Thoughts on October Revenues

The Nevada gaming revenue figures for October have been released, and they don’t look promising. From the LVRJ:

Nevada gaming revenues hit a new low in October. Statewide gaming revenues were $800.3 million, the lowest monthly figure in almost six years. The decline was 11.6 percent compared with $904.9 million reported a year ago.

October marked the 22nd straight month of declining gaming revenues.

On the Strip, gaming revenues were $426.3 million, a 10.3 percent decline compared with $475 million reported a year ago.

All but two areas of Clark County reported double-digit gaming declines; the Boulder Strip was down 6.3 percent while North Las Vegas casinos were up 3.3 percent.

Nevada gaming revenues decline 11.6 percent in October

Both the Boulder Strip (M) and North Las Vegas (Aliante Station) have added major new capacity since last year, so naturally those numbers are better than last October.

I wanted to take some time and really dig into these, but it looks like that’s not going to happen today. I’ve got a Vegas Gang podcast in about 15 minutes.

What I would have done, if I had the time, was to correlate the revenues with news that visitation is up over last year’s. I don’t have the time to do a comprehensive quantatative analysis, but here’s the gist of it:

Room rates have fallen precipitously (nearly 14 percent) from last year’s. Assuming an average stay of three days, the average guest should save $48 on their hotel. Add in taxes, etc, and you can round to $50.

The problem is that they’re not spending that extra $50 on gambling. People are just spending less overall, and lowering room rates doesn’t seem to be doing the trick of increasing gaming revenue.

This suggests that there is no magic bullet solution (“cheap rooms! cheap food!”) that the operators are too clueless to figure out that will boost gaming revenue. Instead, they will just have to wait until the people who’ve been coming here have more money, or find a previously-untapped group to compensate.

There isn’t a shortcut. The only way out is delivering value and service to those who are still coming. Easier said than done, I know, but it’s better than the alternative.

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