 15.7 percent increase compared with $1.8 billion won in the first two months of 2005.

"We wanted to see what the impact of Chinese New Year would be since it fell over two months," said Frank Streshley, the Gaming Control Board's senior research analyst. "Combined with the wagering brought about by the crowd coming in for the Super Bowl, it was a very good month."

Pittsburgh's 21-10 victory over Seattle in Super Bowl XL brought a record $94.5 million wagered on the game, in which the state's 176 sports books won $8.8 million. Still, evidence showed that customers coming in casinos for the Super Bowl bet on more than just the game.

Statewide, table game win was $366.4 million, a 15.5 percent increase from a year ago; slot win was $647.5 million, up 11.2 percent compared with $582.4 million in February 2005.

Chinese New Year helped fuel an increase in baccarat win. State casinos won $79.4 million from baccarat players, a 35.6 percent increase from $58.5 million a year ago.

"Weather wasn't an issue and the Super Bowl weekend was a huge boost to the state," Streshley said.

He said February was the 19th straight month Nevada casinos collectively had positive growth.

Gaming analysts said that once again, Strip resorts drove the state's proverbial engine.

Deutsche Bank gaming analyst Marc Falcone said gaming revenues are becoming a better figure to judge success than Wall Street's "revenue per available room" average, which computes revenue generated by each rented hotel room. Room rates have increased in the past year, as have the number of hotel rooms.

"Like January, we believe February's solid results confirm our positive outlook for the Strip, as continued strong gaming revenues and demand across the board could more than offset slower (revenue per available room) growth," Falcone said in a note to investors. "We believe that the market needs to shift its focus from (revenue per available room) to total revenues, as operators are facing increasingly tough room rate (comparisons) in 2006."

Streshley said a Feb. 25 superwelterweight championship boxing match between Shane Mosley and Fernando Vargas at Mandalay Bay gave the month one last push as free-spending fight fans flocked to the Strip.

Clark County casinos won $870 million from gamblers, a 13.6 percent increase compared with $765.8 million in February a year ago.

"The locals market also posted strong gains," Bear Stearns gaming analyst Joe Greff said in a note to investors. "We think this strength bodes well for Station Casinos and Boyd Gaming Corp. and supports our 'outperform' ratings on shares of both."

Only two areas of the state posted a year-over-year decline in gaming revenues. Revenues at North Lake Tahoe's casinos fell 9.32 percent; bad weather was blamed for reducing travel to the region.

Meanwhile, casinos in downtown saw gaming win tumble 6.97 percent, from $58 million a year ago to $53.9 million in February, the eighth time in the past 10 months those casinos collectively have posted losses. In January, downtown gaming win was up 15.4 percent from the year before.

Streshley said the closing of the Lady Luck in mid-February for a yearlong renovation played a part in diminishing downtown's gaming win.