February gaming win drops 7 percent

Cy Ryan and David Strow

Tuesday, April 10, 2001 | 11:13 a.m.

Nevada recorded its worst dip in gaming revenues in more than three years in February, as baccarat play took a horrendous plunge during the month.

The state's largest casinos won $698.8 million before taxes and business expenses, down $52.8 million or 7 percent from February 2000, the state Gaming Control Board reported this morning. The drop was more precipitous on the Las Vegas Strip, where win fell 12.3 percent to $337 million.

Those are the worst declines since February 1998.

Yet the outlook isn't as gloomy as the numbers might suggest, despite growing fears of a slowdown in the state's gaming industry. The largest single factor, it appears, was the fact that Chinese New Year's fell in January in 2001. In 2000, it fell in February. Moreover, February had one less day in 2001.

That calendar shift showed up in a big way in baccarat revenues, which plunged 81 percent to $16.1 million in February. Moreover, the baccarat hold percentage on the Strip was an anemic 8.5 percent, down from 16.8 percent -- suggesting those baccarat players that did show up were unusually lucky.

"If you take out the effect of the calendar reversal (for Chinese New Year's), you're looking at flat revenues overall on the Strip," said Todd Jordan, gaming analyst for Dresdner Kleinwort Wasserstein Securities. "It's not that surprising to see these numbers ... for the next few months, it's going to be very tough for Vegas to show significant growth."

Slot revenues on the Strip rose 1.1 percent but game and table win fell by 25.7 percent or $50.7 million. Baccarat dropped 81 percent or $68.9 million. The board said blackjack winnings fell 9.3 percent; craps increased 49.3 percent and roulette declined 9.9 percent.

In February 2000, gaming win was up 16.6 percent on the Strip.

In an attempt to find out how much the calendar affected the numbers, CS First Boston gaming analyst Brian Egger removed baccarat numbers and adjusted for the extra day in February 2000. He concluded "normalized" win would actually be up 1.5 percent on the Strip.

"It's tough to say, but for the full year, we're looking for moderate growth in visitation and gaming revenues (on the Strip)," Egger said, likely in the range of 2 to 3 percent for the year.

Frank Streshley, senior research analyst for the control board, said the state's slot win fell by 0.68 percent and revenue from table games was off 18.7 percent. The board said revenue from blackjack fell by 7.6 percent; craps was up 29 percent and roulette declined 8.8 percent.

The worst casualty of the month wasn't the Strip, but the formerly fast-growing casino market of North Las Vegas. In February, North Las Vegas gaming revenue plunged 19.4 percent to $17 million.

That compared with a 35.3 percent increase in February 2000. Slot win was down 19.5 percent and game revenue dropped 19.9 percent. This was the fourth consecutive month that gaming revenue has dropped in North Las Vegas.

One word explains that more than any other, analysts say: Suncoast.

That's the Coast Resorts Inc. property that opened near Summerlin in September 2000.

"That's certainly impacting (North Las Vegas) business," Jordan said. "You have one casino added right on the exterior of the market, and it's taking a lot of business. Also, I think the economy is impacting their business a little bit. Elderly people frequent those properties, and they're seeing their stock portfolios going down a little bit."

But for the fourth consecutive month, downtown Las Vegas casinos showed a modest increase in their gaming win. The board said the gross revenue rose to $55.8 million, up 2.5 percent. Slot win fell 0.1 percent but game and table revenues rose 13.1 percent.

Clubs along the Boulder Strip joined downtown Las Vegas in reporting higher gross revenue this year than a year ago, something analysts say could be explained by expansions of Boulder Strip casinos in the past year. The control board said these casinos reported $48.9 million, up 6.4 percent. Streshley said this was due to the casino holding a greater percentage of win than in the past. Slot win was up 5.4 percent and table revenue rose 20.2 percent.

The board said Laughlin casinos reported $48.5 million in revenue, down 5.1 percent. Slot win fell 4.4 percent and table win was down 10.9 percent.

Clubs in Washoe County had gross win of $71.3 million, down 5.8 percent. Slot win fell 5.9 percent and table win was down 5.4 percent.

Both could be casualties of the troubles of the California economy, as well as that state's growing energy crisis, Jordan said.

"We really haven't seen a whole lot of new (tribal casinos in California)," Jordan said.

South Lake Tahoe casinos enjoyed an 8.1 percent gain to $21.2 million in revenue. That compares with February of 2000 when revenues dropped 14.9 percent. Slot win this year was up 8.4 percent and game revenues increased 8.1 percent.

Elko County casinos reported $17.1 million in revenue, down 9 percent. Slot win declined 7.4 percent and game and table revenues fell 15 percent.

The Carson Valley Area which includes Carson City and all of Douglas County except South lake Tahoe, reported $6.2 million in revenue, up .67 percent. Slot win rose 0.5 percent and game and table win was up 3.2 percent.

Comparing the first two months of this year with the same period of 2000, total statewide win is down 1.4 percent. That probably won't improve much in coming month, as the numbers will be compared against exceptionally strong growth months in 2000.

The board reported that it has collected $401.6 million in taxes for this fiscal year so far, which is 1 percent less than last fiscal year. The Economic Forum forecast gaming tax collections would be up 5.8 percent this year. Economic experts are predicting there will be some $160 million in cuts in Gov. Kenny Guinn's budget, due mainly to lower tax collections from gaming and sales this fiscal year.

The Economic Forum will meet May 1 to make its projections and the February report is the last figures it will have on casino collections.