Las Vegas Strip casinos had a strong February. From the LVRJ:
When combining the first two months of 2010, gaming revenues are up 5 percent statewide and 13.4 percent on the Strip.
“February turned out to be the perfect storm,” Control Board Tax and License Division Chief Frank Streshley said. “It was a record for any Chinese New Year. There was a high volume of wagering on baccarat and the hold percentage was well above normal amounts.”
via Gaming revenues jump 13.9 percent – Business – ReviewJournal.com.
Let’s put the month into perspective. Here are the last 4 Februaries’ baccarat numbers for the Strip:
month——–# of games———-win———–% change*———hold %———-handle
* From previous February
Source: Nevada Gaming Revenue Reports for Feb 2010, Feb 2009, Feb 2008, Feb 2007
The increase in baccarat revenue is part of the larger trend that’s charted in the Evolution of Nevada Baccarat, 1992‐2009 report (pdf).
This February, baccarat accounted for 21.76% of all Nevada gaming revenues–an astronomically high number, when you consider that in 2005, baccarat accounted for only 5.71% of the states total gaming revenue. The 21.76% total is likely the highest in Nevada history.
This is the real story here. It’s fantastic that the casinos had a good month, but we should be mindful that there are hazards inherent in a bacc-heavy approach. As I said three weeks ago in Vegas Seven:
The increasing importance of baccarat marks a step back from the way the industry had been moving since the 1980s, relying heavily on a small pool of players instead of generating profits on volume. This may be a concern, since the universe of people who can bet $10,000 and up a hand is much smaller than those who play quarter slots. With competition intense for this small group, casinos may pay too much in comps and incentives to players.
Second, with fewer players betting more money per hand, casinos will face greater volatility. Some months, they’ll have record hauls; in others, the players might come out ahead. This can impact both the financial health of individual companies and the state’s tax collections.
In times like these, casinos are happy to get revenue wherever they can. But it’s worth considering that the high-end basket is a perilous place to store gaming revenue eggs.
This month’s results are a textbook case of volatility. If the casinos had only held 11.20%, closer to the usual bacc hold, they would have won $134,764,788–about $70 million less than they actually did. That would have dropped the total state gaming win to about $876 million–still better than the previous year’s total of about $830 million, but not the stuff of a turnaround.
To me the most interesting thing about the slot numbers is that the average hold fell from 6.13% to 5.84%, with just about every denomination reporting a decline in hold. A sign that machines are getting looser? Perhaps. But let’s look at the February slot hold numbers in perspective (average, statewide):
For further reference, check out the tables and data sets in my 1992-2009 slot hold study or the 2007-2009 short report.
As far as bacc play helping other games, I don’t see it. Slots won about $40 million less in Feb 2010 than in Feb 2009, blackjack won less, craps won slightly more, and roulette tables won about $18 million more–a big proportional increase from the previous February, but well below the 2008 and 2007 totals. Make no mistake–it was bacc play, not a broad-based boost in gambling–that is responsible for the gains.
In short, any gain is positive, but we’re not out of the woods yet. I agree with Frank Streshley that this isn’t a sign of the coming of another golden age of prosperity.