Nevada Gaming Revenues Slump in January

Is Chinese New Year and baccarat bubble really to blame?

by , Mar 20, 2013 | 10:00 am

Las Vegas StripGaming revenues in January fell 12.4 percent statewide and 18.7 percent on the Strip based on a challenging comparison to figures produced by Nevada’s resort industry a year ago.

The Gaming Control Board said Friday that Nevada casinos collected $909.2 million from customers during January, down from $1.038 billion a year ago. On the Strip, casinos won $507 million, compared with $623.5 in the same month of 2012.

January 2012 was the state’s first billion dollar gaming revenue month since September 2008 – a 40-month drought – fueled by the lucrative Chinese New Year holiday celebration.

This year, Chinese New Year, and the high-end baccarat play associated with the event, fell into February.

Because Chinese New Year moves around the calendar, gaming analysts said the combined two-month figures provide a better reading.

“We believe the January-February combined comparison will offer a more meaningful look into annual growth,” Wells Fargo Securities gaming analyst Cameron McKnight told investors Friday.

On the Strip, baccarat results accounted for 85 percent of the total decline. Casinos collected $95.5 million from baccarat players, 50.8 percent less than in January 2012.

The amount wagered on baccarat during the month was $794.8 million, down 48.9 percent from a year ago.

The hold levels – the percentage casinos held versus what customers took home – were relatively unchanged at 12.02 percent, against 12.47 percent last year.

To analysts, the baccarat figures meant players were waiting until February’s Chinese New Year celebrations.

“During recent investor presentations, management teams from Las Vegas Strip casino operators have boasted that the ‘Year of the Snake was a good one,’?” Macquarie Securities gaming analyst Chad Beynon said.

“The poor optical results were significantly affected by the timing of Chinese New Year.”

Gaming Control Board Senior Research Analyst Michael Lawton said January had one fewer Sunday than a year ago, and the New Year’s Eve holiday fell on a Monday, rather than a Saturday.

Also, Las Vegas sports books lost $1 million in January, as opposed to an $11.7 million profit last year.

Still, Lawton blamed baccarat action, associated with Chinese New Year, as the primary culprit for the decline.

“Early indications are that February has some successful Chinese New Year celebrations,” Lawton said. “That would be a good sign.”

Even with baccarat taken out of the mix, gaming results on the Strip from slot machines and table games fell by almost 4 percent.

“Core gaming volume was subpar but largely consistent with underwhelming January data points reported to date in regional markets,” said Susquehanna Financial Group gaming analyst Rachael Rothman.

The total statewide gaming revenue decline in January was the largest since July 2009.

Last year, Nevada casinos increased revenues by 1.5 percent to $10.86 billion, the third- straight annual increase.

Strip casinos collected $6.2 billion, a 2.3 percent increase.

During January, all of the major reporting areas in the state had a negative month.

Casino revenues from Washoe County, which includes Reno, saw gaming revenues fall 1.9 percent in January.

Clark County as a whole saw gaming revenues fall 13.3 percent, but the results throughout the area were mixed.

North Las Vegas casino revenues declined 12 percent while downtown casinos were down 5 percent. But gaming revenues along the Boulder Highway, which includes Henderson, increased by less than 1 percent, while the balance of Clark County casinos – primarily the locals market – saw a revenues increase to 2.2 percent.

RBC Capital Markets gaming analyst John Kempf said North Las Vegas casinos and the Boulder Strip were hurt by lower hold on table game wagering.

“The locals market held in during the month, as each area saw low single digit declines in slot machine (wagering),” Kempf said.

Statewide gaming tax collections in February, based on January’s revenue totals, grew 18.3 percent to $67.9 million.

For the first eight months of the fiscal year, gaming tax collections are up 5.5 percent.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.
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