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Howard Stutz

Nevada gaming revenues fall by biggest percentage ever

12 February 2010

LAS VEGAS, Nevada -- It could have been a whole lot worse.

Gaming revenues in Nevada fell 10.4 percent in 2009, the largest single-year decline in state history.

Casinos statewide collected $10.392 billion from gamblers last year, the lowest one-year total since 2003 when gaming revenues totaled $9.62 billion, according to figures released Thursday by the Gaming Control Board.

But the declines lessened in the latter half of the year.

Control Board Tax and License Division Chief Frank Streshley said gaming revenues in the first six months of 2009 were down 13.4 percent compared with the same period in 2008. The last six months of the year saw gaming revenues decline 7.2 percent.

"I guess you can say we improved in the second half of the year," Streshley said. "In reality, that stretch between October 2008 and March of last year was a horrendous period for the industry."

The 2009 decline follows a 9.7 percent decrease in 2008 when statewide gaming revenues totaled $11.6 billion.

The Gaming Control Board has been keeping records of gaming revenues since 1956, and the only year-over-year declines have come in the past decade.

Gaming revenues fell 1.3 percent in 2001 and 0.3 percent in 2002, which were because of the damage inflicted on the national and international tourism industries by the terrorist attacks of Sept. 11, 2001.

Streshley said there isn't anything in Nevada's gaming history that he can correlate with the gaming revenue declines of the past two years.

"When you see the industry fall back to 2003-2004 numbers, there is nothing to make any comparison with," Streshley said.

On the Strip, casino revenues were $5.5 billion in 2009, a decline of 9.4 percent compared with $6.12 billion in 2008. Gaming revenues in Clark County as a whole fell 9.8 percent to $8.8 billion.

North Las Vegas, boosted by the opening of Aliante Station in November 2008, was the only reporting area of Clark County to show an increase in 2009. Casinos in the market reported revenues of $286.2 million, a 1.2 percent rise compared with $282.7 million in 2008.

Casinos downtown saw revenues decline 10.1 percent in 2009, while Boulder Strip casinos were down almost 6 percent for the year.

The suffering wasn't just centered on the Strip.

Washoe County's 2009 gaming revenues of $805.2 million were the lowest annual figure since 1989. Both North Shore Lake Tahoe and South Shore Lake Tahoe reported their lowest annual revenue figures in more than two decades.

Declining gaming revenues were reflective of customers' gambling habits. Players wagered $111.9 billion on slot machines, down 10.8 percent from a year ago, and almost $28.6 billion on table games, down 4 percent.

If there was a bright spot, it might have been December.

Gaming revenues statewide were $859.3 million, a decline of 3.2 percent compared with December 2008. The drop followed an increase of 4.4 percent in November, the first monthly rise statewide in more than two years.

Strip casinos, meanwhile, recorded their second straight monthly revenue increase, winning $502.1 million from gamblers, a 5.9 percent jump compared with $474.2 million in December 2008.

Some of the revenue increase was attributed to the opening of the $8.5 billion CityCenter development, including the 4,004-room Aria hotel-casino. Aria opened on Dec. 16, in time for what many analysts have said was a busy New Year's holiday.

New Year's spurred a busy month for baccarat on the Strip. Revenues from the game were $155.7 million, a 101.9 percent increase compared with baccarat revenues from December 2008.

"December marked the eighth consecutive month of year-over-year growth in baccarat win and the fifth consecutive month of year-over-year baccarat (wagering) growth," JP Morgan gaming analyst Joe Greff told investors.

Union Gaming Group principal Bill Lerner, after looking at the data released by the control board, said Aria generated about $56 million in gaming revenue for the two weeks it was open in December.

"We caution against extrapolating this to a full year (or $1.3 billion), as play levels at casino openings can be atypically high," Lerner told clients in a research note.

Lerner estimated that $51 million of Aria's gaming revenue came from table games, nearly all from baccarat, while $5 million came from slots machines.

The Strip results couldn't save Clark County as a whole in December. Countywide gaming revenues were $753.2 million, down 2.4 percent. The figure included monthly declines of 12.4 percent downtown, 25 percent in North Las Vegas, 19 percent on the Boulder Strip and 13 percent for the balance of the county.

Streshley and other analysts said the Las Vegas locals market might be one of the last areas to recover. The troubled economy, high unemployment and the declining housing market play a role in how residents spend discretionary income.

"My personal feeling is we won't see any improvement in the locals market until unemployment improves," Streshley said.