Lag in Nevada numbers called unacceptable

David Strow

Thursday, Dec. 27, 2001 | 10:59 a.m.

Some Wall Street analysts say it's unacceptable that it takes Nevada regulators so long to compile monthly casino win numbers.

Analysts are so accustomed to the long lag time that they weren't overly excited when Gov. Kenny Guinn delayed the release of gaming win numbers for October by a day.

It would be one thing if analysts relied on the report as a critical piece of information. But Nevada's monthly gaming win report, traditionally released about 40 days after each month ends, contains little information of which the market or analysts are not already aware. And when trends in business shift from month to month, a 40-day-old report provides little insight into the market's current direction.

Atlantic City reported its preliminary November gaming win (up 2 percent) on Dec. 3 -- one week before Nevada reported a decline of more than 10 percent for October. Missouri, Illinois and Iowa also all reported November gaming win before Nevada's October report was released.

Some on Wall Street call it an unacceptable situation.

"Every gaming jurisdiction, except for Nevada, releases (the numbers) within 20 days," said gaming analyst Andrew Zarnett of Deutsche Banc Alex. Brown. "Why it takes Nevada 40 days is beyond me. If they want to be responsive to those who they release the numbers for, the public, they should be releasing them within 20 days."

Of course, other states don't have to deal with the sheer number of casinos Nevada does. Atlantic City, for example, compiles its report from 12 casinos. In October, Nevada had 339 "nonrestricted" licensees, which are the ones used to compile the win report. Throw in restricted licensees (authorized to operate 15 or less slots), and the number rises to 2,700.

For that reason, some are more accepting of the situation.

"It's just the number of casinos," said Adam Steinberg, analyst with CIBC World Markets. "It would be different if it was just 12 casinos. It's not a point of contention for me."

But Dennis Forst, gaming analyst for McDonald Investments, also believes Nevada still must make speed a priority.

"I know there are hundreds of licensees that have to get their numbers in, and in most other states, you have between 10 and 20," Forst said. "Maybe they could put more pressure on (licensees) to get numbers out in a more timely fashion.

"It's not that big of a deal, but all things being equal, sure, we'd rather have them earlier. The market craves information, and the sooner you get the information, the better."

The monthly report is compiled by the state Gaming Control Board. Dennis Neilander, the board's chairman, said there's little that can be done about the delay, since gaming licensees have a grace period of 30 days to pay their monthly gaming taxes.

"We take the numbers right off their tax returns, so there's not much of a turnaround time," Neilander said. "By the time we get the returns in ... we don't have a whole lot of time to compile them."

The monthly report does provide useful nuggets of information. One in particular is baccarat play, a key measure of high-end activity on the Strip. October's report showed high-end play drying up rapidly on the Strip, with baccarat revenues falling 29 percent on the month.

"That's helpful because we don't get that kind of detail (from casino operators), ever," Zarnett said.

Another is a break-out of region-by-region gaming activity.

"In (Lake) Tahoe and Reno, there's not enough public companies there to give us all the datapoints," Zarnett said.

A break-out of gaming activity in such "locals" markets as North Las Vegas and the Boulder Strip, for example, helped prompt Bear Stearns to raise its earnings estimates for Station Casinos Inc. after Nevada's October report. The brokerage cited stronger-than-expected gaming activity in locals markets.

Another item on the wish list of investors is a more detailed break-out of the Nevada results. Most states detail the performance of each casino in their jurisdictions. Nevada does not.

But a detailed property-by-property report would currently be against the law, Neilander said -- the control board is required to keep revenue numbers from individual properties confidential.