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Rod Smith

$1 Billion Won by Casinos in May

13 July 2005

Nevada casinos in May won more than $1 billion for only the second time ever, thanks largely to the late April opening of Wynn Las Vegas, the Gaming Control Board reported Tuesday.

More importantly, Wynn Las Vegas boosted total state and Strip takes to May records without cannibalizing other operators, industry analysts said.

"There was pent-up demand as leisure travelers held off (earlier in the year) in hopes of catching a glimpse of the Wynn Las Vegas opening," said Brian Gordon, a principal in Las Vegas-based financial consulting company Applied Analysis.

With the $2.7 billion Wynn Las Vegas resort opening April 28, visitors had pushed back travel plans to May and June, he said.

"This is a positive sign for the gaming sector in the second quarter bouncing back from a relatively soft gaming performance in April," Gordon said.

With a total win of $1.023 billion, up 12.5 percent from a year earlier, the state fell just $8 million shy of beating the all-time record of $1.031 billion, hit in March.

Still, May marked the tenth straight month the gaming win increased over the same month a year earlier and was well ahead of the $878.2 million won in April.

Clark County and the Strip set the pace for the rapid growth in May 2005, analysts said. The win for Strip casinos was $860.3 million, up 14.8 percent from $749 million in May 2004.

"It was a big month for the Strip. Given what we know about the Wynn numbers (which have yet to be publicly released), the Strip was up even without Wynn Las Vegas," Susquehanna Financial Group gaming analyst Eric Hausler said. "It's a good way to start. The market grew with Wynn rather than other operators being cannibalized."

Frank Streshley, senior research analyst for the state Gaming Control Board, said the results were particularly impressive because of tough comparisons with May 2004. In that month, the state's total take increased 13 percent and the Strip take increased 13.1 percent.

Gaming operators also overcame having only four Saturdays in May this year, compared with five Saturdays in 2004 which had boosted revenues last year.

Bear Stearns gaming analyst Joe Greff, who called the May results "impressive" in a note to investors, said slot win drove the May results as Strip slot revenue increased to $286 million, up 20.2 percent from the year before despite an 8 percent drop in volume.

The win at table games on the Strip increased to $245.3 million, up 8 percent from the year before; Strip baccarat win was $58.3 million, up 21.5 percent from May 2004.

Clark County casinos won $860.4 million in May, up 14.9 percent from $749 million a year ago. On the Strip, casinos won $538.8 million, a 14.8 percent increase from $469.4 million a year earlier.

Streshley said the state's hottest market was North Las Vegas, where the gaming win rose 42 percent to $29.4 million from $20.7 million.

Downtown Las Vegas stumbled with a total win of $58.1 million, down 3.3 percent from $60 million in May 2004. Washoe County also was a weak point for the state, with total gaming win of $88.6 million, down 2.1 percent from $90.4 million the previous May.

The gaming win in South Lake Tahoe dropped 3.5 percent to $28 million from $29 million. Gaming win in Elko County was $22 million, up 8.5 percent from $20.3 million a year earlier. The win in the Carson Valley area was $10.6 million, up 11.6 percent from $9.5 million a year earlier.

Statewide, slot machines accounted for $690.3 million of the total win, up 6.2 percent from a year earlier. Table games accounted for $322 million of the total win, up 4.9 percent from a year earlier.

Looking ahead, the calendar should not affect June results, Greff said, and comparisons with the previous year, when the total win increased a mild 4.3 percent, should be easier.

Deutsche Bank analyst Marc Falcone said the impressive results from high-end play such as baccarat, which is popular with high rollers, could help maintain the momentum heading into the year's latter half.

"Despite table and baccarat hold issues this month, we are encouraged by the strong volume trends witnessed on the Strip as we head into summer. In fact, we think trends are likely significantly ahead of most investor's expectations for both the Strip and the locals market," he said.