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Howard Stutz

Nevada gaming revenues fall, but analyst heralds slot play

5 August 2013

LAS VEGAS -- A more than 10 percent decline in gaming revenues on the Strip during June was directly attributed to poor results from baccarat play.

But that’s just part of the story.

One analyst pointed toward a third straight month of increased slot machine wagering inside Strip casinos as the “best metric” for determining if a Las Vegas recovery is taking hold.

The Nevada State Gaming Control Board Gaming Commission said Friday that Nevada casinos collected almost $792.5 million from gamblers in June, a decline of 4.81 percent compared with more than $832.5 million collected in the same month a year ago.

On the Strip, gaming revenues fell 10.1 percent in June to $434.7 million.

Sterne Agee gaming analyst David Bain said the increased slot machine volume — 0.2 percent in June, 1.7 percent in May and 1.1 percent in April — were indicators that Strip casinos are seeing a return of midlevel customers.

“We continue to believe correlating factors, as well as several other data points, point to Strip upside relative to consensus,” Bain said.

Revenues from slot machine play on the Strip increased 3 percent.

Baccarat was the culprit for the Strip’s decline.

Revenues from the game decreased 48.9 percent to $52.7 million in June. The money wagered on baccarat also declined 16.8 percent to $690 million. The hold percentage — the money kept by casinos — fell to 7.63 percent from 12.42 percent in June 2012.

Gaming Control Board Senior Research Analyst Michael Lawton said the difference between hold percentage and the absence of a major championship fight — Manny Pacquiao fought Tim Bradley a year earlier at the MGM Grand — served as “double whammy” to gaming revenues.

“The baccarat decline was $50.4 million and the entire Strip was down $49 million,” Lawton said.

For the first six months of 2013, state gaming revenues are up 0.7 percent compared with the same six months of 2012. Strip revenues are up 2.6 percent.

Nevada also released fiscal year 2013 gaming revenue results on Friday, which cover figures reported between June 2012 and June 2013.

Statewide, casinos collected $10.9 billion, an increase of 1.8 percent compared with fiscal 2012. Strip gaming revenues grew 3.9 percent to almost $6.3 billion during the same time period.

Baccarat also played a role in the state’s fiscal results. The statewide revenues of $1.4 billion from the game was a 13.6 percent increase over fiscal 2012. Wagering on baccarat was $11.3 billion, an increase of 7.24 percent. Both numbers were all-time records.

Lawton said baccarat represented 13.1 percent of all gaming revenues in the state and 34.5 percent of all table game revenues.

“By and large, while baccarat has been a key driver of the early innings of the Strip recovery story, we believe the positive ex-baccarat trends could have a more meaningful impact on Strip operators’ bottom lines,” Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski told investors. “The majority of this play is domestically sourced through cash-paying resort guests.”

Other areas of Clark County, including downtown Las Vegas, the Boulder Strip and North Las Vegas, reported larger-than-expected increases during the month, due primarily to a calendar comparison in which June 2013 had one less Friday, but also one extra Sunday, than June 2012.

Downtown gaming revenues increased 9.3 percent, North Las Vegas casinos saw revenues grow 16 percent, revenues along the Boulder Strip – which includes Henderson – increased 10.4 percent, and casinos in the balance of Clark County reporting section grew revenues 3.6 percent.

Gaming tax revenues collected through July 26 based on the June gaming revenues increased almost 13.3 percent to $43.4 million.

Recent legislative actions changed the reporting date in which Nevada casino operators have to provide revenue information to state gaming regulators. Instead of the 24th of the month, revenue reports are due to the state on the 15th of the month.

The changes took place in June. As such, the Gaming Control Board is able to release monthly revenues statistics for the preceding month, rather than lagging two months behind.