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Las Vegas Strip’s baccarat fortunes slide

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Leila Navidi

Dealer Joe Carrion waits inside the high-limit baccarat room in January at the Hard Rock Hotel.

Updated Friday, Aug. 13, 2010 | noon

Gambling revenue on the Strip, which accounts for more than half that generated by all Nevada casinos, fell 8 percent in June despite a 4 percent increase in visitors, according to figures released Thursday by the Control Board and the Las Vegas Convention and Visitors Authority.

That’s a dichotomy partly explained by the fact that recession-battered tourists are spending less when they get here.

The biggest single culprit is baccarat — a volatile, high roller game that has helped bolster Strip revenue for several months while other, more mundane forms of gambling are struggling to recover.

The gravy train soured in June, though, as baccarat players were exceptionally lucky at the tables. So lucky, in fact, the percentage of wagers baccarat players lost to Strip casinos fell to 4 percent, the lowest month since June 1994, versus the typical 11 to 12 percent. In June 2009, the casinos held 13 percent of baccarat wagers.

“It’s an anomaly ... and affected the overall picture the most,” said Mike Lawton, senior research analyst for the Gaming Control Board.

As a result of losing a lot more money than expected, baccarat revenue fell 61 percent in June from a year ago, even though baccarat wagers rose 43 percent over that period.

Put another way, had Strip casinos won 11 percent of baccarat wagers as they have been over the past year, revenue would have been up 2 percent in June from a year ago.

By contrast, when Aria opened in mid-December, analysts estimate the property generated nearly $50 million in gambling revenue within two weeks, most of it from baccarat — a stupendous figure for a single casino in any economy.

According to analysts' read of the Board's December figures, Aria kept close to 17 percent of those baccarat wagers — a sign that a single or even handful of unlucky players may have worked in the new resort’s favor.

Baccarat is an inherently risky game for casinos. That’s why most don’t offer it, or only offer miniaturized versions with significantly lower betting limits.

The game has significant implications for Nevada, however, as it remains the Strip’s only gambling growth market in the recession, attracting an increasing share of its betting action. Las Vegas casinos with outposts in Macau are luring more Asian players to the Strip from a part of the world where economies are growing.

Baccarat has a low house edge of less than 2 percent. Yet it’s not unusual for the biggest high rollers to bet more than $100,000 per hand. A few lucky bets — or action from a single high roller — can wipe millions from a company’s bottom line. Which is why a casino’s primary job is to ensure that players — and especially high rollers — spend as much time at the tables as possible. Over hundreds of hands, even a low edge can start to do major damage to a player, with net losses piling up in the double digits.

Such trends are skewing state and local gambling figures, but don’t affect the majority of Las Vegas casinos that don’t offer baccarat or cater to high rollers.

The real story about gambling demand is better reflected in revenue from slot machines. Slots are preferred by the masses, who still account for most of the gambling action and profit in Las Vegas.

Slot machine wagers are down 4 percent so far this year, an improvement from the 12 percent drop in slot wagering from July through December of last year.

It’s further evidence that people “aren’t spending what they used to,” although things are moving in the right direction, Lawton said.

CORRECTION: This story has been corrected. It now shows the figures came out Thursday from the Control Board. And it says the Aria figures are based on an analysis of the figures because the Control Board doesn't release property-specific data. | (August 13, 2010)

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