Nevada gaming revenue: What’s the deal?

It seems like every month when the Nevada revenue numbers come out someone has a different spin on why things are looking up, or not looking up. It got me thinking that, even though all of these numbers are publicly available, there’s no readily-available source for some of the key numbers.

That’s a void I’ve been trying to fill over at the Center for Gaming Research, with the assumption that if people know more about the gaming industry and how it operates, there will be less misinformation out there. So many of the reports are summaries of available data on different games, with some narrative summary thrown in.

Last week I started thinking about one simple measure of how well the gaming industry’s doing: the monthly year-to-year comparisons. It seems pretty basic: if casinos make more money than they did in that month the previous year, they’re doing better; if they make less, they’re doing worse. There was a time when it seemed like every month was a “better” month, which should happen over time, even if the industry is stagnant, because of inflation. But we’ve seen so many months of decline for the past 2 years, any month with an increase is good news.

So to quantify just where we’ve been, and where we are, I started by looking at the monthly change in “total gaming win” for Nevada as a whole and for the Las Vegas Strip from January 2008 to today. You might want to open this pdf up in a different window to follow along–it’s the report.

It turns out that for the state, there’s a roughly u-shaped decline when comparing year-to-year performances, with the bottom coming in the fall/winter of 2008-9. We’ve got a year-year increase for the first time in two years in November 2009, followed by slight declines in December and January, a boffo increase in Feburary (which was fueled mostly by baccarat and a favorable calendar), and what looks like the start of another valley, much of which is due to June’s abnormally low baccarat hold.

Looking at the quarterly growth changes from 2Q 2007 to 2Q 2010, the u-shaped pattern is even more evident, as is the apparent reversal of an upward trend.

Yet it’s important to note that if we define a recession (narrowly) as two or more consecutive quarters of negative economic growth, Nevada gaming officially exited the recession back in March, when it notched a quarter of positive growth. Of course, it’s not really that easy, since employment numbers are still down, as are non-gaming revenues.

The pattern on the Strip matched that of the state as a whole, though the Fall/Winter 2008/09 was a little deeper and the Fall/Winter 2009 “recovery” was a little stronger. Still, three straight months of declines in April, May, and June of 2010 show that we’re not out of the woods yet. For what it’s worth, the Strip’s casinos posted positive revenue growth in 4Q 2009 and 1Q 2010, though 2Q 2010 was again a decline.

If anything, looking at these numbers suggests that when the industry does shake off the cobwebs and start growing again in earnest, the Strip is going to lead the rest of the state.

You can see the entire report, and the raw data, here: Nevada Gaming: Revenue Growth & Decline.

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