Casino investors all around the world have been gunning for Vegas to pull in the big bucks while the market remains lukewarm elsewhere; however, The Las Vegas Gaming Control Board has released the report on gaming revenues for the month of March and the figures look less than impressive.
The casinos in Las Vegas collectively reported earnings of $922.2 million for the month of March this year; compared to the figures from March 2015, this suggests a loss of around 3.0%, which translated to an income deficit of $29 million in comparison to this time last year. The lower numbers can be attributed to a state-wide drop in baccarat participation and sportsbooks that struggled to maintain reasonable holds on sports betting.
The lower collections have also affected the taxes the state receives; tax income can be expected to be lowered by 8%, which is approximately equal to $2 million.
Michael Lawton, Senior Research Analyst at Nevada Gaming Control Board said, “I think we expected a little bit more this month, but it didn’t happen.”
Despite the drop in year-over-year revenues, there were some bright spots across the State, primarily in Reno and South Lake Tahoe; more than half of Nevada’s total gaming revenues came from the Strip.
Looking at the whole of the fiscal year so far, which started in July 1, 2015, till the end of March, 31 March 2016, a 1.0% increase in revenues can be noted, compared to the same period from a year ago.
Las Vegas Strip
A large fraction of the income for the state of Nevada, 53%, in the month of March came from the casinos on the Las Vegas Strip; the 4.2 miles stretch of entertainment venues littered with the largest casinos and hotels in the world, located immediately south of the Las Vegas city limits in the towns of Paradise and Winchester. The 53% share of revenues that was generated by these casinos can be translated into a collection $486 million.
It is an exciting time for Shareholders of Wynn Resorts Limited (WYNN), Las Vegas Sands Corp. (LVS), MGM Resorts International (MGM) and Caesars Entertainment Corp. (CZR), who are keenly following the finances for their Vegas properties.
Despite being the winners in March 2016, the year-over-year figures for the Las Vegas Strip casinos showed a 3.9% decline in the month of March; however this was following a 7.3% gain, which was observed in the month of February, which worked out to produce the current total for this fiscal year at the Strip at 0.1% below last fiscal year's running total.
Even the historic Downtown Las Vegas, with famous casinos such as the Golden Nugget Las Vegas and Golden Gate Hotel and Casino, which have performed very well in the last few months, have delivered a less than impressive 4.1% decline in year-over-year revenues in March, 2016. Despite this significant drop, the numbers still show a 7.4% growth compared to last year’s figures, the best growth of any region in the state.
Shares for Boyd Gaming Corporation (BYD), which has recently acquired two new casinos to become the owner and operator of three downtown Las Vegas venues, have gone up by 49.7% in the past year alone.
Las Vegas operators had a bad brush with luck in the month of March. Participation in baccarat play was down leaving very little the casinos could do to combat the drop in business.
Performance by the states sportsbook was also pretty grim; while Nevada books received a record breaking $458 million in sports wagers in the month of March 2016; the odds-makers only collected 2.1% more than the bettors, this translated into a small collection of $9.6 million from all the 89 sportsbooks operating across Nevada collectively.
March Madness pools were also very risky this year; the sports betting practice, based around the annual NCAA Men's Division I Basketball Championship, did not manage to generate as much income as expected. March Madness, which bolsters gambling earning in the month of March every year, involves participants completing a bracket with individual predictions for the outcome of each game in the tournament; the player with the closest forecast in each pool then goes on to win the contest. This year however, with no clear favourite to win the title and a number of capable teams in the running, a large proportion of fans avoided the pools altogether.
Only one #1 seeded team reached the final two games, and #10 Syracuse was the Cinderella story of the tournament. To the delight of fans in Philadelphia, Villanova won their first national title in 31 years, and those who faithfully put their money where their loyalties lie, won big bucks.
Nevada sportsbooks have collected an average of 5% over the last three years; and while technically a 2.1% win is still a profit, it proved much lower than expected.
Casinos are unlikely to regain their losses in the month of April, so they are putting their faith in the Kentucky Derby and Preakness horse racing events, which are scheduled for the month of May, to claw back some of their profits.
Slots Pull Back
Besides the sportsbook, casinos also recorded pretty dismal figures for their earnings from slots in the month of March. Although a massive $9.3 billion have been put into the slot machines over the course of the month, the house only retained a small fraction, 6.6%, which translated to a win of $616.6 million.
According to a study by the Centre for Gaming Research at the University of Nevada Las Vegas, the average state-wide hold rating for slot machines in Nevada between 2004 and 2016 has been a steady 6.9%. A small difference of 0.3% was recorded in March 2016; while this may seem like a small change, given that slots are big business in Nevada, the minute 0.3% drop in revenues translated into a massive loss of $28 million for the casinos.