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DECEMBER REPORT: Gambling winnings show drop
Despite results, analysts retain faith in industry fundamentals
February 12, 2004 - Despite the economic recovery and a return of leisure
travelers, December was not a very lucky month for Nevada's casinos, data
released Wednesday by the Nevada Control Board showed.
The total win for the gaming industry in Nevada slipped in December to $767.3
million, down 1 percent from $775.2 million a year earlier.
Analysts, however, said the tepid performance was caused by weak casino play but
industry fundamentals otherwise remain strong.
"Overall, the volumes are there. (The decline) is a question of what the casinos
are holding (or winning). We saw that at Caesars Palace, and that's what is
contributing to this decline," said Brian Gordon, spokesman for Applied
Analysis, a Las Vegas-based financial consulting firm.
Joe Greff, gaming analyst at Fulcrum Global Partners, an independent Wall Street
investment research firm, said leisure travel and convention business continue
to gain momentum in Nevada, especially compared with other states where gaming
companies are wrestling with an added supply of hotel rooms, stiffer competition
and higher taxes.
Control board statistical analyst Frank Streshley said the soft performance was
"all from the game side, including a slight decline in baccarat. Other games
were mixed."
He said slot performance was up slightly, while there was a large decline in the
sports pool win, down 67 percent, or $12 million, from the year before.
"What we had were winning tickets that were written in previous months, but not
deducted until this month, so it doesn't match up with revenues," he said.
UBS Warburg analyst Robin Farley attributed the overall decline largely to the
casinos' baccarat win, which fell 3.1 percent.
She also pointed out that although baccarat volume was up year-over-year, it was
still well below pre-Sept. 11, 2001, levels, citing games as a persistent
problem for the industry.
She added that the win percentage was 16.7 percent in December, down from 18.4
percent a year earlier and from an average of 19 percent over the past five
years.
Total win from slots statewide, on the other hand, were up 2.5 percent from the
year before on increasing volume, although even slot play remained slightly
below pre-Sept. 11 levels.
This was only the fourth month this year that the total win dropped statewide.
Previously, it fell in April and May owing to the hostilities in Iraq and in
August. Total win actually slipped faster in Clark County than the state as a
whole in December, with its gaming win dropping to $635 million, down 1.1
percent from $642.4 million in December 2002. Only North Las Vegas and South
Lake Tahoe enjoyed double-digit increases.
Deutsche Bank analyst Marc Falcone, however, said he was encouraged by the last
half of the year as a whole.
In the six months since June, statewide gaming win increased to $4.8 billion, up
1.3 percent from the last six months of 2002. And the gaming win in Clark County
increased to $3.9 billion in the same period, up 2.1 percent from the
year-earlier period.
In the last six months, only North Las Vegas has had double-digit growth, with
the gaming win increasing to $117.3 million, up 18.9 percent from $98.7 million
a year earlier. |
