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Best of Howard Stutz

Gaming Guru

Howard Stutz

Nevada gaming revenues decline 11.1 percent in November

11 January 2013

LAS VEGAS -- There is no way to sugarcoat November's gaming revenue totals in Nevada.

However, an 11.1 percent statewide gaming revenue decline during month, coupled with a 12.8 percent drop on the Strip, were not a total surprise.

One reason for the decline? Analysts said the Strip hold figures - the amount of money from wagers that casinos earned versus the percentage collected by customers - were lower than a year ago at both gaming tables and slot machines.

Also, because November ended on a weekend, accounting rules for slot machine collections pushed some revenue totals into December.

Lower baccarat volumes and a 145 percent downward swing in casino revenues from sports wagering also figured in the decline.

"While we do believe there was some softness in the month, we think headline numbers overstate the declines," Macquarie Securities gaming analyst Chad Beynon told investors Wednesday.

Statewide, casinos collected $782.6 million from gamblers during the month, compared with $880.1 million collected in November 2011. The monthly total was the lowest recorded in Nevada since June 2010.

On the Strip, casinos collected $431.8 million in gaming revenues, compared with $495.2 million a year ago. The total was the lowest single month amount since April 2011.

The Gaming Control Board released the numbers Wednesday.

"November's result was not as bad as the headline number suggests," Susquehanna International Group gaming analyst Rachael Rothman said. "Hold was the major driver of the year-over-year decline."

Some analysts blamed fighters Manny Pacquiao and Juan Manuel Marquez for November's gaming revenue drop-off.

In a November 2011 match, Pacquiao won a split decision from Marquez. In a fight in December, Marquez knocked out Pacquiao. Both fights were held at the MGM Grand Garden.

Heavy high-end baccarat action usually follows championship fights. November's revenues totals suffered because the numbers had to compare with a large month the year before.

Consequently, analysts expect December to shine because of the most recent Marquez-Pacquiao fight.

During November, Strip baccarat revenues declined 25.4 percent to $66.4 million. The amount wagered on baccarat was down 16.4 percent to $546.3 million. Casinos held 12.2 percent of the wagers, down from 13.64 percent in November 2011.

Meanwhile, nonbaccarat table game volumes were up 4.8 percent and slot machine wagers grew 3.6 percent.

"Results are still slightly below recent investor expectations," JP Morgan gaming analyst Joe Greff said. "All in all, we believe these results point to a continued uneven recovery on the Las Vegas Strip, with some positives and some negatives."

Casinos statewide lost $8.2 million on sports wagering in November, mainly because college football and professional football where favorites covered the point spread more often than not.

"It was anomaly, especially the first weekend of the month," Gaming Control Board Senior Research Analyst Michael Lawton said.

For the first 11 months of 2012, gaming revenues are up 0.7 percent statewide and up 1.2 percent on the Strip.

Statewide during November, gaming revenue totals fell in every reporting regions except the Lake Tahoe markets and Elko County.

Clark County gaming revenues as a whole fell 13 percent in Nevada as every reporting area showed year-over-year monthly declines. Casinos along the Boulder Strip reported a 26 percent decline in gaming revenues while revenues were off 24 percent in North Las Vegas.

Downtown Las Vegas gaming revenues declined 17.2 percent.

Despite the month, Well Fargo Securities gaming analyst Dennis Farrell Jr. believes Las Vegas is in a gradual recovery.

"Volatility is likely going to continue, as cautiously optimistic management commentary encounters challenging gaming comparisons," Farrell said.

November's results ended two straight months of gaming revenue increases.

Gaming taxes collected in December based on November gaming revenues were $45.7 million, a decline of 20.2 percent over the same period a year ago. For the first six months of the fiscal year, gaming tax collections are up 1.4 percent.