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Best of Howard Stutz

Gaming Guru

Howard Stutz

Las Vegas casinos suffer drop in March

11 May 2007

LAS VEGAS, Nevada -- Timing issues aside, March was a challenging month for Nevada's casinos.

With a vast portion of the slot machine revenue generated at the end of the month falling into April's totals, state casinos reported an overall gaming win of $1.054 billion in March, a decrease of less than 1 percent compared with $1.063 billion collected from gamblers in March 2006.

The monthly figures were released Thursday by the Gaming Control Board.

On the Strip, casinos also saw a less than 1 percent decrease in gaming win, collecting $543.7 million in March, compared with $546.3 million a year ago.

Frank Streshley, the control board's senior research analyst, said that because March ended on a Saturday, many casinos won't count the revenues generated by slot machines until after the weekend is over.

"On a positive note, we had one extra Saturday in the month," Streshley said. "But because of the way slot win is reported, April stands to benefit despite March showing an all-time record for coin-in (amount wagered on slot machines) both statewide and on the Strip."

Gamblers wagered $12.5 billion on slot machines, an increase of 3.6 percent over March 2006. On the Strip, $4.6 billion was gambled on slot machines, a jump of 1.8 percent.

However, the win on slot machines statewide was $709 million, a 2.9 percent decrease from a year ago, and the slot win on the Strip was $295.1 million, down 2.6 percent.

Justin Sebastiano, a gaming analyst for Nollenberger Capital Partners, told investors the gaming win would have increased 3.2 percent in March had the final weekend's slot machine revenues been counted.

"Slot win data is skewed due to the timing of when coin is pulled from the machines," Sebastiano said in a note to investors. "Typically casinos do not 'drop' their machines on the weekend because it is the busiest time. As such, slot win is left in the machine over the weekend and is counted in the following month's numbers."

Because the slot win was pushed into April, Sebastiano thought casino companies were looking at strong second-quarter earnings.

"MGM Mirage generates about 80 percent of its revenue and (cash flow) from the Las Vegas Strip," Sebastiano said. "Management stated on its (first-quarter) conference call that slot revenues in April were strong, and we believe that good momentum continued into May."

The 339 Nevada casinos participating in the report collected wagers of more than $15 billion. The casinos won $709 million from slot machines and $330.5 million from table games.

Streshley said the issue surrounding the timing of slot machine revenue accounting also affected the Las Vegas locals casino market. Gaming win from North Las Vegas casinos was down 20.5 percent while Boulder Strip casinos, which include parts of Henderson, were off 16.4 percent.

Only the balance of the county showed an increase in gaming win during March, collecting $119.7 million, an 11.3 percent jump over $107.6 million a year ago.

Bear Stearns gaming analyst Joe Greff calculated the overall locals gaming market as dropping 3.6 percent in total gaming win, following a 4.8 percent increase in February.

"We note that the balance of Clark County results are positively impacted by the presence of the Red Rock Resort in the 2007 results," Greff said. The Summerlin casino didn't open until the middle of April 2006.

Casinos in downtown Las Vegas suffered their 10th straight month of declining revenues, reporting gaming win of $55.3 million, a 7 percent decrease compared with $59.5 million a year ago.

Despite the slot machine accounting challenges, March was not a particularly strong gambling month, Streshley said, especially for table games. Most of the high end play on the Strip takes place February because of Chinese New Year and Super Bowl weekend.

"March is traditionally not a real good table games month," Streshley said. "We only had a few mid-level concerts and very few special events."

Baccarat win, which is a barometer of high-end business, was $36 million -- down 1 percent from the previous year.

Sports books won $10.1 million from gamblers in March, a decrease of 26.6 percent from a year ago. Streshley said sports book operators put the blame on favorites predominately covering during the first few rounds of NCAA Basketball Tournament in early March. Gamblers, he said, tend to wager on the favorites.