Inside the Friday Effect

The April numbers for Nevada gaming are in, and at first blush they look fantastic — almost exclamation point-worthy. Statewide, for example, overall revenues were up 6 percent, and slot win rose nearly 10 percent. But a closer examination reveals the disappointing truth: Things were actually only so-so in April.

That’s because of the way that Gaming Control Board tabulates the results. When the month ends on a weekend (as it did in March), casino managers usually don’t like to disrupt the casino floor to remove bills from bill acceptors, so the drop results for that month end up being under-reported. The handle (overall play), however, is reported electronically, and is used by the board in that month’s report.

This year, March ended on a Saturday. March slot revenues statewide fell by about 7 percent, and the reported handle dropped from February’s 6.33 percent to 6.05 percent. In April, slot hold rose to 6.56 percent, and revenues jumped nearly 10 percent. On paper that looks like Nevada
slot machines are holding more (and that casinos are more profitable), but it doesn’t represent a genuine increase in play; it’s just an accounting artifact.

Because of the Friday effect, the boffo increases reported for some areas like Downtown Las Vegas are deceptive. Most reporting areas had steady or slightly declining levels of overall play.

The numbers provided by the Gaming Control Board are an invaluable tool for those who study the industry, and a welcome ray of sunshine in the sometimes-opaque world of casinos. Yet just reading the numbers can sometimes lead people to the wrong conclusions; they have to be put into

Luckily, I’ve got all the context you need at the Center for Gaming Research, with two reports looking at different perspectives: year-over-year (back to 2004) and the past six months. These two reports, taken together, paint a good picture of where Nevada casinos have just been, which, to give you the executive summary, is best described as “modest growth.” Things aren’t back to 2006 levels, but they aren’t in the gloom of 2009, either. For now, that’s not a bad place to be.