While Nevada and the Las Vegas Strip set records in July for gaming revenue, a Wall Street analyst said some of the showing for casinos has to be attributed to house luck and wondered if Las Vegans have hit a wall in their gambling at locals casinos.
July has been a lucky month for casinos in terms of hold for table games: the three highest holds over the last 29 months have taken place in July.
The Nevada Gaming Control Board reported Nevada casinos won $1.4 billion and the Strip set an all-time record at $834.8 million in July, a month in which Las Vegas also set an all-time record for excessive heat. Visitation to the city rose 1% year over year, aided by an increase in international visitors, but was impacted by a decline in convention attendance and a decrease of people driving through the California desert.
In a note to investors, John DeCree, a senior analyst with CBRE, cited Strip gaming revenue rising 8% year over year in July, 14.8% higher compared to June. Relative to July 2019, gaming revenue was up 54.1%.
“Slot win and handle both increased 7.6% year over year, and total table win increased 8.3% year over year on a 1.1% decline in table drop as Strip operators held lucky,” DeCree said.
Table hold of 18.4% in July was up 160 basis points year over year and 380 basis points relative to the trailing 12-month average, DeCree said.
“Much of the Las Vegas Strip’s luck was in baccarat, which held 23.9% in the month, up 700 basis points year over year and 970 basis points above the trailing 120-month average of 14.2%,” DeCree said. “This resulted in a 40.4% year over year increase in baccarat win, despite baccarat volume falling a modest 0.9%.”
Michael Lawton, a senior economic analyst for the Nevada Gaming Control Board, told CDC Gaming that while hold didn’t come into play for slots in July, it was a different story for games and tables.
“The 12-month average for game and table hold is 14.12% and in July the hold was 17.62%, the highest hold percentage since October 1987 (excluding April 2020, which had very limited gaming activity due to the pandemic shutdown),” Lawton said. “The baccarat hold of 23.52% was the highest hold since June 2003.”
By applying the 12-month average hold of 14.12% to the game and table drop total of $2.91 billion, Lawton said that would result in a game and table win figure of $411.2 million.
“In other words, utilizing a normalized hold, game and table win for July 2023 would have been $411.2 million versus the actual win amount of $513.1 million,” Lawton said. “This represents a difference of $101.8 million in win that you could attribute to July 2023’s increased hold.”
That $101.8 million that can be attributed to improved hold accounted for 24.8% of the game and table win total and 7.3% of the state’s total win for July, Lawton said. He added it wasn’t an anomaly.
“July 2023 isn’t alone in terms of hold positively impacting results during the past 29 months that Nevada has been on this incredible streak of gaming revenue in excess of $1 billion,” Lawton said. “Three of the top five months during this streak have also experienced elevated game and table hold percentages.”
During the last 29 months, the second highest game and table game hold was 16.6% in July 2021. July 2022 was third at 16.09%. March 2022 was 14.6% and November 2021 was fifth at 13.55%.
“Three of the top 5 baccarat win amounts in the last 29 months were July 2023, July 2021, and July 2022,” Lawton said. “In addition, July ’23 and July ’21 were in the top five months for baccarat hold as well.”
Baccarat doesn’t cater to mass-market retail customers, Lawton said.
DeCree noted that convention visitation, 45.8% below July 2019, and softer convention attendance were counterbalanced by a strong entertainment calendar driving occupancy and hotel rates higher. Strip occupancy increased to 88.1%, but was 530 basis points below July 2019, according to DeCree, who attributed that to a gap in convention attendance.
The average daily room rate on the Strip increased 1.8% year over year and 27.2% over 2019 to $173.49.
“Despite increasingly difficult ADR comps and lagging occupancy, the Strip continues to push room rates higher,” DeCree said.
House luck also played a role in casinos that serve local residents. Those casinos recorded a 6.1% increase in gaming revenue to $247.3 million compared to July 2022, DeCree said, with a 7.8% increase in slot win and 1.6% decline in table win.
Slot handle declined 1.1% year over year, while table drop was down 1.2%. Relative to 2019, July gross gaming revenue was up 16.5%, slot handle was up 9.1%, and table drop was up 20.5%, DeCree said.
While local casinos continue to post modest growth in gross gaming revenue, DeCree said the recent year-over-year gains have been driven by higher hold, as both slot and table volumes have declined moderately over the past four months, DeCree said.
“The decline in gaming volumes isn’t surprising, given the increasingly difficult comparisons to last year, which benefited from lingering stimulus and pent-up demand after the final leg of reopening in May 2022 when the COVID state of emergency in Nevada ended,” DeCree said. “The recent declines in gaming volumes have raised some questions about the state of the locals’ consumer. However, with Las Vegas hitting a new employment peak in July, we remain confident in the overall health of the locals’ consumer and the Las Vegas economy.”
DeCree had good things to say about downtown Las Vegas, where gaming revenue increased 8.9% year over year, including a 14% increase in slot win and a 1.1% decline in table win. Slot handle grew 1.5% year over year, while table drop was down 7.8%. Relative to 2019, July gaming revenue was up 24.5%.
“Downtown is typically slower in the hot summer months, but the convention season this fall appears to be shaping up well, with a very strong citywide event calendar, which should also coincide with the completion of some ongoing renovations, such as Boyd Gaming’s Fremont casino in October,” DeCree said.
