It wasn’t surprising that July’s gaming revenues in Nevada – led by a 5.75 percent decline on the Las Vegas Strip – recorded their first monthly decrease since January.
Gaming companies – notably Caesars Entertainment and MGM Resorts International – telegraphed the punch earlier in month during quarterly conference calls, saying lack of events and declines in room rates softened the numbers for the third quarter.
In July, Strip casinos saw gaming revenue fall to $533.1 million in the month, compared to $565.6 million a year ago, according to figures released Thursday by the Gaming Control Board.
Statewide, however, gaming revenue fell less than 1 percent to $996.4 million, as other reporting markets – notably North Las Vegas and the Boulder Strip in Clark County and South Lake Tahoe in Northern Nevada – recorded double-digit gaming revenue increases during July.
Analysts, notably, focused on the Las Vegas Strip results, which accounted for more than 53 percent of the statewide total.
“Amidst plenty of investor concern over third quarter trends and recent, disappointing company guidance, these results were disappointing,” Credit Suisse gaming analyst Cameron McKnight told investors. “However, we estimate that gaming only accounts for 25-30 percent of Las Vegas Strip casino revenues, which clearly varies by business model and operator.”
On the Strip, baccarat revenue fell 18 percent even as the money wagered on the game was down less than 1 percent, reflecting a decline in hold percentage on the game – the amount held by the casinos from gamblers – from 16.3 percent a year ago to 13.4 percent in July.
At the same time, wagering on slot machines fell almost 5 percent.
Adding to the Strip’s woes in July, the Las Vegas Convention and Visitors Authority said visitation fell 3.4 percent in the month to just under 3.66 million visitors. The LVCVA blamed the drop lower convention attendance, which declined 19.5 percent.
Deutsche Bank gaming analyst Carlo Santarelli said the casinos were also hurt by the July 4th holiday falling on a Wednesday, rather a weekend day.
While the Strip had a poor month, the Las Vegas locals market shined. Gaming revenues on the Boulder Strip – which includes Henderson – were up 18.5 percent and North Las Vegas casinos reported a nearly 15 percent increase. Downtown Las Vegas casinos saw gaming revenue rise 8 percent.
“We continue to see considerable top-line momentum throughout the Las Vegas locals market, which we believe should disproportionately accrue to the benefit of Boyd Gaming and Red Rock Resorts,” Stifel Nicolaus gaming analyst Steven Wieczynski told investors.
In northern Nevada, South Lake Tahoe saw gaming revenue jump 25.5 percent to 29.9 million. However, Reno gaming revenue was down 1.4 percent. Wieczynski said in Reno, slot revenue decreased, but he said the July dip was not a trend.
“As in the Las Vegas Locals market, Reno operators continue to benefit from a thriving local economy, stable supply environment and continued focus on margin improvement,” he told investors.
Chad Beynon of Macquarie Securities said Reno has benefited from a strong economy and major tech companies (i.e. Apple, Tesla) moving operations into the region.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter
