Nevada gaming revenues increase 3.7 percent in July

For once, Nevada's casino industry wasn't all about the Strip.

Gaming revenues produced in July by other markets in Clark County, such as North Las Vegas, the Boulder Strip and downtown, carried the state to its third straight monthly gaming revenue increase.

The nearly 3.7 percent statewide jump, reported Monday by the Gaming Control Board, came even as Strip results were reduced, mainly a result of an unusually low hold percentage on traditional table games.

Strip casinos still saw gaming revenues increase almost 1.6 percent in July, the market's third straight jump.

The results ended two straight months of double-digit gaming revenue increases both statewide and on the Strip. Through July, gaming revenues are up 4.3 percent statewide and 7.5 percent on the Strip.

Statewide in July, casinos collected $860.1 million in gaming revenue, compared with $829.7 million a year ago. On the Strip, casinos reported $468.5 million, compared with $461.3 million in July 2010.

Gaming revenues in Clark County as a whole grew
3.2 percent, but individual reporting areas had healthier hikes. Casinos downtown and in North Las Vegas saw gaming revenues grow more than 10 percent, while casinos on the Boulder Strip were up 13 percent.

Control Board Senior Research Analyst Michael Lawton said gaming revenues from North Las Vegas, the Boulder Strip and the balance of Clark County accounted for 43 percent of the state's overall total in July. For the first seven months of the year, the Las Vegas locals market is up 2.9 percent.

Analysts also found pockets of positive signs within the Strip's July numbers.

Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski told investors that July's gaming volume strength, for the second consecutive month, extended to all segments of the casino floor.

"We continue to believe a recovery in Strip lodging trends, paced by improved convention and group mix, will serve as the primary driver of improved Strip operator health," Wieczynski said.

Slot machine wagering was up 8.5 percent on the Strip, the fifth straight month of increased spending by customers. July marked the largest single-month increase in slot machine volume since June 2007.

Many analysts view increased volume in slot machine wagering as a meaningful indicator of the Strip's overall health.

"This usually flows through to the nongaming spend and hotel fundamentals," said Macquarie Securities gaming analyst Chad Beynon.

Lawton said July was a record-setting month for baccarat, with casinos collecting $88.9 million from customers, a 21 percent increase. The amount wagered, $914.5 million, was up 24 percent.

Wagering also was up for other table games, such as blackjack, craps and roulette. However, lower than normal hold percentages offset the Strip's baccarat numbers.

"The rest of the table games just didn't pencil out," Lawton said.

Most gaming analysts said casino operators had been playing down results from July and have been focused more on August and September results.

"July is seasonally a weaker month," Beynon said. "Given the lack of conventions and the blazing temperatures in Las Vegas during July, this month is not one of the most critical in terms of overall profits."

While July's Strip results didn't match the 32 percent and 28 percent gaming revenue increases the market saw in June and May, respectively, analysts were confident the major Strip casino operators will see marked increases in their cash flows during the quarter, in part because of less expensive marketing, reduced promotions and cost controls.

"We believe these monthly results as well as our recent channel checks suggest an attractive gradual revenue recovery on the Las Vegas Strip," JP Morgan gaming analyst Joe Greff said.

During August, $48.1 million in gaming taxes were collected, based on the July revenue figures, a decline of 3.6 percent compared with the same month a year ago. Gaming tax collections are still up almost 9 percent for the first two months of the fiscal year.

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