Things are looking up in Nevada for the first time in a long time. The state’s casinos won more money from gamblers this November than they did last November. Yet there may be another story that isn’t as positive lurking beneath the numbers. From the LVRJ:
For the first time in 23 months, Nevada gaming revenues increased with casinos statewide collecting $873.2 million in November, a 4.35 percent climb compared to the same month a year ago.On the Strip, gaming revenues were also up for the first time in almost two years. Strip casinos collected $473.8 million, an 8.3 percent jump compared with the figures from November 2008.
In the locals market, November gaming revenues were up 19 percent on the Boulder Strip, almost 21 percent in North Las Vegas and 2.6 percent in the balance of the Clark County.
via Nevada gaming revenues increase for the first time in 23 months – News – ReviewJournal.com.
There are some very interesting patterns here. The big winners statewide were baccarat and pai gow, which increased 136.9% and 26.12% respectively. Slot machines actually did a little worse (down 1.58%), and since they account for the bulk of the state’s gaming, it’s very fortunate that bacc win more than doubled.
Does this mean that we’re out of the woods? Handle, rather than win, is probably a better gauge of consumer interest. Let’s look at the total money played on baccarat in the past two Novembers:
Month Win Hold% Handle
Nov 2008: $39,780,000 10.45% $380,669,856
Nov 2009: $94,237,000 13.54% $695,989,660
So while the casinos got much luckier in November 2009, the total amount played increased by about 83%. Even if they had won at the same rate that they did in November 2008 (10.4%), they still would have made about $73 million from baccarat–a definite step up.
Let’s look at slot handle:
Month Win Hold% Handle
Nov 2008: $558,114,000 5.73% $9,740,209,424
Nov 2009: $549,340,000 6.28% $8,747,452,229
So if you’re a glass-half-full kind of person, you can say that slot play decreased by about a billion dollars from year to year–not the stuff of a major comeback, and certainly nothing to pat yourself on the back about. The hold percentage increased by about a half-point. Could this have something to do with the decline in handle? It’s worth considering. While most of the increase in hold has been driven by players migrating to higher-hold denominations rather than managers tightening up existing machines, the decline in slot machine handle is cause for concern.
It’s paradoxical because players are voting with their feet in two separate directions. On one hand they are playing the high-hold denoms more: statewide win on pennies rose by about 10%, on multi-denom by 4%, and dropped off considerably for everything else, including massive declines in every denom over a dollar (though the $100 drop is complicated by a miniscule ,069% hold percentage). On the other hand, they are playing less, almost exactly 10% less than the year before.
Looking at hold is only part of the picture–looking at handle says a great deal more.
How about the Strip? Here are some highlights from November 2009: Bacc win, up 136%, pai gow, up 58%, and bingo, with total revenues of $212,000, up over 800%.
The lowlights? Craps was off by 32%, due in part to a lower than usual hold percentage; slots were down by about 4%, and sports books won much less in football betting than they did the year before, though the hold (5.23%) was a bit on the low side.
With slot handle down and bacc handle up considerably, the lesson seems to be that the high end is doing better than the low end. From that perspective, it’s good news for City Center and bad news for the lower-tier operators on the Strip and statewide. There appears to be some room for growth in the high-end market that will justify the increase in supply, but it looks like demand for slots continues to weaken.
In a nutshell: good news for some, but I’d keep the champagne on ice, at least until someone figures out how to get slot players to come back en masse.
The November 2009 visitor numbers are positive, with the caveat the the increase in visitation (2.9%) was slightly outdistanced by the increase in room supply (3%). People are coming back to Las Vegas, but they are spending less on their rooms (room rates are down 23% year-to-date) and less at the machines.
This report is thought-inspiring and the links provided (like the Nov. visitors’ list) make it complete.
I’ve read the other two posts on Atlantic City. I know very little about AC…and until the 1980s boom there, I’d thought it was just a very small, turn-of-the-century, past-its-prime, amusement zone…located somewhere on the edge of one of the Great Lakes…that simply had an old pier and a Miss America contest.
As a simple layman…I think Atlantic City has an image problem they need to work on. But that’s a whole other subject.
The news reports about AC make it seem like it’s on its last legs financially. That could be true. Yet, it seems like the news reports always base progress simply by making comparisons to the previous year.
The same thing seems to take place when people evaluate Las Vegas.
Sure. Las Vegas might not be making as much as it did in the last year…but over-all…for nearly two decades it HAS been earning a substantially increasing profit. I think the UNLV statistics (that Dave provides his readers) show Vegas been making over $10 billion (and up to $12B) per year – for the last decade.
IMO, the casino operators shouldn’t hold the philosophy that each year must show a continuous uphill climb. That doesn’t seem realistic for ANY industry and they shouldn’t merely expect income growth to constantly climb each and every single year.
These gaming corporations seem to rely way too much on a steady growth. It seems they developed a ‘Field of Dreams’ belief that “if we build it, they will come”.
I think that’s what led to their current situation. They simply thought that all they had to do was to keep building and their profits would increase naturally.
They failed to think realistically…and failed to follow the lessons provided by 10 decades of American Business History.
In the 1920s RCA Radio stock rocketed (for 10 years) to a high of $115 and then dropped to $3 after the 1929 crash (very similar to Sands’ stock). It took until the 1950s before RCA reached that high value again. The same happened with the auto-industry from 1915-1950.
But such devaluations aren’t always caused by ‘national economic cycles’.
Individual industries have LIKEWISE over-built and under-evaluated the ebbs and flows of profit….and caused their own demise by thinking the sun would shine forever, without even one single cloudy period.
The sardine canning industry of Monterey, California did a very similar thing as Las Vegas has done.
Cannery Row added so many new canneries trying to maximize profits (almost 12 new canneries in a short-span of 7 years in the late 30s until the mid-forties). They made so much noise and caused so much disruption to ‘the natural balance’ of the bay – that the sardines migrated all the way past Mexico to South America looking for a better area to live….and never returned.
There are hundreds of similar ‘over-confidence’ examples through-out US business history. The Eternal Sunshine mind-set and the concept of continual-expansion and over-expectations have killed many an industry before.
The history of Nevada shows us a good example…with its silver-mining industry. Mining corporations assumed the supply of profit was limitless and over-invested.
For modern CEOs to not even take heed of our state’s Metallic-Fever & ‘Ghost Town History’ proves to me they are historically blind.
And to not even have taken into account other historical business examples…which show that even the best of industries do NOT continuously expand as a natural matter of course:
(Examples: Railroads, Radio, Movie Theaters & Drive-Ins, Hula-Hoops, Muscle Cars, CB Radios, etc, etc, etc. Even the Music Industry and its thinking it held an eternal hold on the music market of CDs which would always continue to expand…(Steve Jobs earned a fortune off of the Record Moguls lack of foresight). A hundred other examples of historical corporate ‘over-expectations’ exist to guide or remind us.
This ‘lack of caution’…and the over-expectation and over-confidence that the gaming industry will always expand forever (in the same form and format) could almost be termed as recklessness (or at the very least labeled as turning a blind eye to business history).
Yet, the LV gaming industry continues to steadily earn over $10 per year and continues of draw over 30 million annual visitors.
IMO. That’s pretty darn good. I don’t see why they are thinking things look so bleak. Basically, all that’s happened is that there is less whipped creme on their chocolate sundae. Their sense of alarm is way over-blown and they seem like 12 year olds crying because their Nike shoes aren’t as nice as the ones the had last year.
As an on-looker…I see this thru a different lens than the Warlords Of Las Vegas do.
George Carlin used to provide a very good way of looking at human foibles and society’s odd points of view.
He used to say “It isn’t that the glass is half-full or half-empty. It’s just the wrong size glass”.
It’s time the gaming industry thanks God it’s still alive at all. And if their expectations are too darn high…it’s time they get a proper ‘glass’ and just concentrate on keeping it polished.
IMO
Maybe I’m cutting my nose to spite my face on this one (in other words, maybe this is pretty bad for the big resorts, but…), but I hope that trend continues. Particularly the low room rates.
I know they’ll try to pump it up eventually, but I hope the numbers don’t turn out when they do (either with fewer visitors or, much more likely, visitors remaining about the same but nobody gambling.)
A Las Vegas that will give you a room with drapes that electronically open close with gourmet restaurants downstairs for about $100-ish a night is what I’ve been wanting to see for a lot of years. I’m not sure why the resorts have been such a fan of high room rates, considering it’s just as likely if not more so that people will spend the same money once they’re actually here.
High room rates create a hurdle where someone is sitting at home, booking online, credit in hand, and then sees the rate and says “you know what, better not go.” This is just my armchair psychology, but visitors are more conservative with their spending while they’re still surrounded by the comforts of home, and will spend more once they’ve arrived on the principle of “well, I spent money getting here so I’ll have a good time.”
And no matter which way you slice it, for the Strip’s sake that sure beats someone saying “oh hell, look at the rates” and staying home.
“…but I’d keep the champagne on ice, at least until someone figures out how to get slot players to come back en masse.”
I’m not sure that will happen. Slot players, for the most part, seem content to spend their money at local casinos within driving distance from their homes. They can play slots, have a buffet or dinner and still be home at night. Look at Delta and Continental’s annoucements this week of new, ridiculous fees for checked luggage. That’s got to affect air travel, especially by low and mid market players.
Baccarat reflects high-end players more than slots, and it’s an encouraging economic sign that they’re returning to Vegas where their level of play many times gives them full RFB. But, can Vegas thrive only with high-end visitors?
From these statistics it seems like things are starting to improve in Las Vegas. Hopefully interest in City Center in 2010 will increase gambling and non-gambling revenues throughout the year.
detroit1051 thanks for bringing up the airlines. These airlines keep raising baggage fees because overall in 2009 the airlines lost billions of dollars, like they do most years.
Beatles: ‘A Day In The Life’
“I read the news today oh, boy
About a lucky man who made the grade”
=========
I read part of the front-page newspaper today at Mc Donald’s news rack. I couldn’t read the entire story because of the ‘paper-fold’. But it seems like good news, if this story has run for two days straight.
I’m not sure how the story differs from yesterday (because I can’t find it on-line). Still. I think this headline is the first indication of the big, uphill turn in the ‘economic road’ that Las Vegas (and perhaps the entire country)has been waiting for.
Regardless of the hills and valleys that might lie (lay?) ahead..this bit of good news IS almost as symbolic as the US Marines capturing Iwo Jima. It’s the sign that an important battle has been won. The war sure isn’t over yet…but Las Vegas has gained an important foothold.
This is a time for the casino owners to really start planning to launch a massive, second-stage, surprise assault. This whole recession really needs to be seen as from a WW2 point-of-view. I hope the casino industry takes good advantage of today’s news.
IMO
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