The Las Vegas locals casino market – primarily residential communities outside the tourism corridor – produces gaming revenues that would eclipse most regional gaming jurisdictions.
Through October, casinos in the locals market reported a combined $1.99 billion in gaming revenue, an increase of 3.8 percent over the same 10 months of 2017, according to the Nevada Gaming Control Board. In fiscal year 2018, which ended in June, the locals market collected $2.31 billion, a roughly 4 percent increase.
No wonder Wall Street keeps a close eye on the area.
“While housing and recent Las Vegas locals slot volume trends are worth monitoring, we did not get the sense, in any of our meetings with locals operators, that there has been any discernible change in the cadence of play levels,” Deutsche Bank gaming analyst Carlo Santarelli told investors following a visit to Las Vegas earlier this month.
The locals market is defined primarily as North Las Vegas, the Boulder Strip (which includes he Las Vegas suburb of Henderson) and unincorporated areas surrounding Las Vegas.
Santarelli met with management of both Red Rock Resorts – operators of Station Casinos – and Boyd Gaming Corp. Combined, the companies provide more than half monthly locals market gaming revenue totals.
Boyd has seven suburban Las Vegas hotel-casino resorts. The company also operates three downtown Las Vegas resorts, that are primarily tourist-driven, but are often attract the locals customer.
Red Rock Resorts has 10 hotel-casino destinations under the Station’s brand along with nearly a dozen smaller, non-hotel casino properties. Two of Station Casinos’ destinations – Palms and Palace Station – are located just west of the Las Vegas Strip across from Interstate 15.
Non-gaming amenities, including restaurants, movie theaters, bowling and other entertainment, attract the locals customer. Slot machine play often drives the Las Vegas locals gaming numbers.
Santarelli noted that Boyd Gaming and Red Rock Resorts often cite positive economic data points in Las Vegas – low unemployment numbers, housing trends, consumer spending figures – in gauging the market’s overall health.
Red Rock management told him the company “has not seen any change in player behavior, despite recent pricing softness and inventory build” in the housing market.
“Overall, we felt the tone from management was bullish and constructive, with no discernable signals of issues percolating in the Las Vegas locals market,” Santarelli said.
Both Boyd and Red Rock have been upping their game over the last few years.
In 2016, Boyd acquired the two Cannery casino-hotels in North Las Vegas and on the Boulder Strip in 2016 for $230 million and the Aliante Resort in North Las Vegas – which Station Casinos lost to banks and equity investors in the company’s 2009 bankruptcy reorganization – for $380 million.
Over the last three years, Boyd reprogramed many of the restaurants in the locals properties, adding a variety of casual and fine dining attractions.
Red Rock Resorts acquired the Palms Casino-Hotel in 2016 for $312.5 million. The stylish property has been undergoing a $620 million, multi-faceted renovation that includes a remake of a 342-room hotel and suite tower, a remodeled casino floor, and new restaurants, clubs and non-gaming attractions. At the same time, the company completed a two-year, $192 million total renovation of its legacy Palace Station property.
While construction disruption softened numbers from Palms and Palace Station, Santarelli was surprised when Red Rock management said some of the company’s smaller, older casinos were experiencing better growth and flow through than the higher end properties, such as Red Rock Resort in Summerlin and Green Valley Ranch.
“Overall, we view this favorably and while it could relate simply to the law of large numbers, we also believe the more sluggish Strip trends in 2018 and softer overall group calendar in the year, could have contributed to the lower end outperformance,” Santarelli said. “We think the stronger growth at the core portfolio, relative to the premium portfolio, speaks to the broad health of the locals market.”
Green Valley Ranch and Red Rock Resort, Santarelli said, tend to have a bit more influence from non-Las Vegas residents, relative to the balance of the company’s portfolio.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
