May casino revenue numbers bring optimism to Las Vegas
12 July 2011
Some casino companies in Las Vegas have been discussing slight improvements in business — without much to show for it.
That kind of evidence became obvious Monday when the Gaming Control Board reported the largest year-over-year increase in gambling revenue on the Strip since January 2008, before the recession took down the Las Vegas economy.
Strip casinos’ $580 million in reported gambling revenue in May, a 29 percent increase over a year ago, is still 5 percent less than May 2007, the year when tourism peaked in Nevada. Strip gambling revenue for the 12 months ended May 31 is 12 percent under what Strip casinos pulled in for the 12 months ended May 31, 2007.
About $80 million of May’s $130 million increase in Strip revenue came from baccarat, the game favored by Asian high rollers and offered by only a few casinos around town. Other games on the Strip, as well as parts of the Las Vegas Valley that cater to locals and bargain hunters, also showed increases that were small but significant for a region hammered by the housing and tourism crashes.
On the Strip, baccarat players lost $140 million in May — an increase of 130 percent from the same month last year. May 2010 was a poor month for baccarat, which helped inflate this year’s numbers by comparison. At least two major events in May this year — a title fight between Manny Pacquiao and Shane Mosley and an Ultimate Fighting Championship bout, were comparable to similar events held a year ago that month.
Unlucky gamblers accounted for most of the baccarat increase, as casinos paid back just 88 cents of every dollar wagered versus about 92 cents a year ago. Big gamblers like baccarat because it has a low house edge of less than 2 percent. That edge grows the longer people play.
More important for Las Vegas’ economy, revenue for other games gained several percentage points in May. Slot machine gambling volume has increased for three consecutive months — a trend not seen since 2007.
Slot volume on the Strip rose by 1 percent, or $34 million, in May compared with a year ago.
“It takes a lot of people to put $3.4 billion in a slot machine,” said Mike Lawton, a senior analyst with the Gaming Control Board, referring to the total volume of slot machine wagers on the Strip in May. It’s not just the Strip, he said, but “the whole of Clark County that seems to be moving in the right direction.”
Areas catering to locals, including Boulder Highway, North Las Vegas and unincorporated parts of Clark County excluding the Strip and downtown Las Vegas, have gained 2 percent so far this year through May versus the same period last year. Locals markets were up 3 percent along Boulder Highway and 15 percent in North Las Vegas.
Downtown Las Vegas was up 8 percent, reversing a flat to downward trend in that hard hit part of town.
That’s closer to what the Strip, without the benefit of baccarat, actually gained in revenue in May, according to CB Richard Ellis’ Global Gaming Group in Las Vegas.
Excluding baccarat play and removing the benefit of an extra Saturday of slot revenue, Strip gambling revenue would have been up 8 to 9 percent in May, the firm said. (Because April ended on a Saturday, gambling revenue from slots that day was collected the following month and included in the May results.)
That could be good news for the majority of Strip casinos that don’t cater to high rolling baccarat players, said Jacob Oberman, director of gaming research and analysis for CB Richard Ellis.
Luxury casinos are outperforming their economy-priced peers in this economy, as the recovering stock market has boosted corporate travel and tourism for the well-heeled, he said. Higher-end properties may also have benefited most from the increase in games other than baccarat. Although it’s yet to be seen whether low-rent properties are getting much of that benefit, the overall increase is good news for the state, he added.
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