A November to remember

Things are looking up in Nevada for the first time in a long time. The state’s casinos won more money from gamblers this November than they did last November. Yet there may be another story that isn’t as positive lurking beneath the numbers. From the LVRJ:

For the first time in 23 months, Nevada gaming revenues increased with casinos statewide collecting $873.2 million in November, a 4.35 percent climb compared to the same month a year ago.On the Strip, gaming revenues were also up for the first time in almost two years. Strip casinos collected $473.8 million, an 8.3 percent jump compared with the figures from November 2008.

In the locals market, November gaming revenues were up 19 percent on the Boulder Strip, almost 21 percent in North Las Vegas and 2.6 percent in the balance of the Clark County.

via Nevada gaming revenues increase for the first time in 23 months – News – ReviewJournal.com.

There are some very interesting patterns here. The big winners statewide were baccarat and pai gow, which increased 136.9% and 26.12% respectively. Slot machines actually did a little worse (down 1.58%), and since they account for the bulk of the state’s gaming, it’s very fortunate that bacc win more than doubled.

Does this mean that we’re out of the woods? Handle, rather than win, is probably a better gauge of consumer interest. Let’s look at the total money played on baccarat in the past two Novembers:

Month Win Hold% Handle
Nov 2008: $39,780,000 10.45% $380,669,856
Nov 2009: $94,237,000 13.54% $695,989,660

So while the casinos got much luckier in November 2009, the total amount played increased by about 83%. Even if they had won at the same rate that they did in November 2008 (10.4%), they still would have made about $73 million from baccarat–a definite step up.

Let’s look at slot handle:

Month Win Hold% Handle
Nov 2008: $558,114,000 5.73% $9,740,209,424
Nov 2009: $549,340,000 6.28% $8,747,452,229

So if you’re a glass-half-full kind of person, you can say that slot play decreased by about a billion dollars from year to year–not the stuff of a major comeback, and certainly nothing to pat yourself on the back about. The hold percentage increased by about a half-point. Could this have something to do with the decline in handle? It’s worth considering. While most of the increase in hold has been driven by players migrating to higher-hold denominations rather than managers tightening up existing machines, the decline in slot machine handle is cause for concern.

It’s paradoxical because players are voting with their feet in two separate directions. On one hand they are playing the high-hold denoms more: statewide win on pennies rose by about 10%, on multi-denom by 4%, and dropped off considerably for everything else, including massive declines in every denom over a dollar (though the $100 drop is complicated by a miniscule ,069% hold percentage). On the other hand, they are playing less, almost exactly 10% less than the year before.

Looking at hold is only part of the picture–looking at handle says a great deal more.

How about the Strip? Here are some highlights from November 2009: Bacc win, up 136%, pai gow, up 58%, and bingo, with total revenues of $212,000, up over 800%.
The lowlights? Craps was off by 32%, due in part to a lower than usual hold percentage; slots were down by about 4%, and sports books won much less in football betting than they did the year before, though the hold (5.23%) was a bit on the low side.

With slot handle down and bacc handle up considerably, the lesson seems to be that the high end is doing better than the low end. From that perspective, it’s good news for City Center and bad news for the lower-tier operators on the Strip and statewide. There appears to be some room for growth in the high-end market that will justify the increase in supply, but it looks like demand for slots continues to weaken.

In a nutshell: good news for some, but I’d keep the champagne on ice, at least until someone figures out how to get slot players to come back en masse.

The November 2009 visitor numbers are positive, with the caveat the the increase in visitation (2.9%) was slightly outdistanced by the increase in room supply (3%). People are coming back to Las Vegas, but they are spending less on their rooms (room rates are down 23% year-to-date) and less at the machines.

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