Slot Revenues Fall, High-End Play Rises

February numbers show Vegas casinos’ increasing reliance on big players, especially those from Asia

The numbers are in, and Nevada casinos had a good February overall, with the uneven results demonstrating a great deal about where gambling in the state is right now, and where it might be headed.

On the surface, it looks like a fantastic month for the state: Overall win was up by more than 15 percent, the biggest monthly increase since last July. Once, double-digit monthly revenue gains were considered the norm; now they are cause for celebration.

Baccarat win drove most of that win, jumping 132 percent on the Strip. The reason? Last year, the Chinese New Year fell in January; this year, it fell in February. So while last month we told a tale of woe (19 percent slowdown on the Strip), this month, things are looking up. With the February bounce outdistancing the January slump, it’s a fair assessment that the Chinese New Year business has increased this year, and that overall the first two months of the year show a new improvement for the Strip.

But looking deeper, there are concerns: Despite the New Year bounce, slot revenues fell on the Strip—and just about everywhere else, too. To me, that signals that the “recovery” on the Strip continues to rest on the strong but slender reed of high-end play, particularly Asian high-end play. A broader turnaround in mass-market play in Las Vegas seems to remain out of reach.

We can see what this means when the results are broken down by reporting area. The Sino-stimulus was limited mostly to the Strip. Out of the state’s 20 reporting areas, only five showed increases in revenue: the Las Vegas Strip, the state as a whole and Clark County (both of which got their boost from the Strip); and North and South Shore Lake Tahoe, which each reported respectable gains. But in every other part of the state, including Reno, Laughlin, Mesquite, and the Las Vegas locals market, revenue declined. In North Las Vegas, where casinos cater primarily to locals, revenue fell more than 14 percent, making February anything but a good month for them.

What we’ve seen since the start of the recession is the split of Nevada casinos into the haves, who host the high-end play that’s powering the state, and the have-nots, who are just scraping by. This has many consequences: For one, markets that aren’t the Las Vegas Strip continue to suffer. Much of the problem is because of competition cutting into former feeder markets (particularly in northern Nevada), and there is no quick fix; this problem started before the recession. The other consequence is that, since a disproportionate amount of casino win is coming from relatively few high rollers, we are not seeing the large jump in employment numbers that would accompany a more broader-based comeback.

For the future, the February results bode very well for Genting, whose Resorts World casino will cater specifically to the Asian high-end market that has delivered the only meaningful gains in Nevada gaming in recent months. The same trend will help companies like Wynn Resorts, Las Vegas Sands, MGM Resorts, and Caesars Entertainment that are hosting the big players. Everyone else, it seems will be fighting over pieces of a slightly smaller pie, at least in the near future.



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