Analysts shrug off decline in January gaming revenue

Analysts shrugged off a decline in January gaming revenue. They said the Strip and statewide raw figures for the month don’t really tell the whole story.

Nevada gaming revenue declined 2.76 percent in January to $884.2 million while Strip gaming revenue fell 1.41 percent to $499.8 million.

The Gaming Control Board released the numbers Friday.

The Strip’s baccarat revenue fell 14.5 percent to $81.7 million, but the amount wagered on the game was $908.6 million, a 14.3 percent increase. The hold percentage — what the casinos won from the game versus what the players collected — was 9 percent, well below the average hold of 12.02 percent.

The monthly revenue decline from baccarat was the Strip’s first in five months. However, the game accounted for 16 percent of the Strip’s overall revenue total.

“Results were impacted by low hold and more importantly all relevant volume metrics were up nicely,” Union Gaming Group analyst Robert Shore told investors. “We think the volume numbers are encouraging and point to a pick-up in Las Vegas demand.”

Table game wagering on the Strip was up 5 percent in January while wagering on slot machines increased 7.2 percent. In both cases, the hold percentages were below the January 2013 figures.

“It was a strong month, but the casinos just didn’t hold well,” Control Board senior research analyst Michael Lawton said.

January is a typically popular month in Las Vegas, boosted by the annual New Year’s Eve celebration and special events.

Wells Fargo Securities gaming analyst Cameron Mc-Knight said the month’s wagering growth and a strong convention calendar could translate into increased nongaming revenue for the major Strip hotel operators, such as MGM Resorts International and Caesars Entertainment Corp.

JPMorgan gaming analyst Joe Greff told investors that despite the lower hold percentages, “We believe these results are actually OK.”

Greff said Wall Street likes to compare gaming results from January and February together to gauge the market’s overall health. The Chinese New Year holiday often straddles the two months.

February 2014, however, will include all of Chinese New Year and $19.67 million in revenue from Super Bowl wagering, a previously reported record.

“We are expecting a strong February,” Greff said. “We believe (the Strip) is generally healthy and moving in a positive direction.”

The Boulder strip’s gaming revenue fell 18 percent compared with January 2013; there was an almost 13.5 percent drop in North Las Vegas.

Two Clark County reporting areas had increases — a 4.5 percent rise in Laughlin and a less than 1 percent jump in the balance of Clark County.

Gaming revenue in Clark County as a whole declined 3.15 percent.

Meanwhile, gaming revenue in Washoe County casinos, which include those in Reno, increased 1 percent.

January marks the last month the Control Board will keep wraps on the revenue produced by the state’s online poker operations. Last week, Real Gaming, which is operated by South Point, launched its real-money operations, joining Station Casinos’ Ultimate Poker and Caesars-owned WSOP.com.

Union Gaming Group believes the results are included in the card games number for the balance of Clark County, which was up 14.7 percent to $1.6 million. Shore said the figures imply revenue of $200,000 from online poker in January.

“The recent addition of a third entrant into the market should provide increased transparency going forward,” he said.

Nevada collected $69 million in gaming taxes in February, based on January’s revenue, which was a 1.7 percent increase from a year earlier.

For the first eight months of fiscal 2014, gaming tax collections are up less than 1 percent over the same time period of fiscal 2013. However, the figures are $10.6 million, or 2.4 percent below the projections released by Nevada’s Economic Forum.

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