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August 28, 2014

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Timing of gaming earnings can skew the numbers

A month ago, investors panicked over news that Nevada's gambling revenue in May plummeted 15 percent to its lowest level in 11 years while Strip gambling revenue fell 16 percent.

That was an overstatement. In reality, the numbers weren't as terrible as the reports indicated -- though pundits have only the casinos to blame. That's because of a quirk in the way casinos report slot revenue, a big chunk of their total revenue, to the Gaming Control Board.

Unlike table games, where casinos count their reportable winnings daily, if not multiple times a day, slot winnings are typically counted once a week. If a month ends on a weekend, casinos generally won't take cash or vouchers out of their machines until the following Monday or later that week -- even if that day falls into a new month. The Gaming Control Board doesn't count casino money as revenue until it's pulled out of the machines, counted and verified.

Because May ended on a weekend, slot winnings from that weekend were included in the June figures -- making the May numbers look worse and the June figures look better than they actually were.

That explains why today's figures don't look that bad even though casino operators had already reported worsening earnings heading into June. Statewide gambling revenue in June fell 1 percent versus a year ago and it dropped 3 percent on the Strip, the board reported.

It also explains the discrepancy between table games revenue, which was mostly down, and slot machine revenue, which was up in most markets.

Some markets with the largest slot declines last month reported big increases in June -- figures that were skewed by the lag in slot reporting. North Las Vegas, down 30 percent in May, was up 52 percent in June and the Boulder Strip, down 32 percent in May and is up 31 percent in June, for example.

So how much did the casinos really win from slots in May and June?

A better indicator of that is wagering volume, which casinos report daily through electronic accounting systems -- figures also reported to the Gaming Control Board.

Statewide, slot volume in June fell 10 percent from a year ago. It also fell 10 percent on the Strip.

That compares with declines in slot volume of 5 percent statewide and 7 percent on the Strip in May versus last year.

So, yes, gamblers spent less in June than a year ago and they spent less than they did in May -- even though the revenue figures appear to show otherwise.

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