Gaming revenue shifts trend, rises 7.75 percent in Nevada, 15.4 percent on Las Vegas Strip

2 March 2015

LAS VEGAS -- Nevada casinos turned the corner in January.

Gaming revenue increased 7.75 percent statewide while Strip casinos grew totals by 15.4 percent during the first month of 2015, the Gaming Control Board said Friday.

The January results ended five straight declining months of gaming revenue on the Strip.

Statewide, gaming revenue fell four out of the five past months through December.

Nevada casinos as a whole collected $952.7 million in revenue during January, compared with $884.2 million a year ago. Strip casinos reported gaming revenue of $576.8 million, compared to $499.8 million a year ago.

Analysts said the month was a good start to the year for the Strip following the market’s 2014 overall gaming revenue decline of 2.1 percent.

“With these gross gaming revenue results, we maintain our positive outlook for the Las Vegas Strip, and believe the overall room rate and visitation driven recovery will continue throughout 2015,” J.P. Morgan gaming analyst Joe Greff told investors.

Wells Fargo Securities, LLC gaming analyst Cameron McKnight said the Strip has a “healthy” nongaming outlook, due in part to a 6 percent increase in the market’s fourth-quarter revenue per available room figures, increases in airline capacity, and a stronger mix of corporate meetings and conventions.

Union Gaming Group analyst Chris Jones said improving trends in the housing market, employment and lower gasoline prices are boosting a Las Vegas recovery.

“Overall, we are encouraged by January’s results across the board and maintain our favorable outlook for Las Vegas,” Jones said.

FORESHADOWING STRONG FEBRUARY?

He added the January numbers could also be foreshadowing a more lucrative February compared to a year ago, when gaming revenue declined more than 20 percent due to lower table games volume.

Strip resorts benefited from strong baccarat numbers in January. Revenue from the game increased 68.5 percent to $137.7 million. However, baccarat volume fell 13.5 percent in the month, the fifth straight monthly decline in wagering on the game. The casinos’ hold percentage was 17.5 percent compared with 8.92 percent in January 2014.

“Record attendance from the Consumer Electronics Show and strong New Year’s Eve carryover led to the bulk of the growth in January,” said Macquarie Securities gaming analyst Chad Beynon.

Nevada State Gaming Control Board Senior Research Analyst Michael Lawton said the Strip hosted two Ultimate Fighting Championship cards and a major boxing event that helped drive business in the month. Lawton said their were no special events of that magnitude during January 2014.

Slot machine revenue on the Strip increased 4.2 percent to $256.8 million in January. Wagering on slot machines grew 6.4 percent, the eighth monthly increase in the last nine months. Table game revenue, not including baccarat, increased 6.2 percent and the amount wagered was up 21.4 percent.

“Baccarat hold had a meaningfully positive influence on the numbers,” said Deutsche Bank gaming analyst Carlo Santarelli. “Core domestic gaming revenues were up 5 percent.”

Sports wagering continued its positive trend with $387.5 million gambled statewide on various games and events, a 12.6 percent increase. Revenue from sports wagering increased 51.7 percent to $20.3 million. Lawton said January marked five consecutive months where the revenue total from sports wagering was $20 million or more.

DOWNTOWN DECLINE

The January results were not entirely all positive in Clark County. Downtown casinos saw gaming revenue decline 10.6 percent. Boulder Strip casinos were off 15.4 percent while North Las Vegas casinos experienced a 6.4 percent gaming revenue dip.

Analysts said slot revenue accounting methods, because of the month ending on a weekend, could have factored into the declines, particularly in downtown Las Vegas.

Casinos in Washoe County saw January gaming revenue increase 14.2 percent in Reno and 25.8 percent in North Lake Tahoe.

Gaming taxes collected by the state during February, based on January’s results, declined 1.68 percent to $68.4 million. For the first eight months of the fiscal year, gaming tax collections are up 1.36 percent.

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