Nevada gaming revenues increase for the first time in 23 months

Let’s not break out the party hats and the self-congratulatory statements just yet.

November’s modest statewide gaming revenue increase, the state’s first monthly rise in almost two years, is just a start to the casino industry’s recovering from a recession that has curtailed consumer spending, especially discretionary entertainment dollars spent by gamblers, according to analysts.

Nevada casinos collected $873.2 million from customers in November, a nearly 4.4 percent increase compared with $836.8 million won from gamblers in November 2008.

The figures, which ended a streak of often-times double-digit declines in monthly gaming revenues, were released Tuesday by the Gaming Control Board.

On the Strip, gaming revenues were up for the first time since December 2007. Strip casinos collected $473.8 million, an 8.3 percent jump compared with $437.7 million collected in the same month the prior year.

Despite the positive November, gaming revenues for the first 11 months of the year are down 11 percent statewide and 10.7 percent on the Strip.

The Las Vegas locals market also had a positive month.

November gaming revenues were up 19 percent on the Boulder Strip, grew almost 21 percent in North Las Vegas and were up 2.6 percent in the balance of the Clark County.

The numbers surprised analysts. Most expected Las Vegas would see a revenue bump from the December opening of MGM Mirage’s $8.5 billion CityCenter development, but not until January figures were released.

Frank Streshley, chief of the control board’s tax and license division, said regulators saw a hint that the month was going to land on the positive side as tax reports were being filed.

“November was well above expectations,” Streshley said. “We didn’t think we would turn the corner until the first part of 2010, well after the opening of CityCenter.”

CRT Capital Group gaming analyst Steve Ruggiero offered a reason for the increase. Because Oct. 31 fell on a Saturday, some slot machine revenues from the weekend fell into November’s reporting period.

“This can partially explain the apparent surge in the month of November as compared to the prior year’s period,” Ruggiero told investors. “The combination of October and November may provide a better proxy for Nevada and Las Vegas trends.”

Ruggiero said the Nevada gaming revenue totals for the two months were off 3.9 percent compared to the same two months of 2008. Still, he said, it was an improvement.

JP Morgan gaming analyst Joe Greff said gaming revenues earned by casinos in November 2008 were down almost 15 percent statewide from the prior year, which made for an easy comparison.

“We think November’s relative strength has been well understood by investors, but (it is) encouraging nonetheless,” Greff said in a research note.

Table games, especially high-end baccarat play by international customers, continued to fuel the Strip’s rebound.

Streshley said the Nov. 14 Manny Pacquiao vs. Miguel Cotto championship fight at the MGM Grand helped spur baccarat totals, but high-end play was up throughout the month.

Strip casinos won $92.7 million from baccarat, a 136.3 percent increase compared with a year ago. More than $690.8 million was wagered on baccarat, up 84 percent.

Susquehanna Financial Group gaming analyst Robert LaFleur said the baccarat results were a positive sign for several casino operators.

“The strong baccarat numbers benefit properties such as Wynn, Venetian, Bellagio, along with to a lesser extent some of the other MGM Mirage properties, like the MGM Grand and Mirage,” LaFleur said.

Streshley said any sort of recovery on the gaming front would come from table games, which usually attract more high-end players.

In November, table games accounted for gaming revenues of $312.8 million, an increase of 17.3 percent compared with a year ago, while the amount wagered was $2.4 billion, an increase of 13.6 percent.

Meanwhile, gamblers wagered $8.7 billion on slot machines, down 10.2 percent from a year ago, while the revenues produced by the games was $549.3 million, a decline of 1.6 percent.

One month doesn’t make a trend, Streshley said. But analysts point to positive signs.

Las Vegas visitation was up almost 3 percent in November. Early indications are that New Year’s Eve had strong numbers and the recently concluded Consumer Electronics Show grew attendance by about 6 percent.

“We are more confident that 2010 will represent the positive inflection in Las Vegas,” said Union Gaming Group principal Bill Lerner.

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