Propped up by strong high-roller action, the Las Vegas Strip posted an 11.5 percent increase in June gaming revenues, the state Gaming Control Board reported this morning. But evidence of a slowdown in Nevada’s gaming industry continues to mount.
The Strip’s casinos reported $394 million in gaming win in June, while the state posted $776.5 million, up 3.8 percent.
On the surface, that appears to contradict the consensus that Nevada’s casinos are mired in a slowdown. But a closer look at the numbers shows the Strip’s big increase came from baccarat — the game of the high-roller — and not slots, the game of choice for the middle-market gambler.
Winnings in baccarat soared 82.9 percent statewide. And on the Strip, the increase was 80 percent. Baccarat accounted for $48.4 million in winnings on the Strip in June, or 12 percent of the total. Blackjack also showed strength, as winnings rose 23 percent on the Strip.
But at the same time, slots weakened. Total slot win on the Strip was $189.1 million, down 1 percent from last year.
“It looks like your overall traffic in the city is coming down, which has pretty much been the trend,” said William Schmitt, gaming analyst with CIBC World Markets. “It’s the same usual suspects … the Indians (casinos in California), the California economy, energy and fuel costs.”
And it’s likely to get rougher in the next several months, Schmitt said.
“The summer months will be very difficult, Togel because last year was huge,” Schmitt said. “That’s why July is something we have to watch closely. If it doesn’t come down too much, I would take that as a positive.”
The reason slot play is watched so closely is because it is a stable stream of income, as opposed to the volatility of high-end play.
“That (slot play) is the middle market in Las Vegas,” said Andrew Zarnett, gaming analyst with Deutsche Banc Alex. Brown. “High-rollers can come and go as they wish, but sometimes there’s very strong demand, and sometimes there’s very weak demand. The decline in slot play is a concerning trend.”
What it’s reflective of is a continuing split, Zarnett said. Properties at the higher-end of the Las Vegas spectrum have continued to do fairly well; properties at the lower end have not.
“What we’re seeing is that the larger companies with better assets have been able to capture a little more market share … at the expense of some of the further-off (from the Strip) middle-to-low end properties,” Zarnett said.
Downtown casinos reported $54 million in win in June, up 3.1 percent.
The board said North Las Vegas casinos in June saw revenues drop 14.7 percent to $15.4 million; Laughlin reported $41.8 million in win, down 5.4 percent, and the Boulder Strip had $45.4 million in winnings, down 10.2 percent.
North Las Vegas is primarily controlled by Station Casinos Inc.’s Texas Station and Fiesta. Those properties have struggled through much of the last year due to the September 2000 opening of the Suncoast hotel-casino near Summerlin. While the slowdown isn’t as apparent in the June numbers, it becomes clearer in the numbers for the fiscal year ending June 30, which the board released today.
For the year, the state’s casinos reported gross win of $9.6 billion. That’s an all-time record, but it’s up just 2.2 percent from fiscal 2000 — the second-lowest growth rate for the state in the last decade. Only 1997 was a slower year, when the state’s gaming win increased just 0.7 percent.
During the 2001 fiscal year, casinos on the Strip reported winnings of $4.8 billion, up 2.8 percent. This was the third lowest-increase for the Strip in the last ten years; the average increase has been 6.6 percent.
Frank Streshley, senior research analyst with the control board, noted that four new megacasinos opened on the Strip in fiscal 2000, resulting in an 11.3 percent gaming win increase that year. In fiscal 2001, only the Aladdin opened on the Strip.
That coupled with a slowing of the national and international economy in September were the main reasons for the sluggish performance.
“There’s a general malaise (among Las Vegas visitors) of, ‘I’ve seen it, I’ve been there, what’s new?”‘ Zarnett said.
Clark County continues to play the dominant role in the state’s gaming picture. It accounts for 80.5 percent of the total revenue. Ten years ago, it contributed 74.3 percent. For the second year in a row, the Strip casinos contributed slightly more than 50 percent of the gross win to the state total.
While other areas were suffering somewhat, downtown Las Vegas casinos posted their third highest growth rate in the last ten years. The clubs reported $679.8 million in revenue, up 1.1 percent.
North Las Vegas casinos took the biggest hit for the year. The casinos reported $221.8 million in revenue, down 5.2 percent. That’s the worst year for growth in the last ten years where the average annual increase has been 22.7 percent.
Boulder Strip clubs accounted for $608.5 million in gross win, up 4 percent, but this is the lowest growth for that area in the last 10 years. Streshley said the 4 percent increase comes on top of a 9.1 percent gain in fiscal 2000.
So how long will the slowdown continue? Zarnett believes growth will remain sluggish through Labor Day, then should pick up somewhat as group business and conventions return to town.