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NEVADA ECONOMY: Funk and fear in February

Even seemingly favorable factors can't prevent gaming win slip



Photo by K.M. Cannon



Graphic by Mike Johnson.

OK, now it's time to panic.

Despite a month that included Chinese New Year, Super Bowl weekend, the three-day Presidents Day weekend, a favorable calendar and one extra day thanks to the leap year, gaming revenues statewide fell almost 4 percent in February, giving Wall Street cause for concern.

On the Strip, casino revenues were down 3 percent from a year ago due to a lower hold percentage in baccarat and other table games. Meanwhile, the locals casino market also experienced a revenue drop.

"Gaming revenues have been soft this year. However, we believe the decline is not as bad as expected," Deutsche Bank gaming analyst Bill Lerner said in a note to investors Wednesday. "Still, with room rates down this quarter and gaming revenue declining, it is clear that Las Vegas is feeling the impact of a difficult economic environment."


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  • The Gaming Control Board released the monthly gaming revenue figures Wednesday.

    Gaming win was $1.014 billion in February, a decline of 3.9 percent from $1.056 billion a year ago.

    On the Strip, gaming win was $556.6 million, a 3 percent decrease from $574.7 million in February 2007.

    Gaming revenues declined in every reporting area of the state except for two locations, Carson Valley, which includes Carson City; and the area described as "balance of Clark County," which includes several locals casinos such as Red Rock Resort and South Point. Balance of Clark County gaming revenues were $107.8 million, a 1.1 percent increase from $106.7 million a year ago.

    However, gaming analysts said the locals market fell more than 6 percent in February when results from the Boulder Strip (down 14 percent) and North Las Vegas (off 13.3 percent) were factored in.

    Morgan Joseph gaming analyst Justin Sebastiano said the numbers didn't bode well for some casino operators.

    "What's worse, we believe promotions remained high, which typically translates into tighter margins and less profitability," Sebastiano said in a note to investors. "We calculate that Boyd Gaming derives about 45 percent of its fiscal year 2007 revenue and 47 percent of its fiscal year 2007 (cash flow) from the Las Vegas locals market."

    Gaming revenues reflect what the casinos collect from customers before taxes, payroll and other operating expenses are deducted.

    Frank Streshley, senior research analyst for the Gaming Control Board, said there is now a downward trend for overall gaming revenues statewide. Three of the last four months have reported revenue decreases and the amount wagered on slot machines was off 1.4 percent statewide during the month.

    There had been much hope within the gaming industry about February, following January's 4.75 percent decline in gaming win.

    Streshley said the extra day, Feb. 29, which fell on a Friday, was thought to be worth an additional 3 percent in gaming revenue. Also, February 2007 featured the NBA All-Star Game Weekend, which drove down gaming revenues last year.

    "The expectations were high but the results were not unexpected given the state of the economy," Streshley said. "When all but two markets are showing declines, that's reflective of the economy."

    Streshley said a portion of the state's decrease in February could be blamed on the New York Giants' upset victory over the New England Patriots in Super Bowl XLII. Sports books in Nevada lost $6.8 million during the month, $2.6 million of which came from gamblers who bet on the underdog Giants. A year ago, sports books won $12.9 million from gamblers wagering on the Super Bowl.

    "Overall, the statewide total was down $41.5 million from a year ago," Streshley said. "We had almost a $15 million swing on the Super Bowl, so that's one factor."

    February had one extra weekend day than a year ago, which would have seemingly helped boost gaming revenues, analysts said. Also, the three-day Presidents Day weekend didn't have the NBA All-Star Game or Chinese New Year.

    Baccarat also contributed to the down month. The amount wagered on baccarat on the Strip was $1.041 billion, up 2 percent from $1.025 billion a year ago. However, the win of $116 million was flat compared with 2007.

    Bear Stearns gaming analyst Joe Greff said in an investors note the decrease in hold percentage, "wiped out the year-over-year growth in drop. Excluding baccarat, the total win on the Strip in February fell 3.9 percent year over year."

    Streshley said one resort operator told him some of the high-end baccarat players from Asia, who came to Las Vegas over the Jan. 1 New Year's holiday, gambled in Macau over Chinese New Year instead of making a return trip.

    "That's not necessarily a negative for the state because we did have a record baccarat win in December," Streshley said.

    Statewide, gamblers wagered $10.8 billion on slot machines and $3.1 billion on table games.

    Gaming revenues downtown were relatively flat in February, with casinos winning $50.6 million, compared with $50.7 million a year ago.

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



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    Haven't you heard wrote on April 10, 2008 08:06 PM: Haven't you heard? They are planning 40,000 more hotel rooms. When those go online they will magically fill up and everything will be normal.

    Better rush to get those rooms built.

    I get some insider info on the mega hotels and that info states that the rooms are not anywhere 90% full.

    Why would they drop room rates if they are near full.

    Hard times coming could not happen to a more deserving industry.


    Geez wrote on April 10, 2008 07:56 PM: Bryce

    "we have often wondered why they market to th grandma and grandpa half dead crowd that tie up slot machines playing 3 and 2 for hours, or sit at dining tables noshing while sharing tea and a plate of crackers !! They don't tip, spend no or little money, but hang out and wonder around all day looking for the freebie."

    Perhaps it is because they have the wisdom to realize that slots are a ripoff that take your money as fast as you put it in.

    You missed the entire point of the article.

    Complaining about the TIPS, get a real job you LOSER!


    fluffy wrote on April 10, 2008 04:01 PM: Well, the bright side is that we can look out for bargains in the near future if "big casino" wants to stay open here.


    Bryce wrote on April 10, 2008 01:31 PM: I am not surprised at all, but some of it can also be blamed on marketing too. Having worked at several casinos over the years, we have often wondered why they market to th grandma and grandpa half dead crowd, that tie up slot machines playing 3 and 2 for hours, or sit at dining tables noshing while sharing tea and a plate of crackers !! They don't tip, spend no or little money, but hang out and wonder around all day looking for the freebie. I am sure these folks can find something else to do, like a walk in the park, wash dishes, or watch a soap opera. They trully need to market to a crowd that actually has disposable income and is willing to part with some as well. Not show up at 8 a.m. with your oxygen tank, walker, or motorized golf cart, and start demanding this or that. The casinos need to lower their prices on goods and services, and make it more affordable to business people and people looking for that weekend getaway. If they want to market to the 1/2 dead crowd, just put slot machines at food for less or K-Mart, another popular hang out for the geriatric ward.............


    Alvin L. wrote on April 10, 2008 11:33 AM: You know it's bad when the Ritz Carlton at Lake Las Vegas goes under. The only Ritz in Nevada. The casino is a ghost town during the week; it only has business if they have promotions out on the Lake on the weekends. People are forced to gamble at the shabby joints down on Boulder Highway, but even there, the take was down substantially. Looks like a long hot summer-and beyond.


    scott wrote on April 10, 2008 10:15 AM: Good. After 9-11 rooms at the Bellagio could be had for $89. For the last few years the hotels got fat. Room rates are high, restaurants are expensive and all you hear about is three bottle minimums to get a table at a night club, at $300 a bottle. And that is after getting fleased by the bouncer to get into the club. The hotels need to take a step back and look at what they have created. With the weak dollar more visitors are going to be from outside of the country who are not here to gamble.


    David wrote on April 10, 2008 10:01 AM: The casinos got a dose of the very medicine that keeps them in business. GREED. They insist on cutting back on labor (AKA... service), increased prices, cutting back on comps (Stations is famous for that one by buying up the competition and then tightening up comp priveleges) and using ticket in ticket out which, by their own admission, are tighter than the old machines (LVRJ reported that number of slots increased by 2 1/2% but gaming win from those same slots increased 70%...hmmm 2+2 = tighter slots) Not to worry Fertitas, Lanni. Loveman and the like. Just cut back on the benefits of that poor frontline employee so you can still earn your next billion.


    Chester wrote on April 10, 2008 09:21 AM: Well, a wake up call for the casino bosses, who think this city is in a bubble and immune to the real world..Get you heads of your #*#**# and realize what is going on, gas approaching $4.00 per gallon, unemployment rising, and you idiots think the US is just going to keep on gambling. Here is a suggestion for these fools, take a paycut from you hefty 7 figure income, and put it back in your own properties. Or better yet, give an extra incentive to people to want to eat in your overpriced stodgy uppity restaurants, where the food is so tiny, but poofed up to the max with crabgrass, and you might actually win some local customers back. We all know that you guys think Vegas is its own world, but the reality is, when the passengers stop boarding the flights in other cities, the planes land here empty. Get used to it Lani, going to be a long dry spell, as this is not going away quickly, at least not until the next administration and new congress take office next year..........


    Furious wrote on April 10, 2008 09:17 AM: Whoever thought Las Vegas gaming revenues would continue to soar in the face of indian casinos, online gambling, more states passing legalized gambling, and global recession, must have been the guy who dreamt up the "family friendly" approach. Vegas has lost its core competency. The food is too expensive. The rooms are too expensive. The odds are too tight. And the one thing Vegas had going for it--girls--are so over-regulated, you can't get a decent lap dance. Way to go, guys. You managed to kill the golden goose.


    patriot wrote on April 10, 2008 09:16 AM: Well the casinos have just gotten so greedy, managing as if short term for personal gain.Ans they continue to build even though they cant leep them filled unless a big weekend is here.and take into acount that now that we have mexifornia and cant rely on a solid calif market anymore.But hey look on the good side pretty soon youll be abvle to buy a house dirt cheap if vegasd hasnt slit its own throat with greed!


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