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Nevada gaming revenue dips, but positive note seen in slots

Despite Nevada and the Strip’s third straight monthly gaming revenue decline — fueled by a more than 35 percent drop in baccarat totals — analysts found a bright spot in what was otherwise a dismal October.

After all, it is the start of the Thanksgiving holiday.

Statewide, casinos’ gaming revenue fell almost 4.3 percent to $913.6 million during the month. On the Strip, gaming revenue fell 5.6 percent to $520.3 million. The Gaming Control Board released the figures Wednesday.

The positive note came from slot machines.

Strip revenue from slots increased almost 7 percent during October to $260.6 million. Slot machine wagering of $3.5 billion during the month was an increase of 6 percent. Through the first 10 months of 2014, slot machine wagering is up 1.6 percent and revenue has increased less than 1 percent.

Analysts point to slot machine wagering as a good barometer for the overall health of the casual Strip visitor.

Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said he was encouraged by the backstory within October’s results, which included a 3 percent increase in total passenger counts at McCarran International Airport.

“At this point, we view the Las Vegas story as one heavily predicated on the ongoing mass-market recovery,” Wieczynski said.

Much of the Strip’s decline was attributed to poor baccarat results. Revenue from the game was $97.3 million, a decline of 35.5 percent compared with the same month a year ago. The amount wagered on the game fell almost 15 percent, the second straight month of double-digit percentage declines in baccarat volume.

The October hold percentage on baccarat — the percentage of wagers retained by casinos — was 10.08 percent, down from 13.3 percent in October 2013.

Wieczynski said he still views the Strip’s baccarat business as “healthy,” despite the October decline that came during a month with a popular Chinese holiday.

“(Baccarat) has generated average monthly revenue of $134 million over the trailing 12-month period,” he said.

Without baccarat, Strip gaming revenue would have increased 5.6 percent.

“These results were mildly positive to us given growth in mass tables and slot machines,” Macquarie Securities gaming analyst Chad Beynon said.

Wells Fargo Securities gaming analyst Cameron McKnight said the Strip’s nongaming outlook has helped offset any gaming revenue declines.

Revenue per available hotel room — a nontraditional reporting figure — was up 6 percent in the third quarter. Las Vegas is also benefiting from a strengthening in corporate meetings and conventions.

The statewide declines followed a 3.7 percent drop in August and a 6 percent dip in September. In those same time periods, Strip gaming revenue fell 6 percent in August and 12 percent in September.

For the first 10 months of 2014, state gaming revenue is down 0.5 percent. Strip gaming revenue is down 0.1 percent.

Analysts say the Strip’s poor overall monthly total was not a surprise.

“We have been forecasting flat-to-down gaming revenue for the year and the fourth quarter specifically,” Deutsche Bank gaming analyst Carlo Santarelli said.

In Clark County as a whole, gaming revenue declined 6.2 percent, primarily because of double-digit percentage decreases on the Boulder Strip (down 24.2 percent) and North Las Vegas (a 14.6 percent drop).

However, casinos in downtown Las Vegas reported a gaming revenue increase of 1.2 percent in October.

The downtown Las Vegas market continues to benefit from strong Hawaiian tourism, recent renovations and new amenities, Santarelli said.

Gaming revenue in the balance of Clark County, which includes casinos outside of Las Vegas and Henderson, increased 2.4 percent.

Washoe County casinos’ gaming revenue climbed almost 7 percent during the month, including a 7.9 percent increase in Reno.

Gaming revenue in October associated with Internet poker was $665,000. October will be the last full month with three online wagering sites in Nevada after Ultimate Gaming ceased operations earlier this month.

Gaming taxes collected in November, based on October’s revenue, were $66.8 million, a 9.5 percent increase from the same period a year earlier. For the first five months of the fiscal year, gaming revenue collections were up less than 1 percent from a year earlier.

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

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