Strip Casinos See Revenue Bump
What seemed like a positive sign — a 6.39 percent increase in Strip gaming revenues during May — was downplayed by Wall Street Thursday.
After delving deep into the results, several analysts termed the month a disappointment.
“This is a decent headline number for the Strip, in our view, but driven by a mostly favorable table game hold results versus a year ago, and not volumes,” JP Morgan gaming analyst Joe Greff told investors.
Nevada gaming revenues grew 1.37 percent in May, to $897.2 million, the Gaming Control Board said Thursday. The increase followed a flat revenue month in April and two straight monthly increases in February and March.
On the Strip, gaming revenues hit $505.4 million.
Table game results on the Strip were mixed, analysts said. Baccarat wagering was down 10.9 percent and table games — minus baccarat — were off 9.8 percent. The one positive was slot machine wagering, up 1.7 percent from a year ago.
Wells Fargo gaming analyst Cameron McKnight said figures from slot machines in Strip casinos are a key indicator of mass market activity.
“Compositionally, results were mixed, as the majority of revenue growth (on the Strip) was driven by higher hold in mass tables and baccarat,” McKnight said.
Strip casinos held 12.38 percent of the money customers wagered on table games, compared with a hold percentage of 9.71 percent in May 2012.
Strip casinos collected $90.5 million in revenue from baccarat, a 21.8 percent increase from a year ago. Revenue from table games was $163.8 million, an 11 percent increase. Slot machine revenues were $251 million, down 0.8 percent.
Wagering on baccarat was $835.3 million, down almost 9 percent from a year ago.
“Despite an extra weekend day, overall gaming volume declined (in May),” Susquehanna International Group gaming analyst Rachael Rothman told investors. “If the weak underlying volume trends continue, we view Las Vegas gaming revenue estimates with a negative bias.”
Union Gaming Group Managing Director Bill Lerner said May included a Floyd Mayweather championship fight at the MGM Grand and an initial glimpse into whether the openings of the Hakkasan nightclub at MGM Grand and the Light Nightclub and Daylight Beachclub at Mandalay Bay would help boost gaming revenues.
“Overall, the numbers were slightly disappointing,” Lerner said.
For the first five months of the year, Strip gaming revenues are up 5 percent over a year ago, due largely to a 31 percent increase in February.
Statewide, gaming revenues were up 1.7 percent through May.
“Gaming revenue in Nevada (was) driven by strength on the Strip, which was slightly offset by a weaker locals market,” RBC Capital Markets gaming analyst John Kempf told investors.
Clark County gaming revenues as a whole grew less than 1 percent in May, as other reporting regions in the area suffered losses. North Las Vegas casinos saw gaming revenues decline almost 20 percent while Boulder Strip casinos, which include those in Henderson, experienced a nearly 18 percent gaming revenue decline. Downtown Las Vegas gaming revenues fell more than 7 percent.
Reno’s casino market grew 9.73 percent in May, after a 15.36 percent increase in April. The market has benefitted from lengthy men’s and women’s national bowling tournaments.
Washoe County saw gaming revenues increase 7.9 percent. It was the region’s third consecutive monthly increase, the first time that has happened since April-June of 2006, said Control Board senior analyst Michael Lawton.
Gaming taxes collected in June based on May’s gaming revenue grew 10.85 percent to $57.5 million. For the fiscal year, gaming taxes were up 3.85 percent to $678.7 million, beating the projections of the state’s Economic Forum by $6.3 million, or just less than 1 percent. The Economic Forum is an independent panel that forecasts state revenues on which the general fund budget is based.
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