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Howard Stutz

Nevada gaming revenues jump 16 percent

12 August 2011

LAS VEGAS, Nevada -- June turned out to be a month in which the Strip's high-end baccarat players gave back the money they won a year ago.

Gaming revenues statewide and on the Strip recorded their second-straight monthly double-digit increase, fueled in part by a 489 percent increase in what casinos won from free-spending baccarat customers.

The Gaming Control Board said Wednesday gaming revenues in June were $885.7 million statewide, a 15.98 percent jump compared with $763.7 million collected by Nevada casinos in June 2010.

Strip casinos collected $506.7 million from gamblers in June, up 32.3 percent compared with $382.9 million collected in the same month a year ago. The Strip's total was the area's largest single-month percentage jump since February 2010.

Much of the credit went to baccarat, where gamblers wagered $523.3 million, 30.8 percent more than year ago. However, the players left $107.2 million with casinos. The story was the hold percentage: Last June, casinos held 3.5 percent of the baccarat wagers. In June 2011, the hold percentage was 15.7 percent.

"June's hold percentage last year on baccarat was the lowest since June 1994," control board senior research director Michael Lawton said. "It was a complete anomaly."

June is not necessarily a traditionally big month for baccarat wagering on the Strip. Bigger volume usually is seen around the Chinese New Year holiday in January or February. In May, gamblers wagered $1.1 billion on the game.

"Baccarat numbers were strong but should not be extrapolated forward given the month-to-month volatility," gaming analyst Rachael Rothman said in research note. "We would highlight strong core gaming volumes in the month as a better indicator of the broader Las Vegas recovery."

Strip casinos also had increases in the money wagered on slot machines, up 5.6 percent, and all table games, up 13.8 percent.

Strip casinos collected $231.5 million from slot machines, up 1.6 percent, which was the largest percentage increase since September 2007.

Lawton said the volume wagered on slot machines marked the fourth-straight monthly increase .

Strip casinos also collected $156.3 million from table games, excluding baccarat, which was a 24.2 percent increase from a year ago.

"On the whole, June's results serve to strengthen our conviction in the gradual Las Vegas recovery story," Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski told investors. "High-end international play remains strong. June's results serve to indicate rated domestic play has begun to show signs of life."

Wall Street already had anticipated positive numbers for June, based largely on quarterly earnings reports from Wynn Resorts Ltd., Las Vegas Sands Corp., MGM Resorts International and Caesars Entertainment, that showed increases in revenues and cash flow from Strip hotel-casinos.

"June numbers are already baked into second-quarter earnings that were already reported," Rodman & Renshaw gaming analyst Robert LaFleur told investors. "We view the June results as pretty good but not nearly as strong as the headline 32.3 percent increase might suggest."

The Nevada and Strip figures followed May's gaming revenue totals, which included a 16.2 percent jump statewide and 28.9 percent on the Strip.

For the first six months of the year, gaming revenues are up 4.5 percent statewide and 8.5 percent on the Strip.

Many on Wall Street have questioned how the stock market's recent up and down swings might influence travel to Las Vegas and spending by consumers. A dip in consumer confidence, many have said, could reverse the current trends.

"Even though the significant year-over-year increases over the past two months are likely not sustainable, we believe they provide further evidence that the Las Vegas market is in a gradual recovery," Wells Fargo gaming analyst Dennis Farrell Jr. said.

Clark County as a whole showed a 19.9 percent increase in gaming revenues during June. Three reporting areas -- balance of the county, downtown and North Las Vegas -- had declines. Gaming revenues along the Boulder Strip region, which includes casinos in Henderson, were up more than 5.6 percent.

For the first half of the year, gaming revenues in the locals markets, which includes balance of the county, North Las Vegas and the Boulder Strip, are up 2 percent, Lawton said.

Most analysts are apprehensive about the overall recovery in the Las Vegas market, citing continued high unemployment. Locals are still holding on to their discretionary dollars, analysts said.

Nevada collected almost $52.8 million in gaming taxes in July based on June's gaming revenues, a 22.8 percent increase compared with $42.9 million collected in the same time period a year ago.

Between July 2010 and June 2011, gaming revenues grew 3 percent, to $10.63 billion. In the previous fiscal year, gaming revenues fell 4.3 percent.

Strip gaming revenues in the fiscal year were $6.01 billion, up 7 percent.
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