Tag Archives: Gaming revenues

AC in decline

August 11, 2009 5:45 am

Casinos in Atlantic City continue to post revenue declines, as the July number prove. From the AC Press:

Casino revenue sank to its lowest level in 12 years in July, another ominous sign that there will be no summer turnaround for the troubled gaming industry.

In what is ordinarily the biggest money-making month on the casino calendar, revenue generated by slot machines and table games fell 12.7 percent compared with July 2008, according to figures released Monday by the New Jersey Casino Control Commission.

Altogether, the 11 casinos took in $383 million in winnings, the worst July since 1997. An even more dramatic comparison is this July versus July 2005, when casinos posted an all-time record of $504.8 million in revenue. The 2005 figure is 24 percent higher than this July.

Only Trump Taj Mahal Casino Resort saved the industry from the ignominy of having every gaming hall in town suffer a decline. Boosted by a 45 percent jump in table game revenue, the Taj Mahal was up 8.7 percent overall for July.

Atlantic City has stumbled through 11 straight months of declining revenue and is heading for its third straight down year – a stunning slide considering that the first 28 years of casino gambling were consecutively higher.

Atlantic City casino revenue takes 12-year tumble, July figures show

Not good at all, and I don’t see any signs of this getting better any time soon. The institutional response seems to be “Batten down the hatches, ride out the storm.” That would be a great approach if things weren’t changing, but it’s obvious that the gaming landscape of the Northeast has changed considerably in the past two years, and will consider to do so. Further down in the article, there’s a statement that the hotel rooms are full, but day-trippers are staying away. Given that slot parlors have opened across Pennsylvania, one of the city’s primary day-tripper markets, that should be surprising. So maybe it’s time to build more hotel rooms?

Things just look bad. It doesn’t help that the UAW has put up billboards reading “EVERYONE LOSES” in giant type, with smaller type saying “At Bally’s and Caesars,” with a tiny, nearly invisible header that says “When workers are treated unfairly.” Seriously, I didn’t see that header until maybe the tenth time I saw one of those billboards. And they’re everywhere, from US 95 just north of the Philly airport to up and down the Expressway. If that’s not enough, they even had it on a banner plane, flying over the ocean for all of the beach-goers to enjoy. I’m not exaggerating at all when I say that, from a distance and at high speeds, you can only catch “EVERYONE LOSES” before you’ve driven past.

I’m not saying dealer unionization is good or bad–that’s for dealers and only dealers to decide. This just seems like the UAW is just poisoning the waters down in Atlantic City. I can’t think of too many things that are more demoralizing to potential visitors than a big sign saying EVERYONE LOSES. I guess this is the approach that’s brought prosperity and success to the American auto industry, so it should work wonders for Atlantic City casinos.

About the only bright spot for the city is the opening of Revel, which should bring in multi-day visitors who aren’t going to settle for a few hours at a Pennsylvania slot parlor instead. If it’s successful, it’s possible that other operators will finally embrace the “resort model” and join Borgata and Harrah’s. The key, I think, will be doing this in a way that’s not too upscale for the market. There are plenty of people who want to have a few days vacation and don’t mind gambling a bit, but don’t want to pay $200/night for a room or $100 for dinner. Atlantic City could position itself as a mid- to high-market destination resort, with some amenities for high rollers but the bulk of its room and f&b inventory geared at a slightly less affluent demographic. For the foreseeable future, it looks like everyone’s going to be slightly less affluent, anyway.

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March revenue thoughts

May 7, 2009 4:11 pm

The March gaming and tourism numbers are out, and it doesn’t look pretty, though only time will tell whether the bottom is near or somewhere in the distance.

Statewide, all nonrestricted locations won 11.61% less this March than they in March 2008. In Las Vegas, visitor volume declined by 6.5%. Clearly, fewer people are coming to Las Vegas, and those who are, are gambling less. They aren’t spending more on hotel rooms, either; the average daily rate (ADR) fell more than 30%. Assuming a three-night stay, the average visitor saved about $130 on his room this March, money that didn’t, however, make it into the casino. Dropping room rates may have kept hotel occupancy in the respectable upper 80s, but it hasn’t translated into more spending elsewhere.

Downtown, casinos won about $55 million in March, a decline of less than three percent from the previous year. Table play shrank by about 15 percent, but slots posted a small gain. Poker, too, edged up a bit, lending credence to the belief that poker play, which is potentially more profitable than negative expectation casino games, is more “recession resistant” than slots and table games.

On the Strip, though, it was a different story, and a far gloomier one. Most table games saw double-digit declines, with the exception of roulette (at 21% gain), baccarat (about a 5% drop) and pai gow (which nearly doubled its win). Pai gow has a tiny installed base (only 24 games), so it may be unwise to read too much into its soaring revenues. Baccarat’s shrinking decrease, though, may indicate that the earlier trend away from high end play is slowing or even reversing.

Penny slots increased their revenues, by about 14% downtown and 12% on the Strip, but only about 2% statewide. Statewide, we’ve added about 4,000 penny slots in the last year, about a 12% increase, so win per device is down by about 10%, par for the course. Downtown, however, added only fifty penny machines, so the big gain there represents real growth, not just cannibalization of other denominations.

It is interesting to compare these numbers to those from 2004. Statewide, total gaming win for the month declined from $930 million to $912 million–a net loss of more than 1%. Table games became looser, with the win percentage declining from 14.04% to 11.60%; players were able to win more (or lose less), while gambling fewer dollars. Slots, however, tightened up less than one half of one percent.

One significant, though often over-looked fact, is that Nevada has fewer gaming positions today than the state did five years ago.

2004 2009
Slots 180,710 171,332
Tables 5,753 5,700
Total positions 215,228 205,532

That’s about a 4.5% decrease in capacity. Revenues, however, are down only about one percent, so casinos are apparently generating more win per position. But there has been a measurable decrease in the size of the Nevada casino industry, which raises all sorts of interesting questions about where we are going: will the industry continue to shrink, retrench, or reverse? With Aria and Fontainebleau coming online later this year we’ll see some positions added. I don’t know exactly how many, but I’d guess somewhere in the neighborhood of six to eight thousand–not enough to “grow” the industry.

In the near future, casino operators will have to do more with less of everything: visitors, room rates, casino spend, and games.

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Things are getting worse…

September 10, 2008 3:39 pm

…but I see a silver lining. In fact, you could argue that things are getting a whole lot better. It’s just a matter of perspective. Specifically, we’re talking about July’s Nevada gaming revenues being down. From the LV Sun:

For the seventh straight month, casino winnings on the Strip slumped, falling 14.6 percent in July from the year before.

It is “the worst run for Nevada gaming casinos since the early 1980s,” said Frank Streshley, senior research specialist for the state Gaming Control Board.

It was also the seventh month of decline for casinos statewide and the third straight month they reported gross win of below $1 billion.

Casino winnings fall for seventh straight month – Las Vegas Sun

I prefer to see the positive side: why not say that gamblers lost less money in Nevada this year? That’s good, isn’t it?

I thought the breakdown was interesting but ultimately inconclusive. Mesquite got hammered, which says to me that people from Utah and Northern Arizona don’t want to waste their gas on gambling trips. But you’ve also got some major erosion at baccarat on the Strip, while penny slots there actually gained. And so did $100 slots, a whimsical idea if ever there was one.

There isn’t a nice glib soundbite to wrap around these numbers, and I think they show that gambling habits are much more complex that most people think.

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The Economist on Vegas

June 27, 2008 9:11 am

Most everyone knows that gaming revenues have dipped a bit, but it’s not every day that the Economist covers Las Vegas, so here it is:

THE media had a field day recently when Charles Barkley, a retired basketball player, was forced to pay a gambling debt of $400,000 owed to Wynn Resorts, a Las Vegas casino operator. It may seem churlish to chase a star as big as the “Round Mound of Rebound” for anything less than a seven-figure sum. But after a long boom, the industry faces a rare slowdown and belts are tightening across Sin City.

Gambling has long been considered all but recession-proof. Only twice have overall revenues on the Las Vegas Strip fallen since it took over from the downtown as America’s gambling hotspot in the late 1980s—most recently after the attacks of September 11th 2001—and both dips were short and shallow. Gamblers, they say, will keep betting as the economy slows, still hoping for that big win.

But Vegas is less about gambling than it used to be. Today only 41% of its revenues come from betting, down from 58% in 1990. These days people are as likely to come for shopping, shows and fine dining as for blackjack or baccarat; the Forum Shops, at Caesar’s Palace, has the highest sales per square foot of any American mall. Today’s visitors are more likely to be worried by broader economic woes than the punters who used to flock to the city were, says Bill Lerner of Deutsche Bank.

A cut in the wages of sin

It’s always good to get an outsider’s perspective on what’s going on here. I learned a new factoid: that Las Vegas now has 7% of all the hotel rooms in America. That’s staggering.

It’s also nice to be identified as an optimist in the penultimate paragraph. I really think that it’s usually not as good as people think, or as bad as people think. And as I’ve always said, with a finite number of people in the world who are able or willing to vacation in Las Vegas, there is definitely an upper limit to the number of hotel rooms that the city can support. Ultimately, the market will determine what that limit is.

Did you like all of those helpful statistics in there? I’m about 99% sure that they came from the Center for Gaming Research’s Gaming Abstract, and this is exactly why we’ve put so much energy into assembling it. It’s refreshing to see it get some good use.

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