Gaming revenue slumps in June


Maybe we haven't hit bottom.

Gaming revenues statewide and on the Strip fell in June to levels not seen since 2003.

For the second straight month, baccarat players walked away from the tables with more money than they sat down with.

Gaming revenues were $763.8 million in June, according to figures released Thursday by the Gaming Control Board. The number was a more than a 6.6 percent decline from $818.3 million collected in June 2009.

The statewide number was the worst single-month decline this year and the fourth straight monthly drop.

The last time state gaming revenues were this low was April 2003, when casinos collected $744.6 million from gamblers.

Strip casinos didn't fare much better.

Gaming revenues on the Strip were $383 million in June, a decline of 7.6 percent from $414.5 million a year ago. The figure was the lowest total on the Strip since casinos won $378.9 million in December 2003.

If there was a bright spot, it's that investors and analysts largely expected June to be a down month.

"As most companies have already reported second-quarter results at this point, we note that June gaming revenue results are by and large academic," JP Morgan gaming analyst Joe Greff told investors.

The hold percentage in baccarat -- the amount casinos won versus the amount gambled -- was again a reason for the monthly decline. On the Strip, baccarat hold percentage was 3.51 percent. A year ago, the hold percentage was a more normal 12.85 percent.

In May, baccarat hold percentage was 8.26 percent and was largely blamed for a 6.4 percent dip in Strip gaming revenues.

During June, gamblers wagered $518.3 million on baccarat, which was up 43.2 percent from a year ago. The casinos' revenue from those wagers was $18.1 million, a decline of 60.9 percent from June 2009.

"It's a volatile business and, as it happens, the gamblers played lucky," said control board senior research analyst Mike Lawton. "Baccarat absolutely moved the needle."

Lawton estimated that with a normal hold percentage on baccarat of 13 percent, Strip gaming revenues would have been up 4 percent in June. He said hold percentages were below normal for blackjack, craps and other table games as well.

Gamblers wagered $2 billion on table games in June, up 10.5 percent from a year ago. But the hold percentage for table games was 9.84 percent, compared to almost 13 percent a year ago.

The only market where gamblers didn't play lucky was South Lake Tahoe, where the table games hold percentage was 22.54 percent .

Through June, gaming revenues are down 1.2 percent statewide. They are up 2.6 percent on the Strip, due in large part to February, when gaming revenues climbed more than 32 percent.

February was a month where baccarat hold percent was above 17 percent on the Strip and came about during Chinese New Year, when more than $1.2 billion was bet on baccarat.

In Clark County, gaming revenues fell 6.9 percent, including an 11.7 percent drop downtown and an 8.8 percent decrease along the Boulder Strip.

"We view the Nevada data as consistent with our expectations of decelerating declines overall, but with particular weakness in the downtown and locals markets," Jefferies & Co. gaming analyst David Katz told investors. "The results validate operators' second-quarter commentary regarding low table hold percentage and its impact on results."

For the fiscal year that ended in June, gaming revenues were $10.3 billion statewide, a 4.3 percent dip from $10.8 billion in the previous fiscal year. In the 2009 fiscal year, gaming revenues fell 13.7 percent.

Frank Streshley, chief of the control board's tax and license division, said fiscal gaming revenues are down 18.9 percent statewide from fiscal year 2007, when casinos collected $12.7 billion.

On the Strip in fiscal year 2010, gaming revenues were $5.62 billion, a decline of 0.6 percent from $5.65 billion in the previous fiscal year. The 2010 figure is down 17.1 percent from $6.77 billion in gaming revenues in fiscal year 2007.

Taxes collected based on June's gaming revenues were almost $43 million, a 5.9 percent decline from $45.7 million collected in the same month a year ago.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.

 

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