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Baccarat results send state, Strip gaming revenue downward


Baccarat results on the Strip sunk statewide gaming revenue in June.

How bad?

Baccarat revenue was $64.7 million for Strip casinos during the month, down 53.7 percent from June 2014. For the first six months of the year, baccarat revenue is down almost 20 percent. The $616.7 million wagered by gamblers on baccarat was a decline of more than 43 percent. The hold percentage - the amount of money won by casinos out of the total wagers - was dismal 9.4 percent versus the 12.4 percent of a year ago.

Analysts said June 2014's baccarat revenue was 154.8 percent increase from a year earlier, making for a seemingly impossible comparison to reach. Gaming Control Board Senior Research Analyst Michael Lawton said the revenue and volume totals from a year ago were the highest ever for the month of June.

Still, the damage was done.

The Gaming Control Board said Tuesday Nevada gaming revenue declined more than 8 percent to $830.9 million during June. On the Strip, gaming revenue was down 16.3 percent to $445.5 million.

The results were disappointing considering that May's gaming totals marked the state's first billion-dollar revenue month for casinos since December 2013. The Strip's $601.2 million figure was the highest single-month since December 2013.

Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said "the inherent volatility in baccarat volumes" skews the overall results.

"That said, June's results, though still somewhat disappointing, were far better than the headline comparison would indicate," Wieczynski said.

Forgetting baccarat for the moment, Strip gaming revenue would have been down just 3 percent without the game. Meanwhile, slot machine revenue was $230.8 million, down 4.1 percent for the month. For the first six months of 2015, slot machine revenue is up 4.4 percent. Table game revenue excluding baccarat was $157 million in June, down just 0.3 percent

"Overall, we continue to think the Las Vegas Strip can generate low-to mid-single (revenue per available room) and visitation growth, though we expect the market to continue to experiencing volatility in baccarat play given a likely slowdown in Chinese players," said J.P. Morgan gaming analyst Joe Greff.

Fantini Gaming Research principal Frank Fantini said the declines in table game and slot machine revenue in June might suggest a broader weakness on the Strip.

"The question about the big decline in baccarat volume is whether it is a trend running parallel to the decline of high roller play in Macau as big Chinese players lay low," Fantini said.

For the first six months of the calendar year, statewide gaming revenue is up 0.6 percent over 2014, while Strip revenue is down 1.4 percent over the same time period.

Wells Fargo Securities gaming analyst Cameron McKnight said the June gaming revenue numbers "were moderately disappointing." McKnight said the city saw a boost in visitors thanks to the 400,000-plus attendees at the three-day Electric Daisy Carnival. However, the event didn't help gaming revenue figures give the "core demographic."

Gaming revenue results by individual market were a mixed bag in June. Downtown Las Vegas gaming revenue increased 2.2 percent, but the Boulder Strip saw gaming revenue rise more than 6 percent. Up north, Reno gaming revenue fell 2 percent, but South Lake Tahoe casinos saw a 44 percent gaming revenue increase during the month, driven largely by the opening of the Hard Rock resort.

The Control Board also released the 2015 fiscal year totals Tuesday. Statewide, gaming revenue declined 1.6 percent for the 12 month period that ended June 30, topping $11 billion. In the 2014 fiscal year, statewide gaming revenue increased 2.9 percent. On the Strip, gaming revenue declined 4.3 percent to $6.3 billion in the 2015 fiscal year. In fiscal 2014, Strip gaming revenue was up 5.2 percent.

Nevada collected $48.7 million in gaming taxes during July, based on gaming revenue in June, an 8 percent increase from a year ago.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.

 

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