Let’s Not Get Too Excited About the July Numbers

July looks like an outstanding month for Nevada gaming. After several months of growth (and decline) in fits and starts, total overall casino revenues jumped by almost 17 percent. In the Valley, the Strip posted an impressive 28 percent gain, while Downtown and the Boulder Strip also saw their monthly win increase.

So why aren’t I celebrating?

Because, when you look more closely at the numbers, they aren’t that great. 

In some industries, there’s a pretty obvious relationship between sales and revenues. Casinos don’t work that way. While the most common way for revenues to post a sustained increased is for the amount actually played (called the handle) to increase, gaming win can also get a boost from a gain in the hold percentage. Meaning the casino gets luckier than usual. For example, instead of holding 12 percent of all the money gambled at baccarat, it keeps 18 percent. That doesn’t sound like much, but it adds up.

Throughout much of the state, July revenues soared because of a jump in hold percentage for slots. Strip slot machines held nearly 20 percent more money this July than last; in Downtown, that number was up 29 percent, and on the Boulder Strip, it grew by a whopping 48 percent. In July, at least, slots tightened up considerably.

In the short term, tight slots mean a revenue increase. In the long term, though, if patrons perceive less value for their slot dollar, it can signal the start of a decline in overall play.

One month of high hold percentage isn’t anything to sound the alarm about—the July hold percentage, for most reporting areas, is within the usual range of variation. But it’s nothing to celebrate, either. If July had shown slot handle skyrocketing across the state, there would be cause to cheer, because that would mean that the state’s casinos could look forward to a broader patron base. As it is, though, it was just a case of slot machines holder more than they had in the past; overall handle actually fell. People gambled less money in Nevada slots this July.

I’m also pessimistic because of the dominant position baccarat holds on the table game side of the ledger. For example, table win jumped by 45 percent on the Las Vegas Strip; on the surface, you’d think this meant players were squeezing in at the blackjack and roulette tables. But when you subtract the $100 million gain in baccarat win, you’re left with a 13 percent decline in table games.

Meaning: outside of baccarat, table game play was woeful in July. You might think it doesn’t matter, because a dollar won at baccarat spends just as easy as a dollar won at craps. But the overall impact of an increase in baccarat play is much less than a broader-based growth of table play. A handful of Strip casinos offer high-stakes baccarat, and it’s bad news for everyone else that table play outside of those high roller oases isn’t improving.

At the end of the day, we’ll take the money, but if you’re looking to the July numbers for a hint of what the future brings, you can’t be too happy with what you see.