November Revenue Run-down

I had a busy morning yesterday. Every month, the day that the Nevada Gaming Control Board releases its monthly revenues numbers is a busy one. As usual, I prepared the historical summary for the month in question (November this time) and updated the rolling six-month summary. Here are the highlights and links. First, the monthly historical comparison:

November was good for Nevada’s gaming industry. Most reporting areas saw a second straight month of increases in gaming revenues.
Generally speaking, handle rose along with revenues, indicating an at least modestly rebounding demand for casino gambling. Partially this was
because November 2010 was a particularly bad month, but the increase in several areas indicates a small recovery for the gaming industry.

Statewide, casinos bounced back (+7.06%) from an atrocious November 2010 and then some—this was the strongest November since 2007; though revenues were still well (-10.29%) below their 2007 equivalents, this is a move in the right direction. Slot revenue, handle, and hold percentage all increased, and this pattern held for table games as well. These increases were small but definite, lending credence to the notion of a mild rebound.

Las Vegas Strip revenues grew by 9.02%, driven by slightly (+2.40%) higher slot revenues and what appears to be a major bounce in table play (+17.90%). But this is only because November 2010 was exceptionally weak for table games. It was a decent, but not a great, month when factoring in the favorable comparison. Table handle grew less than 7%, and much of the gain was driven by higher table hold percentage.

Downtown Las Vegas increased revenues by slightly more than the state average (+7.26%), due to high slot win (+4.63%) and especially table win (+17.31%). Much of the table increase was due to higher hold, however, so the actual increase in play is not as dramatic as it first appears.

On the Boulder Strip, total revenues grew by 12.44%, keyed by a 64.47% increase in table win. This was only, however, because November  2010’s hold percentage was just 4.88%; total table play actually fell, but a return to a normal hold made play more profitable for casinos. Slot  handle and win increased respectably, indicating continuing strength in the Las Vegas locals market.

Washoe County revenues increased slightly (+1.95%), a welcome respite from the usual decline. This bump was due to higher hold, however, as  handle remained nearly constant from last year. Perhaps this indicates a stabilizing trend in Northern Nevada.

Tables for Statewide, Las Vegas Strip, Boulder Strip, and Washoe County follow

Nevada Gaming Statistics: November Comparison

Second, the six-month analysis:

Statewide, November built on a strong October, canceling out—and then some—the disappointing
August and September results. It looks like the mini-downturn of the late summer has reversed, which
bodes well for strong December.

The Las Vegas Strip now has five out of six months in positive territory. Particularly impressive are the
three months of double-digit gains and one near double-digit increase (November). Slot revenues have
increased in each month in the period, with table revenues less consistent, but still showing an overall
increase. The Strip is moving in the right direction, albeit, in the case of slot machines slowly, and in the
case of table games, inconsistently.

Downtown Las Vegas now has an overall positive trend for the past half-year, with four out of six
months showing increases in revenue for tables and slots. This may be the long-awaited Downtown
turnaround. Consistent improvements in slot revenue are the key, looking ahead, for future growth.

The Boulder Strip continues to impress relative to the rest of the state, with a revenue increase well
above the statewide average. While the overall economic indicators for the Las Vegas Valley continue to
remain flat or worse, this reporting area is outperforming its expectations.

Washoe County appears to be stabilizing. Three out of the past six months have seen slight (less than
2%) revenue increases, which may be a signal that the decade-long slide of Northern Nevada’s gaming
revenues might have reached bottom. There doesn’t appear to much room for growth, but this market
may be through the worst of its contraction.

Tables for Statewide, Las Vegas Strip, Downtown Las Vegas, Boulder Strip, and Washoe County follow

Nevada Gaming Statistics: The Last Six Months

And finally, I took a look at exactly what the numbers mean on Two Way Hard Three:

This appears, at first blush, to be a good month for Nevada casinos with no qualifications. There were, however, a few qualifications, though November was still a net positive for the state and the industry.

First, lets put November in context. The state’s gaming industry has been on a bit of a roller coaster, with an apparent recovery trend through much of the first half of 2011 ended by two consecutive months of declines (August, September). Then came October, which had an 8.12% increase in year/year revenues. Some started to believe that the recovery was back on track.

November makes it more likely that the state can anticipate further (modest) growth in its gaming industry. For the month, the state had a 7.06% increase in gaming revenues. And nearly every major reporting area posted positive results. For the first time in as long as I can remember, all five of the reporting areas I look at for my monthly reports (Statewide, Las Vegas Strip, Downtown Las Vegas, Boulder Strip, Washoe County) reported gains. That in and of itself is good news.

November in Nevada

That’s what I think. Share any of your opinions in the comments.

Baccarat and gaming win in the LVBP

In this week’s Las Vegas Business Press, I look at what the continued reliance on baccarat means for Nevada:

Since the second quarter of 2010, the fortunes of the Las Vegas Strip — and, by proxy, of Nevada’s gaming industry — have been tied to baccarat. The game’s had a presence in Nevada since the 1950s, and has been a steady offering for top-tier casinos since the 1970s, but with slot play wilting and midlevel table play suffering, baccarat has risen to unprecedented heights. February’s results confirm what we’ve known since last summer: with baccarat as king, Nevada gaming is more of a game of chance than ever.

via Las Vegas Business Press :: David G. Schwartz : Volatile baccarat can’t reliably lift gaming win.

This isn’t really new–I just saw that I never published this. Still, it might be a fun read. Enjoy!

Thoughts on the February numbers in Two Way Hard Three

In addition to the statistical reports I’ve written in my official capacity, I’ve got a few thoughts I’d like to share about what the numbers mean over on Two Way Hard Three:

Every month, Revenue Day is always a bit of a mixed blessing for me. It means a lot of fairly frenetic number crunching (at least by the standards of academia), but also a chance to share my thoughts on what’s happening in the gaming industry. I’ve been mulling over the numbers since about 6:45 this morning, and here’s where I’m at right now.

via Thoughts on the February NV gaming numbers | Two Way Hard Three | Las Vegas Casino & Design Blog | from

I’ve now spent about ten hours thinking, calculating, and writing about the February numbers. Glad the weekend’s almost here.

Feb. Nevada number comparison

I’ve got the Nevada gaming revenue comparison and analysis for February up. Here’s the executive summary:

For Nevada’s gaming revenues, February 2011 had little to celebrate, though in some ways the numbers aren’t as dire as they seem at first glance. Comparatively, the Strip continues to outperform much of the state, but it is still reading water. As of today, the 3Q 2010 “baccarat recovery” is over.
Statewide, slot handle declined by 3.3%; higher hold percentage kept the drop in win to 0.49%. Table play cooled off considerably, with a 14.81% decline from the previous February, which had the benefit of a higher than average baccarat hold. The decline in baccarat revenue almost exactly matched the drop in hold percentage, as the amount played on the game remained nearly constant This small bump, centered on the Strip, wasn’t enough to compensate for the general torpor of the market, though table handle as a whole rose slightly.
On the Las Vegas Strip, slot handle fell, but a 9.08% jump in hold percentage meant that slot revenues actually increased slightly (3.17%). This speaks to the continuing weakness of the broader gambling market in Las Vegas. Table revenues declined by what appears to be an alarming 17.10%, but the return of baccarat hold to a normal level (11.71% vs. 17.04%) was largely responsible. Table handle overall increased by 3.86%, indicating a moderate increase in demand. Interestingly, the number of baccarat tables decline for the first time since at least 2004, indicating that the “baccarat recovery” of late 2010 may have been short‐lived.
Downtown Las Vegas continues its slide, with declines in every category save one—table hold increased slightly. Since February 2004, Downtown revenues have shrunk by 31.04%. It’s clear that this is a market in dire need of a turnaround.
The Boulder Strip, a weathervane for local Las Vegas play, also saw declines, though not as severe as the Downtown area. Cheeringly, slot handle increased by 2.09%, and it may be that the fall in slot hold percentages to under 5%, if sustained, will help draw slot customers back.
Washoe County remains a market in decline: overall revenues fell by 8.55% from February 2010, and have fallen 31.04% since February 2004. The decline in table revenue (‐14.85% year to year and ‐45.13% since 2004) is particularly troublesome.

Nevada Gaming Statistics: February Comparison

I’m working on a commentary piece about the numbers for Two Way Hard Three, as well.

More about the “Friday Effect”

In my analysis of the January Nevada gaming numbers, I made reference to slot win from December being rolled over into January, something I dubbed the “Friday Effect” because I couldn’t think of a better description. I got a few emails asking for more details about it, so here’s the explanation that GCB Senior Research Analyst Michael Lawton gave me via email, shared with his permission:

December ended on a Friday so as a result of operators not dropping and counting on weekends we had December slot revenue roll into January. This also generally happens every Dec/Jan as operators don’t like to disrupt the slot floor during the holiday when there are such heavy volumes. The other factor is that the handle is reported in the actual month that it occurred because the meters are read electronically by on-line systems. As a result our stats get distorted because operators report on a cash basis and report the drop in the following month. I would estimate that approximately $58 million rolled into January from December for the State and of that $41 million was from the Strip.

One of the side effects of the difference between reporting the drop and win is that the handle estimates in my monthly reports are usually a bit different from the official coin-in numbers, but they’re still close enough to get the general gist of what’s happening. In slots, for example, the bottom line is that play has consistently fallen across the state.

Looking at past results and the December/January swing, I’d guesstimate that for most markets January slot hold was 0.4% to 0.5% higher than it should have been.

Nevada January gaming revenues: not encouraging

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.

Wrapping up 2010

With some time to really work today, I finished several updates and created a new report that should help put 2010 in perspective. Here’s the rundown:

1. I updated and retitled the analysis of monthly and quarterly revenue changes 2007-2010:

Nevada Gaming: Charting the Recession
Analysis of Total Gaming Win, Statewide and Las Vegas Strip, 2007-2010, on monthly and quarterly bases

2. I updated the year-to-date report, which now has unaudited figures for the entire year:

Nevada Gaming Statistics: Year-to-Date Comparison
Current totals for Statewide, Las Vegas Strip, Boulder Strip, and Washoe County

3. I created a new report, which summarizes the year’s revenue trends for several reporting areas:

Nevada Gaming Win 2010
Summary of Results from Statewide, Las Vegas Strip, Downtown Las Vegas, Boulder Strip, and Washoe County reporting areas

The new report is a real improvement over the old Gaming Revenue Breakdowns, which only had state-wide info. Now, I’ve also included summaries for four major reporting areas. Four times the work as last year, but hopefully five times the enlightenment for people who actually read this stuff.

I’m now working on an annual comparison of revenues in several markets. I’m thinking it will look like:

Nevada Statewide
Clark County
Las Vegas Strip
Atlantic City

I’m pretty sure I can get yearly data for all of those (well, I already have it for five of the eight), and it will give a good where the industry is heading. I’d like to get total US vs. total Asia as well, but that’s a project for the future. I’m having a hard time finding a good source for Singapore stats, which is the main impediment to rolling out a Singapore jurisdiction page and including Singapore in the report.

Talking Vegas debt in Vegas Seven

Another Thursday, another Green Felt Journal in Vegas Seven. This week, I tackle casino debt with the help of Eugene Christiansen:

It’s no secret that casino companies are more debt-encumbered now than they’ve ever been. In 1990, the average big Las Vegas Strip casino (those earning more than $72 million a year in gaming revenue), had $7.8 million in long-term debt attached to it. By 1999, that number had soared to $171.5 million. And as of 2009, the total stood at $860 million. That’s a lot of borrowing.

And yet casinos continue to borrow money—last month MGM Resorts International sold nearly $500 million in bonds that it plans to use to pay loans that are coming due in 2011. And Boyd Gaming is preparing a similarly sized bond offering for much the same purpose.

Gambling on debt | Vegas Seven

It’s almost hard to wrap your head around how much debt casinos have these days. This is definitely a concern for the financial health of the industry, and therefore the state, in the future.

I’ll probably be writing more about casino debt in the coming months, though it will likely be in a more academic channel.

Baccarat doesn’t = back in LVBP

In my latest Las Vegas Business Press column, I dissect the August 2010 Nevada gaming numbers:

And if your casino doesn't offer baccarat or high-end play, you might be out of luck. With only 22 out of the 329 casinos with nonrestricted licenses in the state 6.7 percent offering the game, only a few are sharing in the baccarat bounty.

via Las Vegas Business Press :: David G. Schwartz : Bounce in baccarat doesn’t signal recovery.

I got an interesting phone call yesterday from a caller who wouldn’t identify herself but still had a very good question: could the rise in gaming revenues be tied to the extension of unemployment benefits?

My first thought was, “I really hope not,” and the nature of the revenues suggests that’s not the case, unless the unemployed are betting big on baccarat. But other revenues are up slightly, and my caller shared an admittedly anecdotal but no less valid example: her neighbor, thanks to the extension, received six weeks worth of checks at once, paid her rent, and gambled much of the rest of it away.

If you multiply that by a few thousand (a big if), you could have a definite bump in gaming revenues, albeit one at taxpayer expense.

You might be able to figure out if this was so by looking at gaming revenues on a day-by-day basis. A big jump in the days after the unemployment checks mail would tend to support the theory. On the other hand, if people from other states are taking their money and vacationing in Vegas, it would be hard to correlate.

Look at quarterlies in LVBP

I’ve got another LVBP column up, in which I discuss whether looking at Nevada’s gaming numbers by quarters can yield any insights:

The financial quarter is a handy time measure for evaluating the Nevada gaming industry’s recessionary progress. Three months is long enough to absorb monthly volatilities, but not as long as a year. Looking at how different areas of the state have fared over the past three years may be the best way to forecast what will happen over the next three years.

via Las Vegas Business Press :: David G. Schwartz : Strip offers hope for recession-weary Nevada.

No matter which way you slice it, Las Vegas just isn’t looking very good right now. As much as I pooh-poohed analysts who offered sunnier outlooks earlier in the year, they might have been right in the short term, though it’s possible that we’re headed back down.

It’s really hard to use history to handicap the near future, but looking at these quarterly results really demonstrates the magnitude of the recession.