Nevada casino industry has record month

With the state in the midst of a budget crisis and calls for an increase in the gaming tax weaving their way through political channels, Nevada's casino industry recorded an all-time single monthly record for gaming revenues during October, collecting more than $1.164 billion from gamblers.

But the record gaming win, reported Tuesday by the Gaming Control Board, didn't translate immediately into a record contribution into the state's tax coffer. Gaming taxes collected during the month were more than $71.8 million, 1.5 percent higher than a year ago but almost 4 percent below projections by the state's Economic Forum.

Gaming observers said the discrepancy between gaming revenues and tax collections was due to high-end play at Strip casinos. Baccarat win in October was $108.2 million, up 338 percent from a year ago. That money isn't always immediately collected at the tables, however. Most baccarat play traditionally is handled through credit. Once casinos collect the markers, the taxes are then forwarded to the state.

Frank Streshley, the control board's senior research analyst, said the gaming win for the first four months of the 2008 fiscal year is more than $4.38 billion, up almost 5.8 percent from last year, which is in line with the Economic Forum's forecast.

"We know those fees will be collected either next month or several months down the road," Streshley said. "There may be months where the gaming win is off, but the collections are high."

Melissa Subbotin, press secretary for Gov. Jim Gibbons, said while the gaming revenue record for October was a welcome surprise, it doesn't mean the state budget crisis is over.

Recent projections show Nevada is facing a budget shortfall of more than $285 million, which is also a reflection of reductions in sales tax and real estate transfer tax collections.

"This certainly is good news, but we are still preparing to make some difficult financial decisions for the state," Subbotin said.

So far in the fiscal year, gaming tax collections stand at $329.1 million, 1.6 percent below the projections of the Economic Forecast. Streshley is confident the percentage will rise in the coming months as the casinos account for credit play.

Bill Bible, president of the Nevada Resort Association and a former chairman of the Gaming Control Board, said the record gaming win sends a false message. While revenues are up, the gaming win is a raw number and doesn't account for taxes, payroll, promotional fees, capital improvements and other expenses.

The October gaming revenue totals were surprising to most industry observers.

Statewide, the casino win was 9.6 percent higher than a year ago and eclipsed the previous monthly record of $1.146 billion set in July. Casinos in Clark County on a whole reported gaming revenues of more than $1 billion, 12.5 percent higher than a year ago and the first time in state history Clark County cracked the $1 billion figure.

Strip casinos again were the state's gaming engine, winning almost $637.8 million in October, 19.8 percent higher than October 2006. The figure was the second largest monthly Strip win total in history.

"While we normally would not call out monthly revenues, October's Las Vegas Strip revenue growth was far enough outside of a normal band to warrant special attention," Deutsche Bank gaming analyst Bill Lerner said in a note to investors.

Streshley said baccarat told the story. The win of $108.2 million came about through the highest amount ever wagered on baccarat in a single month, $766 million, which was a 36.2 percent increase over the October 2006 total. The hold percentage was an above average 14.3 percent, Streshley said.

Golden Week, a Chinese labor holiday, fell during the first week of October; and casinos spent heavy promotional dollars to bring high-end Asian customers to Las Vegas to celebrate the event.

Alan Feldman, a spokesman for MGM Mirage, cautioned that increased gaming revenues don't always translate into profits. MGM Mirage operates 10 Strip casinos, several of which cater to a high-end baccarat customer. Fedman said the casinos often pay for a customer's airfare, luxury hotel suites, and offer other incentives to attract high-end Asian baccarat business.

"It's great that gaming revenues are up, but that oftentimes has nothing to do with profitability," Feldman said.

Statewide, table games accounted for revenues of $373.3 million, up 21.5 percent from a year ago.

Revenues generated by slot machines was $779.2 million, a 4.9 percent increase. Live poker generated $12.4 million in gaming win, down less than a percentage point.

Overall, gamblers wagered $11.6 billion on slot machines and $2.8 billion on table games during October.

Streshley said the calendar in the final few months of the fiscal year bodes well for the casino industry. The biggest gambling events in the early part of the year -- New Year's Eve, Super Bowl weekend, Chinese New Year and President's Day -- are all on separate weekends in 2008, meaning hotel rooms will be available.

"We have a pretty good comfort zone, but that's not to say things couldn't change," Streshley said.

For the first 10 months of 2007, the overall state gaming win is 3.5 percent above the 2006 total.

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