Gaming revenue improves

Cy Ryan and David Strow

Tuesday, April 9, 2002 | 11:01 a.m.

For the first time since Sept. 11, Nevada's casinos reported a monthly increase in gaming win, the state Gaming Control Board reported this morning.

The control board reported the state's casinos won $752.6 million in February, a 7.7 percent increase over February 2001. That's the largest single-month gain in gaming win since July 2000.

On the Las Vegas Strip, win rose 10 percent to $371.1 million.

"It was a good month. We're very pleased," said Frank Streshley, senior research analyst for the board.

Others were optimistic about the report as well. Dennis Forst, gaming analyst with McDonald Investments, said he expected an even stronger report for March.

"I'm getting revved up about the prospects for the next few months," Forst said. "I think it's clear the Vegas economy and demand for trips to Vegas has improved much quicker and more dramatically than I would have thought.

"I don't know if we're back to normal yet, but we're getting there."

A quirk of the calendar played a significant role in pushing up February's numbers. Chinese New Year and the Super Bowl, both big events for Las Vegas high rollers, fell in February this year; in 2001, both came in January. This calendar shift led to a horrendous January, with gaming win down 23.9 percent -- the worst monthly decline since 1983.

However, "even factoring in the beneficial calendar, it looks like everything on paper was the best in six months," Forst said.

Others were more cautious. Todd Jordan, analyst with Dresdner Kleinwort Wasserstein, said gaming revenues for January and February together were down about 10 percent on the Strip.

"Obviously that's not great, but considering the events of 9/11 and the economy, it's not bad," Jordan said. "It's about where I expected it to be. We should see gradual improvement over the coming months."

Statewide, table games were the engine that drove the strong month -- not a surprising development, given the fact that high rollers were pushing results up.

Gross win on table games rose 22.9 percent or $48.6 million. This was the first increase in table game revenue in eight months. By far the largest component of this gain came in baccarat; baccarat revenue soared $24 million, or 143.8 percent.

The gain in baccarat wasn't solely caused by increased play. In February 2001 the Strip's casinos held just 8.66 percent of the money wagered on baccarat, an unusually low percentage. In February 2002 the hold was 14.95 percent -- still a little below normal, but enough to push baccarat numbers way up.

Blackjack winnings rose 8.6 percent, craps revenue fell 12.6 percent and roulette spiked 25.4 percent.

Meanwhile, the state's slots managed to eke out a 1.2 percent gain, which added $8.5 million to the casinos' coffers.

The one downside to the Super Bowl came in the sports books themselves. An upset victory by the New England Patriots was largely responsible for a loss of $8.3 million from the state's sports books. But Streshley noted that these bettors helped contribute to the increase in win in other games.

Despite the gain in gaming win, the state's tax cut fell 3.9 percent to $42.2 million. The reason, Streshley said, is that casinos extend a high amount of credit to Chinese New Year's patrons, and won't collect on the markers for several months. The tax isn't applied until the casinos collect.

On the Strip, high-roller play on the tables helped drive a month that saw slot machine revenues fall 3.2 percent. However, gaming analyst David Anders of Merrill Lynch noted that slot machine volume -- the amount wagered in the machines -- was down just 1.3 percent, "the best monthly performance since August 2001."

Table revenues on the Strip were up 27.2 percent, led by an increase of nearly 150 percent in baccarat win. Jordan estimated more than 70 percent of the Strip's gaming win increase came from baccarat.

Blackjack win was up 7.6 percent, roulette win rose 32.5 percent, and craps revenue fell 17.1 percent.

The Strip's strong numbers prompted Anders to reiterate his strong buy rating on MGM MIRAGE this morning. MGM MIRAGE is one of the Strip's largest operators, and will report its first quarter earnings next week.

"We believe that these results once again confirm that business in Las Vegas continues to improve at a faster rate than we initially anticipated," Anders wrote in a research note.

Away from the Strip, downtown casinos posted $45.3 million in win, up 0.9 percent. Slot revenue fell by 3.7 percent, but table win rose 17.2 percent.

North Las Vegas clubs posted a 2.1 percent increase to $17.3 million. Slot win rose 4.3 percent but table revenue decreased 11.3 percent. Boulder Strip revenues rose 7.1 percent to $52.4 million, and revenues for the rest of Clark County rose 6.9 percent to $61.5 million.

"The Las Vegas locals market actually did very well," Jordan said. "These are very good numbers, considering the Las Vegas economy. I'm pleasantly surprised by these numbers."

Jordan attributed the gains to rehiring by Strip casinos and growing consumer confidence in the local economy.

"Overall, I think you'll continue to see better numbers coming out of the local markets," Jordan said.

One laggard in Clark County was Laughlin, where win fell 1.4 percent to $47.8 million. February marked the third consecutive month of decline for the Laughlin market.

Gaming win increased 11.2 percent to $9 million in Mesquite.

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