Nevada gaming revenues drop 6.1 percent in August

LAS VEGAS, Nevada -- Take baccarat out of the picture and August would have been a pretty good month for Strip casinos.

Wagers on the game by high-end Strip customers declined almost 59 percent from a year ago, sending the casinos' baccarat take down by almost 41 percent.

The result?

Strip casinos suffered a nearly 9 percent decline in gaming revenues during August, ending three straight monthly increases. If baccarat were removed from the mix, the Strip would have shown a monthly increase of 4.7 percent for the month.

Statewide, gaming revenues fell 6.1 percent in August, the casino industry's largest decline since February. Nevada casinos collected almost $886.9 million in gaming revenues in August, compared with $944.5 million the same month last year.

The Gaming Control Board released the figures early Tuesday morning and analysts were quick to warn investors not to overreact in an already skittish marketplace.

"We would caution investors from reading too much into today's report," Stifel Nicolaus Capital Markets analyst Steven Wieczynski said in a research report. "Excluding highly volatile baccarat play, we believe August results provide further evidence of stabilization in Las Vegas Strip gaming trends."

Added Susquehanna Financial Group analyst Rachael Rothman, "We would note that August is one of the most leisure-dependent months of the year, and we would expect trends to improve as Las Vegas mixes back to convention (business) in the fall."

In August 2010, baccarat play on the Strip attracted more than $1.9 billion in wagers, an all-time single-month high. Revenues produced from the game were $160.5 million, the second-highest single-month ever.

Those figures made the overall August 2011 Strip baccarat numbers -- wagers of $797.1 million and revenues of $94.5 million -- seem paltry by comparison.

"August really was just a bump in the road," control board senior research analyst Michael Lawton said.

On the Strip, casinos collected $496.9 million in August, down 8.7 percent from $544.4 million collected a year earlier.

Despite the declines in August, the first eight months of 2011 have been positive for the state and the Strip. Gaming revenues for Nevada casinos are up 2.9 percent through August, while Strip casinos have seen gaming revenues grow 5.2 percent.

Baccarat, a game favored by the high-end Asian market, has driven play at Strip casinos as the industry slowly recovers from the economic doldrums going back to 2008. Convention business has been slowly bouncing back and the leisure market has followed.

Going into August, Strip casinos had experienced five straight months of increased slot machine wagering, which analysts use to gauge the tour and travel market's wagering activities. In August, slot machine volume was down less than 1 percent, but that didn't concern analysts.

"Despite the challenging baccarat comparison, we view the August trends as a neutral event," Jefferies & Co. gaming analyst David Katz told investors. "The Strip data reflects the highly volatile baccarat trends that more than offset the relative stabilization in slot and table drop levels."

August was rough for casinos throughout Nevada. The Boulder Strip reporting area, which includes Henderson, was the only Clark County market that had a positive month. Boulder Strip casinos reported an increase of 3.3 percent in gaming revenues.

Gaming revenues in Clark County as a whole dropped nearly 7 percent.

But at least one analyst took the numbers in stride.

"Given the lack of conventions and the blazing temperatures in Las Vegas during August, this month is not one of the most critical in terms of overall profits," Macquarie Securities' Chad Beynon told investors.

Gaming revenues at casinos in Washoe County, which includes Reno, declined nearly 10 percent in August. However, gaming revenues for casinos in South Lake Tahoe came in at $27.3 million, an increase of more than 16 percent compared with August 2010.

Gaming taxes collected during September, based on August's gaming revenues, declined 23.6 percent. The state collected $47.2 million compared with $61.8 million collected in the same month a year earlier.

For the first three months of the fiscal year, gaming tax collections are down 4.2 percent.