Gaming win has upside, downside

First, the good news: Statewide gaming revenues fell 8.3 percent in May, ending seven straight months of double-digit declines.

Now, the bad news: Statewide gaming revenues fell 8.3 percent in May, Nevada's 17th straight monthly decline in the amount of money casinos collected from gamblers.

"It's disappointing because with the number of special events in May, coupled with a soft monthly comparison from a year ago, we thought the results would be much better than what was reported," said Frank Streshley, the Gaming Control Board's chief of the tax and licensing division. "The higher numbers just didn't occur."

Nevada casinos collected $889.1 million from gamblers during the month, figures released Thursday by the Gaming Control Board show. The figure compared with $970 million collected a year ago. The May 2008 number was down more than 16 percent from what was reported in May 2007.

The latest decline was the lowest since September, when gaming revenues fell 5.4 percent.

On the Strip, gaming revenues were $480.8 million, a 6.4 percent decline compared with $513.5 million a year ago.

Taxes collected by the state from the May gaming revenues totaled $50.8 million, a decline of 19.9 percent compared with $63.5 million collected for the same period a year ago.

Streshley and other analysts thought the state would fare well going into May 2009 because of the event calendar.

The month featured several special events in Las Vegas, starting with the Ricky Hatton-Manny Pacquiao championship boxing match at the MGM Grand on May 2. Also, several well-attended concerts took place during the month. The month ended with an Ultimate Fighting Championship card at the MGM Grand.

The events turned out to be good for high-end business. Baccarat revenues were $96.2 million, an increase of 36.6 percent. The amount wagered on baccarat was $726.8 million, up 16.4 percent from a year ago.

However, the state's win from table games, other than baccarat and slot machines, didn't keep pace.

Streshley said without the boost from baccarat, statewide gaming revenues would have been off almost 12 percent.

The bright side, Streshley said, is that high-end business seems to be returning when special events are in town.

Other analysts echoed those sentiments.

"In a recent meeting we had with management, MGM Mirage indicated that demand patterns in Las Vegas were heavily event-driven in the current environment," Susquehanna Financial Group gaming analyst Robert LaFleur told investors.

He said the Strip results were also impacted by increased capacity.

"While, May's results show an improvement from recent levels, Las Vegas still faces significant challenges," LaFleur said.

Jacob Oberman, gaming analyst for CB Richard Ellis in Las Vegas, said baccarat results might have brought benefits only to the casinos that hosted each event.

"The other silver lining is that although the economic data and many other factors are still going against Las Vegas, the psychological malaise caused by the bombardment of negative news headlines could be wearing off," Oberman said in a report to clients. "Therefore, as we pointed out last month, it is not out of the question that things could improve before the economic data would suggest."

JP Morgan gaming analyst Joe Greff said he was encouraged because the May decline stayed in the single digits.

"All in all, we think results were solid, more on the table side than on the slot side," Greff said.

The money wagered on slot machines statewide during May was $10.1 billion, a decline of 10 percent from a year ago. Table game volume was $2.5 billion, a drop of 4.6 percent.

For the first five months of the year, gaming revenues are off 13.4 percent statewide and are down 14.7 percent on the Strip.

Still, two reporting areas in Clark County, North Las Vegas and the Boulder Strip, showed year-over-year gaming revenue increases in May because of new casinos opening in those markets. Washoe County, however, suffered its 23rd straight monthly gaming revenue decline.

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