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Gaming revenues rise again, hoisting rebound hopes, too
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Jessica Ebelhar/Las Vegas Review-Journal
New England Patriots fan Anita Ruiz plays a video game at the sports book at the LVH during the Super Bowl. The gaming industry saw profits rise again in 2011. » Buy this photo
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LAS VEGAS REVIEW-JOURNAL
Updated: Feb. 10, 2012 | 7:59 a.m.
So, are we back?
Nevada's casino industry posted its second straight annual gaming revenue increase in 2011. Analysts were quick to point out another positive: The results were not totally reliant on high-end baccarat play, the game that has bolstered the industry's overall performance during the recession.
Statewide, casinos collected $10.7 billion in gaming revenues in 2011, a 2.8 percent increase over 2010 and the highest annual jump in four years.
On the Strip, gaming revenues increased 5.1 percent over 2010 with casinos collecting $6.068 billion -- crossing the $6 billion threshold for the first time since 2008.
When baccarat figures are subtracted from the statewide total, Nevada casinos still would have reported a 2.4 percent gaming revenue increase. That hasn't occurred since 2007.
"The recovery is much broader, which is what we have been waiting to see happen," said Michael Lawton, senior research analyst for the Gaming Control Board. The agency released the year-end and December gaming revenue figures Thursday.
"It's not a double-digit recovery, but it's steady," Lawton said.
In Clark County, six of the seven reporting areas showed annual gaming revenue increases. Only Laughlin was down for 2011.
SLOT PLAY SIGNALS UPTURN
The telling revenue reporting metric, Lawton said, came from slot machines, which signal increased play by the mass- market customers.
During 2011, Nevada casinos saw revenues increase 1.5 percent from slot machine wagering while revenues from table games increased 5.2 percent. In 2010, slot machine revenues were down 2.7 percent.
December's gaming revenues showed a better than 2 percent increase statewide and giving Nevada casinos three straight monthly increases to end 2011. On the Strip, gaming revenues grew 3.6 percent in the last month of the year.
So, are we back?
Lawton said the second half of 2011 was better than the first six months for most of the reporting markets, including Las Vegas locals, based on slot machine wagering figures.
Macquarie Securities gaming analyst Chad Beynon said slot numbers are a good indication that customer spending on nongaming items and hotel rooms is growing. Other analysts agreed the state and the Strip are moving in the right direction.
"Looking ahead, we believe our gradual recovery thesis for the Las Vegas Strip remains intact, with solid group and convention booking trends continuing into 2012, combined with strengthening results in the free and independent travel and leisure segment," JP Morgan gaming analyst Joe Greff told investors.
Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski agreed.
'We get the sense that Las Vegas continues along its path to recovery, as increased visitation, higher average daily room rates and improved non-gaming results serve to complement slightly stronger gaming results," Wieczynski said.
BACCARAT PLAYS SLIGHTLY SMALLER ROLE
Baccarat was still a factor in 2011, but not as much as it was in 2010.
The game's revenues grew 6.2 percent last year, which paled in comparison to the 21.4 percent increase the game experienced in 2010. Baccarat wagering was actually off statewide in December, with revenues declining 4.5 percent.
"These trends continue to reflect the high volatility of this segment," Susquehanna International gaming analyst Rachael Rothman told investors. "While the swings have an impact on quarterly estimates, they do not reflect broader fundamentals on the Strip."
Clark County as a whole saw gaming revenues increase 3.5 percent in 2011, including increases of 2.9 percent along the Boulder Strip and 1.2 percent for the area referred to a balance of Clark County.
Downtown Las Vegas casinos saw gaming revenues increase just under 1 percent in 2011, the market's first positive year since 2007. However, the figure could have been higher except that the downtown market saw a gaming revenue drop of 10.7 percent in December.
In January, Nevada collected $31.8 million in gaming taxes based on December's gaming revenues, an increase of almost 6 percent compared with a year ago. For the first seven months of the fiscal year, gaming tax collections are up less than 1 percent.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.
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Jerry S..Dickinson you are absolutely correct. We could even extend the "jack pot" scenario to the strip, but, mostly to casinos locally like the former coast group (excluding station). What activity. Floor people in constant motion and high fives and cheers abounded. One might lose one day or week, but, win the next; in the end one felt like the video poker games were "relatively" fair. I now only play to kill time to take a family member out and feel foolish doing so. The mood at local casinos is dismal and veteran players are gone or tapped out. None of what I described above is evident. The very large independently owned south end local casino now has so few jackpots that they no longer announce any on the overhead paging system. $1.00 machines now play like nickle machines circa 2000. What a state. A Gaming Commission that basis an advertised 100% pay out on 25 years of simulated play when the hold and the respective chip can be changed anytime. Add to this the most deceptive form of advertising: perpetual "looser slots." No slot manger or the control board have ever been able to explain this to me. On the strip they have turned blackjack into a table slot game with six (6) deck perpetual shuffle machines and the guest are unaware of it. The Nevada Gaming Commission needs to be honest with the public and not allow legal "deceptive trades practices." Post hold on every machine, odds of winning each jack pot level and a notice of perpetual shufflers and number of decks--just to name a few less crooked changes.
Think back 15 years, 1996. Every corner store in Las Vegas had banks of slots. They were all full with people waiting to play. People winning. Remember the pay vans that drove from one payoff to another to pay Royals. When was the last time you saw someone collecting for a Royal Flush from a slot machine? That came to a halt when the laws of averages was rewritten. It isn't the "No Smoking" law that stopped the cornerstore gambling. that was the deception to cover the break from a fair game to an rigged game. Read the history, it is as plain as the "stupid" sign on our backs.
The economic rebound is a flat basketball. The only thing keeping the inner mechanism working isn't the clown prince in DC. it is the free market entreprenurs risking their assets on property at auction. Walk thru Lowes or Home Depot the customers yousee are 90% funded by these buyers/sellers. Good old American free market enterprise. It will postpone the inevitable for a while, until the Clown Prince sniffs them out and taxes them into submission
And I quote: "So are we back." The casinos never left. What the major publicly traded casinos did was allow the misguided twin concepts of business growth and increasing stockholders value to deluded their business judgement. Most major corporations would have brought in the management broom after a debacle like this. These casinos top management are ultimately responsible for not being able to navigate through rough waters. Over development of a business model, reliance on an outdated concept of increasing stockholder wealth at any cost (e.g. operating cost reductions and services, layoffs, planned expansions, new properties without a market, etc.) and leveraging to attain these results is at the heart of the vague statement "are we back." Several of Las Vegas' publicly traded companies caused untold chaos to the financial and social fabric of the state by having made poor decisions. The recession didn't cause the problem poor management decision making coupled with a continuous and unabated need for their own self aggrandizement is the root of the problem.
If JP Morgan believes Las Vegas is on the recovery, why then did they sell their 15% stake in Station Casinos to another Fertitta ghost corporation for pittance? No comment from JP Morgan? Hmmm... something is amiss.
Gross revenue or net revenue?
bill s is right people are losing more money because the odds are in the casinos favor if they are doing so well how come they still complain about debt and labor cost .the new contract with the culinary is going to be interesting
The so-called analysts have been fooling people by data spotted once in a while from RJ. They claim percentages without stepping inside of casinos. They live far from Las Vegas.
If we had experienced gaming operators running these places, the numbers would be much higher. Instead we have inexperienced people from outside the industry operating them and have no idea what they are doing. They operate from an analytical basis, that is why there is a lack of employees and a lack of service and more importantly, lack of any sign of value at all.
Another story with only half the facts. Is the take up due to increased gambling or only because of an increased hold ? My guess is increased hold, with the smaller odds on blackjack and craps, video poker with lousy pay tables and tighter slot machines of course the take is up. That doesn't mean there's any kind of turnaround in gambling.