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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Nevada gaming revenues dip slightly

14 May 2010

LAS VEGAS, Nevada -- It was back to normal for Nevada casinos in March -- or what portends to be the new normal.

Gaming revenues fell by less than 1 percent during the month following February's double-digit increase, the first such climb in almost three years.

On the Strip, gaming revenues increased 2.4 percent, the second straight monthly increase for the tourist market. As in previous months, Strip casino results were helped along by a hefty boost from high-end play.

The Gaming Control Board released the figures Tuesday with predictions that Nevada casinos may see similar results over the next few months as the economy recovers and customers slowly return.

"We're entering a period where the market relies more on the leisure traveler or convention business and less on special events," said Frank Streshley, chief of the control board's tax and license division.

"People keep using the term 'at the bottom.' I think we're going to be bouncing along the bottom for quite awhile," Streshley said. "We don't see any reasons for major declines or major increases compared to last year's figures."

State casino operators collected $912.2 million during March, a decline of 0.66 percent compared with $918.2 million collected from gamblers in March 2009.

On the Strip in March, casinos collected $467.1 million from customers, a 2.4 percent increase compared with $456.1 million collected from gamblers in the same month last year.

In February, Strip casinos were boosted by high-end baccarat customers in town for Chinese New Year and Super Bowl weekend. The events help spur the Strip to a massive 32.9 percent jump in gaming revenues, the largest single-month increase in more than 10 years.

March did not have the volume of baccarat play found in February, but the money wagered was still enough to kick-start Strip results. Gamblers wagered $625.5 million on the game, up 35 percent from a year ago, and casinos collected $52.7 million, an increase of 59 percent.

Without baccarat, state gaming revenues would have declined almost 3 percent, Streshley said.

JP Morgan gaming analyst Joe Greff said March's baccarat totals marked the 11th consecutive month of year-over-year growth in baccarat win. Still, analysts were expecting a good month.

"As most companies have already reported first-quarter results at this point, we note that March gaming revenue results are by and large academic," Greff told investors.

For the first three months of the year, gaming revenues are up 3 percent statewide and 9.8 percent on the Strip.

"It's a good start," Streshley said. "We're still off back to where we were a few years ago, but the year has started off nicely."

Jacob Oberman, who follows the gaming industry for real estate firm CB Richard Ellis, told clients that international visitation, which provides much of the high-end play, will be the Strip's primary driver for economic growth in the long run.

"In the short term, however, Las Vegas could be facing some headwinds in this regard," Oberman said. "Over the past few years, the proportion of visitation and revenue from international visitors has been increasing. The increase has been a function of rapidly rising Asian and emerging-market economies, which have grown at a much faster rate than the U.S. economy, and the euro and Canadian dollar that have steadily strengthened against the U.S. dollar, increasing the spending power of those visitors."

Clark County on a whole saw gaming revenues decline 0.89 percent in March. Laughlin, which reported a 2.47 percent increase in March gaming revenues, was the only Clark County reporting area other than the Strip that showed a monthly jump.

The increase helped Laughlin erase 27 straight months of declining revenues.

Streshley said Laughlin's figures were a bit of surprise because the market is now competing for customers with Las Vegas because of low hotel room rates.

Downtown casino revenues were off 10.62 percent in March while North Las Vegas casinos saw an 11.75 percent gaming revenue decrease.

The state also saw a record month for basketball wagering, brought about by the NCAA basketball championship. Sports books collected $264.1 million in basketball wagers during the month, which includes professional basketball games. The figure was a monthly record. The win for casinos was $19.9 million.

"The book operators are saying that March Madness gets bigger every year," Streshley said. "What's good about it is that it brings customers in during the midweek."

Statewide gaming tax revenues increased 6.85 percent in March, helped by the collections of outstanding markers from high-end play in February. Nevada collected $79.9 million during the month, up from $74.8 million in the same month last year.

For the first 10 reporting months of the fiscal year, Nevada has collected $532.9 million in gaming revenues, down 3.58 percent for the same 10 months in the prior fiscal year.