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Best of Howard Stutz
Howard Stutz
 

Nevada gaming revenues jump big in February

12 April 2010

LAS VEGAS, Nevada -- The Year of the Tiger had some teeth.

Nevada recorded its first double-digit increase in gaming revenues in almost three years during February, buoyed by results from the customer-rich Chinese New Year holiday and Super Bowl weekend.

Statewide, casinos reported total gaming revenues of $946.6 million during the month, a 13.9 percent increase compared with February 2009, when casinos collected $830.9 million, according to figures released Thursday by the Gaming Control Board.

The last time Nevada gaming revenues grew by double-digits was in July 2007. The statewide total was the largest single-month increase since December 2006 and just the second statewide gaming win increase since November when revenues grew 4.3 percent after falling for 22 straight months.

Strip casinos were the largest beneficiary of the increased Chinese New Year traffic in February, collecting almost $568 million in gaming revenues, a jump of nearly 32.9 percent compared with $427.4 million in the same month last year.

The figure was the largest single-month increase since November 1999.

Casinos benefited this year because both the Chinese New Year and the Super Bowl weekends fell entirely in February. In 2009, the Chinese New Year and the Super Bowl straddled the months of January and February. This Chinese New Year was the Year of the Tiger.

"February turned out to be the perfect storm," Control Board Tax and License Division Chief Frank Streshley said. "It was a record for any Chinese New Year. There was a high volume of wagering on baccarat and the hold percentage was well above normal amounts."

Spurred by Chinese New Year visitors, gamblers on the Strip wagered more than $1.2 billion on baccarat during February, up 132 percent from a year ago. That translated into a win of $205 million for casino operators, up a record 255 percent. The hold percentage on the game was 17.04 percent vs. 11.12 percent last year. Streshley said the hold percentage was well above average.

Spending increased on all table games statewide, Streshley said. The Super Bowl weekend helped grow sports wagering, but it also fueled table game play as well.

Some experts worried that Las Vegas may be relying too much on international visitors to make up for the lack of spending by American gaming consumers who have been hurt by the recession.

"The surge in baccarat over the past half year is clearly linked to the strength of the Chinese economy plus the cross-marketing efforts of the U.S. casinos with Macau operations," said University of Nevada, Reno economic professor Bill Eadington. "That is the good news. The bad news is that there is little, if any, sign of recovery from the domestic Las Vegas tourist market."

Wells Fargo Securities gaming analyst Dennis Farrell Jr. said the Strip's results essentially carried the state. He worried that reduced airline capacity into the market, weak convention attendance and lower spending will continue to depress the market.

"Despite the Strip's positive revenue results, we remain cautious, as we believe Las Vegas Strip operators will continue to face a challenging environment." Farrell said.

When combining the first two months of 2010, gaming revenues are up 5 percent statewide and 13.4 percent on the Strip.

But Streshley is not ready to declare Nevada's gaming fortunes healed. He said February may be the last double-digit increase the state experiences for quite a while.

"We're entering the months that don't have too many special events where casinos usually grind out results," Streshley said.

The nearly 13.9 percent jump in statewide gaming revenues during February did not translate into increased gaming tax collections.

The control board said Nevada collected $46.8 million during the month, a 28.1 percent decline compared with $65.1 million collected in the same time period a year ago.

For the first nine months of the fiscal year, gaming tax collections are down 5.2 percent.

Streshley said gaming taxes collected from high-end play, such as that during Chinese New Year, often are reported in subsequent months as markers are collected. With more than $1.2 billion gambled on baccarat during February, Streshley said it might take several months for the markers to be paid off.

Spending on slot machines also boosted Strip casinos. Gamblers wagered $3.2 billion on slots, an increase of 1.5 percent from a year ago and the first monthly increase in spending on slots in 26 months.

Statewide, slot machine revenues were $520.7 million, down 7 percent compared with a year ago. The amount wagered on slot machines was $8.9 billion, down 2.3 percent, but one of the smallest declines in months, Streshley said.

Casinos won $415.2 million from table games, which included the baccarat figure, an increase of 59.7 percent from a year ago. Gamblers wagered $2.9 billion on table games, up 37 percent.

Washoe County also saw a spillover from increased high-end play, giving the Northern Nevada area, which includes Reno, its first gaming revenue increase in 32 months.

Casinos in Washoe won $60.9 million from gamblers, up 2.7 percent compared with $59.3 million collected a year ago. Gaming revenues from Reno casinos were up 4 percent.

The Strip results did not spill over into the locals market in Clark County.

On a whole, Clark County gaming revenues were up 16.5 percent. However, North Las Vegas casinos were down 14.5 percent, while the balance of Clark County was down 15.4 percent. Downtown gaming revenue was down 5.8 percent and the Boulder Strip was off 2.3 percent.

"The locals market will continue to lag behind the Strip," Streshley said. "That is what all the recovery models have shown."