In a month that saw Strip and statewide gaming revenues plummet based on the calendar, a lower-than-usual hold percentage and a challenging comparison, analysts found a bright spot: The Las Vegas locals gaming market showed a healthy recovery during May.
Nevada gaming revenues declined 10 percent in May, the second time in three months that state casinos showed a double-digit drop, according to figures released Thursday by the Gaming Control Board.
On the Strip, casinos suffered an 18 percent decrease in gaming revenues.
"We view these results as being modestly weaker than expectations, though not as bad as the headline implies," Deutsche Bank gaming analyst Carlo Santarelli told investors.
Nevada casinos collected almost $885.1 million from gamblers in May, down from $984 million in the same month a year ago. On the Strip, casinos collected almost $475.1 million in May, down from $580.4 million in the same month a year ago.
Analysts said May 2011 didn't really offer a fair comparison.
That month's revenue total, at the time, was the highest single monthly figure recorded by the state in 20 months. Since then, May 2011's total has only been surpassed by January, when casinos collected slightly more than $1 billion.
"The comparison was absolutely brutal," said control board senior research analyst Michael Lawton.
In addition to having one less Sunday than May 2011, this May saw the casinos' hold percentage on two table games - baccarat and blackjack - come in far below normal figures.
The baccarat hold percentage (the amount of money won casinos compared to what was wagered) was 8.1 percent. The average hold on the game over the past 12 months was 12.19 percent. Casinos collected $74.3 million in revenues from baccarat, down 46.8 percent. The amount wagered on baccarat declined 21.7 percent to $912.1 million.
The hold percentage for blackjack was 8.59 percent statewide and 7.44 on the Strip, the lowest hold percentages since the state began keeping records in the 1980s. The casino revenues produced by blackjack were off 29 percent statewide.
"We would caution investors from reading too much into the minus 18 percent headline," Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said. "Several moving parts affected the year-to-year comparability. Most notably, the loss of a weekend and lower overall table hold negatively impacted the comparison."
Wieczynski said strong international baccarat play paced the Strip's early recovery. He's worried the game has started to have the opposite effect.
"To the contrary, we continue to be encouraged by evidence of further improvement in gaming volumes across games generally dominated by domestic rated players," Wieczynski said.
Clark County gaming revenues decline 10.2 percent as the Strip's bad month was offset somewhat by increases from Laughlin (up 20 percent), the Boulder Strip (up 9 percent) and the balance of Clark County (up 7 percent).
Gaming revenues fell 1.8 percent in North Las Vegas during May. However the combined revenue figures of $194 million from North Las Vegas, Boulder Strip and the balance of the county produced a monthly revenue increase of 6.6 percent. For the first five months of the calendar year, revenues in the locals gaming market are up 5.43 percent.
"We believe revenue growth continues to be fueled by aggressive promotional activity in the locals market," Macquarie Securities gaming analyst Chad Beynon told investors.
Santarelli said the revenue figures from the locals market was good news for Boyd Gaming Corp., which operates casinos on the Boulder Strip and the balance of the county.
Analysts said the overall and Strip gaming numbers for May might have given investors reason for concern, sending the stock prices of Strip-centered companies, such as MGM Resorts International and Caesars Entertainment Corp., down Thursday.
MGM closed at $9.75 on the New York Stock Exchange, down 46 cents, or 4.51 percent. Caesars closed at $8.90, on the Nasdaq Global Select, down 59 cents, or 6.22 percent. Both companies operate 10 Strip resorts.
For the first five months of the year, gaming revenues are up 1.3 percent statewide and 0.2 percent on the Strip.
Gaming tax collections in June, based on May's gaming revenues, declined 24 percent. Nevada collected $51.9 million during the month.
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