Saturday, September 11, 2004
Copyright © Las Vegas Review-Journal

NEVADA ECONOMY: Gaming win dips in July

$812.5 million is lowest monthly total since December, but fall blamed on calendar

Bob Lepovetsky spins the Wheel of Fortune on July 27 at the MGM Grand. Nevada's monthly gaming win turned downward in July, falling 1.6 percent from a year ago. Photo by ISAAC BREKKEN/REVIEW-JOURNAL Click image for enlargement.

Nevada's total monthly gaming win dipped in July for only the second time this calendar year, falling 1.6 percent to $812.5 million compared with $825.4 million a year earlier, the state Gaming Control Board reported Friday.

Analysts blamed the drop mainly on the fact there were only four weekends in the month, compared with five weekends in July 2003, although one expressed some concerns about consumer attitudes.

Unlike June, when the gaming win fell from a year earlier but increased from May, the July win was down from June and was the lowest posted in Nevada since December.

Control board statistical analyst Frank Streshley said it was also the first month that new tax rates hit gaming revenues. In September 2003, the gross receipts tax on gaming win was increased from 6.25 to 6.75 percent for top-tier casino companies.

The state collected $49.2 million in August, based on taxable revenues generated in July, down 8.7 percent from $54.4 million the month before.

Streshley also pointed out that the soft spots were mainly in Clark County and the South Lake Tahoe area, which had a 21.8 percent drop in gaming win.

"We don't usually look at smaller markets pulling the state down, but that's the case this year. And in July, (South Lake Tahoe) had (a major) golf tournament and casino play was extremely unlucky, pulling the state down."

Still, Brian Gordon, spokesman for Applied Analysis, a Las Vegas-based financial consulting firm, said one month doesn't make a trend.

"The July gaming win numbers were somewhat surprising, but the increase in the prior year, when the win was up 4.5 percent, set a high hurdle to meet," he said.

Deutsche Bank analyst Andrew Zarnett said if you take out the low table holds for the month, gaming revenues increased 7 percent compared with 2003.

"July really continued the strength we saw in the spring. We expect the trend continued in August and we should keep seeing strong results into the fall," he said.

Despite the decrease, Gordon said overall gambling activity appeared strong statewide in July.

"The drop at table games was up 16 percent while the drop on the slots was up 14 percent, suggesting strong activity," he said.

Total drop is the amount wagered and lost at table games and slot machines.

"Overall, it seems as if the activity is there," Gordon said. "The same month, McCarran saw a record number of passengers. But in this particular month, players fared better than they have historically."

Eric Hausler, gaming analyst for Susquehanna Financial Group, said the problem of relatively lucky players was compounded by the calendar.

Because the last day of the month fell on a Sunday, July included only four weeks of slot revenues, compared with five in 2003, he said.

"They had an entire extra weekend last year. In addition, they had a big surge in demand on the Strip last year at the end of the war (in Iraq)," Hausler said.

"This year, you had a consumer hiccup in July. The economy definitely hit a soft spot over the summer. That said, August will be an easier comparison and September should be pretty strong because of the timing of Labor Day this year," he said.

"Still, we're watching consumers closely. There's no doubt Las Vegas has slowed from its torrid pace earlier in the year and we're expecting more moderate growth rates in the back half of the year," Hausler said.

Gov. Kenny Guinn in a statement called the latest gaming statistics disappointing after six solid months of growth.

Still, he said the state economy is strong and expressed confidence the latest downturn is only temporary.

Clark County casinos reported a gaming win of $647.2 million, down 1.3 percent from $655.9 million the year before. The county's largest win was on the Strip where casinos took in $393.8 million, down 0.7 percent from 2003.

Statewide, baccarat winnings in July were $31.3 million, up 45 percent, while blackjack winnings dropped to $83.3 million, a 12 percent decrease. Craps winnings were up 10 percent at $34.7 million. Slot winnings were down 3 percent for a total win of $564.8 million.