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Best of Howard Stutz

Gaming Guru

Howard Stutz

Reno casinos shine in October as rest of Nevada suffers

1 December 2015

Maybe there is something to this Reno resurgence.

Nevada and Strip gaming revenue fell during October, the fourth time in the last five months that the results showed declining numbers, according to figures released Monday by the Gaming Control Board.

However, Northern Nevada's casino market increased during the same time period.

Reno, which is part of Washoe County along with casinos in Sparks and North Lake Tahoe, saw its gaming revenue jump about 6% in October to $50 million. For the first 10 months of the year, Washoe County gaming revenue is up 3.5%. Reno casinos have seen revenue grow 3.6%.

Reno received national focus after Eldorado Resorts completed its buyout last month of MGM Resort International's casinos in the market, giving the company ownership of three downtown properties. Eldorado CEO Gary Carano told state gaming regulators the company wanted to take part in Reno's economic boom, much of which is attributed to construction of the Tesla Motors gigafactory.

Macquarie Securities gaming analyst Chard Beynon said told investors Reno has experienced "one of the sharpest economic recoveries in the U.S." over the past three years with increasing home prices and improved unemployment levels.

"We expect Eldorado to become a more well-known name that could result in enhanced shareholder interest and valuation improvement," Beynon said.

Control Board Senior Research Analyst Michael Lawton said Reno visitation was up 9.6% in October while casino operators said there has been a noticeable uptick in the overall economy.

Meanwhile, Strip results headed in the opposite direction. Revenue fell 5.1% to $493.6 million in October. Statewide, gaming revenue declined 2.9% to $887.6 million. For the first 10 months of 2015, gaming revenue is down 1.8% on the Strip and is flat statewide.

Analysts blamed the Strip's troubles on baccarat play, which continues to experience volatility because of the slowdown from the Chinese market.

Baccarat revenue decline 19.2% to $78.3 million while the amount wagered on the game was down 8.6% to $882 million. For the first 10 months of the year, baccarat revenue is down 17.7% and wagering is off 14% compared with 2014.

"Soft baccarat play continues to negatively impact Strip gross gaming revenue performance," said Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski.

He said the baccarat declines hurts just a few companies, notably MGM, Wynn Resorts Ltd., and Las Vegas Sands Corp.

"This drag should moderate given mostly easing baccarat growth comparisons." said J.P. Morgan gaming analyst Joe Greff.

Table game revenue on the Strip — not including baccarat — fell 4.7%, although wagering on table games — excluding baccarat — grew 2.7%. Strip slot machine revenue was flat as wagering declined 1.4%.

Deutsche Bank gaming analyst Carlo Santarelli said October ended on a Saturday, which skewed revenue accounting for the month and "is likely to benefit November."

Clark County as a whole saw gaming revenue fall 4%, which included declines of 6.5% downtown and 4% dip in North Las Vegas.

Sports wagering was a bright spot, however, with October providing the second largest single-month of betting ever recorded. Gamblers wagered $504.6 million statewide on sports in October, which included $397.8 million on football. Casinos collected revenue of $33.6 million from sports betting, an increase of 21.8% compared to a year ago.

Nevada collected $52.3 million in gaming taxes during November, based on October's gaming revenue, a decline of 21.7% during the month. For the first five months of the fiscal year, gaming tax collections are down 4.4%.
Reno casinos shine in October as rest of Nevada suffers is republished from