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Gaming Guru

Howard Stutz

Vegas gambling revenues dip slightly in April

10 June 2011

LAS VEGAS, Nevada -- More tourists came to Las Vegas in April, but gambling revenue reports fell during the month because of the way revenues are reported.

The total visitor count for Las Vegas rose 4.8 percent from a year ago, to 3.35 million in April, while statewide gaming revenues fell less than 1 percent and Strip gaming revenues dipped 2.2 percent, figures released Thursday show.

The Las Vegas Convention and Visitors Authority said tourism posted its 14th straight monthly increase.

JP Morgan gaming analyst Joe Greff told investors in a research note that state gaming results were hurt by methods regulators use to count slot revenues. Gaming Control Board senior research analyst Michael Lawton calculated that with normalized slot machine reporting figures, both the state and the Strip would have shown monthly revenue increases of about 1.4 percent had April 30 -- which fell on a Saturday -- been counted with April revenues.

Lawton said casinos count slot revenue five days a week, typically avoiding weekends because they don't want to interrupt the flow of gambling.

"It's kind of a complicated month," Lawton said.

This boost in April's visitation came despite a rise in gasoline prices, which topped $4 a gallon in the Southern California market. The car count at the state line at Primm rose 3.4 percent from a year ago.

Analysts said Thursday they still saw positive signs in the numbers released by the state Gaming Control Board during April even though statewide gaming revenue totals were mixed, especially in Clark County.

"Even though April results were somewhat soft, we continue to believe that the Las Vegas market is in a gradual recovery," Wells Fargo Securities gaming analyst Dennis Farrell Jr. told investors.

Statewide, casinos collected $806 million from gamblers, a 0.58 percent decline compared with $810.7 million collected in April 2010. Strip casinos collected $427.5 million in gaming revenues during the month, a decline of 2.2 percent compared with $437.3 million in the same month last year.

On the Strip, baccarat revenues fell 3 percent to $56.8 million while the amount wagered on the game, $490.4 million, was down 29 percent.

That brought a note of caution from another analyst.

"We view April results as slightly disappointing," Rodman & Renshaw gaming analyst Robert LaFleur told investors. "It clearly looks like the strength in high-end international play has moderated from past years."

Clark County casinos as a whole saw gaming revenues decline 1 percent.

Casinos located in the reporting area known as the balance of the county said gaming revenues grew 8 percent. Downtown gaming revenues were down 5.6 percent and North Las Vegas casinos reported revenue declines of almost 8 percent. Boulder Strip gaming revenues were up 2.5 percent.

Lawton noted that April slot machine wagering volume on the Strip was up almost 1 percent in April, the second straight month slot machine wagering showed an increase. He said Strip slot figures were the first consecutive monthly increases since July and August 2007.

Macquarie Securities gaming analyst Chad Beynon said the figure was an encouraging sign for the Strip.

"We view this as the more important metric in evaluating slot gaming trends and believe the growth in handle is a positive data point for non-gaming spend and hotel fundamentals," Beynon said.

April's decline reversed increases seen in the previous month. In March, statewide gaming revenues rose 5.1 percent after four straight monthly declines.

For the first four months of 2011, gaming revenues are down 0.8 percent both statewide and on the Strip. But Las Vegas visitor volume in 2011 is up 5 percent through April.

Convention attendance during April, a major contributor to the improving numbers, rose 2.2 percent. By contrast, the number of conventioneers increased 8.8 percent during the first four months of this year. With the number of hotel rooms almost flat, occupancy rose 3.7 percentage points to 87.7 percent.

The average daily room rate hit $105.67 in April, up $8.80.

Gaming taxes collected in May based on the April gaming revenues were $42.6 million, a 7.25 percent increase from a year ago. For the first 11 months of the fiscal year, gaming tax collections are up 1.9 percent. Casino taxes account for about a third of state general fund revenues.

Several analysts said they expect May to be a positive month for the Strip and the state. Memorial Day Weekend helped boost room rates while several special events, such as the Manny Pacquiao and Shane Mosley championship fight at the MGM Grand on May 7 drew free-spending customers.
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