Analysts say drop in casino win not a harbinger of hard times

Wednesday, Jan. 15, 1997 | 11:59 a.m.

The state Gaming Control Board said Tuesday that casino winnings fell 6.3 percent in November 1996, compared with the same month in 1995. The decrease, the largest single month drop since February 1993, was blamed on a $28 million drop in baccarat winnings and a $4.9 million drubbing that sports books took when heavyweight boxer Evander Holyfield upset 20-1 favorite Mike Tyson.

"Tyson was an isolated event," Harry Curtis, a gaming analyst for Smith-Barney, said Wednesday. "And baccarat had a strong year in 1995 and many casinos enjoyed baccarat hold percentages that were above their usual.

"I think part of this (decrease) is giving back part of the extraordinary earnings that casinos had in 1995" baccarat play, Curtis said in a telephone interview from his New York office.

Casinos won $571.2 million in November 1996, down $38.4 million from the same month in 1995 when the win was $609.6 million.

Baccarat numbers have been down all year, Curtis said, "so why should they change?"

Bill Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno, said Nevada properties used to count on about $600 million in baccarat winnings. In the last year they have won $504 million.

The casinos achieved a 5.8 percent win on baccarat play in November, far below the traditional 17 percent.

"We all have to recognize that in Las Vegas, there are several sources of profits that a casino can draw from, and if casino profits are flat, and room and food and beverage profits are better, that's an indication the gamblers are still there, that they're just coming with a bigger budget for other types of spending," Curtis said.

State Budget Director Perry Comeaux agreed.

"Sales tax revenue is coming in like gangbusters and making up for this (gaming drop)," Comeaux said. "People are still coming to Nevada for tourist-related things. We know they are filling up the rooms."

Russell Guindon, an analyst for the Control Board, said visitors are still coming, "but they are changing what they do with their dollars."

Guindon said the gaming drop was a concern since about 35 percent of the state's $1.46 billion in spending comes from gaming taxes.

With the opening of New York-New York Hotel & Casino on Jan. 3, Las Vegas now has 101,106 hotel rooms - more than any other city in the nation, according to the Las Vegas Convention and Visitors Authority.

New properties and hotel expansions are expected to push that total to about 120,000 rooms by 1998, double that of a decade ago.

The visitor count for the first 10 months of 1996 was 24.9 million, a 2.2 percent increase over a year ago. The 1996 total is expected to top 30 million, also double that of 10 years ago.

Curtis said he felt it was too early to tell whether the lower winnings could affect future growth, with some $7 billion in new hotel-casinos now under construction or in the planning stage.

"I think the theory that Las Vegas is becoming over saturated is sensationalistic," Curtis said. "There is no evidence for this at this point.

"Historically, there is precedence for the absorption of these rooms. But you can't just build rooms, you have to build resorts with good locations and imaginative themes."

The question is how the new resorts will "impact tier two and tier three properties," Curtis said.