The January numbers are out, and while they appear to be merely ho-hum (a 0.67% Statewide revenue decrease), they are actually quite troubling. Here’s the executive summary of the report:
January 2011 continued what has been a trend: a persistent, moderate decline in the state’s gaming revenues. This is the third consecutive month in which state gaming revenues declined.
Statewide, slot revenue from the previous January, but this may not be all it appears. Because December ended on a Friday and many operators did not want to disrupt weekend operations by collecting slot win, December’s slot revenues were artificially lower than they should have been, while January’s are higher. The Gaming Control Board estimates that about $58 million of slot revenues were rolled into January from December. Therefore, there was likely a decline in slot win. Both table win and handle declined
Table revenue decreased by 11.44% year to year, and handle slipped 13.19%–not signs of a revival at all.
On the Las Vegas Strip, slot revenue appeared to gain because of the Friday Effect, but the roll-over of December revenues into January produced a historically-high 8.67% slot hold percentage (January 2008’s 8.57% was the previous record holder). Baccarat play slumped precipitously (29.16% year-to-year decline), a sign that perhaps the “baccarat recovery” has fizzled. Continued weakness in slot (-2.44%) and, more troubling, table handle (-15.10%) point to continuing difficulties on the Strip.
Downtown Las Vegas saw a year-to-year gain, but with both slot (-1.58%) and table (-10.27%) handle falling, it continues to be a market with problems. Since 2004, total revenues have fallen 23.81%, with 33.11% and 39.45% declines in table and slot handle, respectively.
The Boulder Strip, a weathervane for local Las Vegas play, saw a 10.93% jump in revenues, but this is partially offset by an abnormally-low table hold percentage in January 2010 and an 11.40% jump in slot hold caused by the Friday Effect.
Washoe County saw a continued decline, with revenues falling by 4.93%. Handle and win both declined, nothing new for a market that has shrunk 22.19% since January 2004. Over the past 8 years, table revenues have declined faster than slots, but clearly this is a market in decline.
Nevada Gaming Statistics: January Comparison (pdf) – more reports
Back in September of 2009, I warned job-seekers about waiting for casinos to save them:
This time, the casino cavalry won’t be coming over the hill. It’s time to look to another — more balanced — solution.
In March 2011, that’s even more true when applied to the state’s budgetary fix. There’s no sign of a sustained turnaround in the gaming industry, which has traditionally shouldered much of the tax burden for the state, is in a prolonged slump that clearly isn’t over.
Let’s look the tax implications of the revenue decline. Since 2007, annual gaming revenues for Nevada have fallen by 19.02%. Here’s the budgetary impact:
Roughly estimating a 7% tax on the state’s total gaming revenues (it’s 6.75%, but adding in fees makes it closer to 7%), we see:
2007: total revenues $12.8 billion, total tax approximately $889 million
2010: total revenues $10.4 billion, total tax approximately $728 million
That’s $161 million in direct tax revenue lost, which, when added with the sales and other taxes that have also slumped because of visitors spending less on everything, makes the state’s current budget situation understandable.
Diversification is really the only way forward.