October Non-Surprise

The Nevada Gaming Control Board released the October results for the state this morning, and they are an uninspiring start to the fourth quarter.

Superficially, things seem great: Both statewide and Strip revenue totals are up, which should be encouraging. But there’s really not that much cause for optimism, since all of those gains were driven not by more play, but by higher slot hold percentage. Actual slot handle fell, both statewide and on the Strip.

In other words, when it comes to slot machines, which make up the bulk of Nevada’s gaming win (63 percent in October), gamblers played less and won less. Hardly a sign of fantastic prospects for the near future, but the thing about the casino business is that it can turn on a dime. For a long time, every month brought good news, giving the illusion that progress in gaming can be measured in neat monthly increments. But the past two years have seen little true momentum — a month of two of revenue gains are followed by losses, and often even the good months deserve asterisks (and the bad ones, too).

Even with the increases in win driven by higher hold, this year’s looking incredibly flat, with overall revenues up by about 2 percent in the last 12 months.

On the Strip, table games were something of a bright spot, even though total game win fell. In this case, hold percentage worked in favor of the players, as they got luckier this October than last.

Nowhere is this clearer than in baccarat. Revenue from the high-end game fell by 19 percent, but overall levels of play actually increased 5 percent—players just won more this time around. They didn’t even get exceptionally lucky; October 2012’s baccarat hold percentage, about 15 percent, is well over the 12 percent average for the game on the Strip. It’s just that last year casinos got phenomenally lucky, retaining 19 percent of all money played. Usually it’s the players who get a rude awakening from regression to the mean, but in this case the casinos did.

What’s it all mean? It seems like Nevada’s gaming industry is inching forward, not falling behind anymore, but not growing much, either. The message throughout 2012 seems to be that the
gaming industry in Nevada has stabilized, but it’s no longer working miracles—another reason why economic diversification is more important than ever for all parts of the state.



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