Gaming revenue generated by casinos in Nevada and along the Las Vegas Strip ended a four-year upswing last year, reports the Las Vegas Review-Journal.
Casinos statewide collected just more than US$11 billion from gamblers in 2014, a year-on-year decline of 1.1%. In 2013, Nevada had recorded $11.1 billion in gaming revenue, marking the first year its casino revenue cracked the $11 billion mark since the recession struck in 2008.
Gaming revenue on the Strip was down 2.1% to $6.37 billion, also ending four straight years of annual increases.
In December, gaming revenue fell 8% in Nevada as a whole to $950.7 million and was down 16.4% on the Strip to $555.2 million. It was the fifth straight month of gaming revenue declines on the Strip, while statewide, the number has been off four of the past five months.
Analysts knew December was going to be a challenging month for Strip casinos. In December 2013, the Strip collected $664.2 million from gamblers, the market’s second-highest single-month revenue total on record.
Baccarat also told the story for the Strip in 2014, with the impact of China’s corruption crackdown and less buoyant economy on Chinese VIPs making its way over the Pacific.
In December, the revenue total from baccarat on the Strip fell 39.3% to $148.1 million. The amount wagered on the game fell 14.5% to $1.3 billion. The hold percentage on the game during the month—what the casinos kept based on what players wagered—was 10.99%, compared with 15.4% in December 2013.
Deutsche Bank gaming Carlo Santarelli said the Strip’s single month decline in December would have been just 3% if baccarat was removed from the picture.
“Given a difficult December baccarat hold comparison, and volatility around New Years Eve, we do not find the result to be overly surprising,” Mr Santarelli said.
For all of 2014, Nevada collected $1.5 billion from baccarat, a decline of 5.9% compared to 2013, which marked a single-year record. It also ended five consecutive years of increases in statewide baccarat revenue. A weaker hold also had a part to play, with baccarat wagering in 2014 actually up 1.9% to $12.1 billion.
Union Gaming Group analyst Chris Jones said Strip casino operators with exposure in Macau have experienced diminished baccarat play.
“We expect other Strip operators to feel the pinch of a slowing Asian gaming business,” Mr Jones said.
One bright spot in Nevada in 2014 was sports wagering.
Revenue of $227 million was 11.8% higher than in 2013 and an all-time single year record. Gamblers wagered $3.9 billion on sports during the year, an increase of 7.7%. The amount bet on sports by Nevada casino customers has increased annually in each of the five previous years.
Analysts credit technology, such as mobile sports wagering applications for smart phones and tablet computers, and in-game wagering, which allows customers to bet on games that are in progress.
In December, gamblers placed $427.3 million in wagers on sports, which was a record for that particular month. In November, gamblers wagered a single-month record $535 million on sports.
“Sports betting is one of our better growth stories,” said Control Board Senior Research Analyst Michael Lawton.
In January, the state collected $43.7 million in gaming taxes based on December’s gaming revenue totals, an increase of almost 23% over a year ago. For the first seven months of the fiscal year, gaming tax collections are up 1.9%.
Analysts pointed out that gaming revenue doesn’t tell the entire story of Nevada’s economic recovery, especially on the Strip. Gaming revenue growth continues to be outpaced by customer spending in non-gaming areas, such as hotel rooms, dining, retail and other entertainment.
The recently released Gaming Abstract showed Strip casinos increasing total revenue in the last fiscal year by 5%, with non-gaming spending accounting for 63.3% of the overall figure.
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“Strip revenues were down. More importantly, the non-gaming outlook in Las Vegas remains positive,” Wells Fargo Securities gaming analyst Cameron McKnight told investors.
Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said a spike in the conventions and meetings business at the end of 2014 was expected to carry into 2015.
J.P. Morgan gaming analyst Joe Greff said despite the gaming revenue decline, he maintained a positive outlook for the Strip.
“The overall room rate- and visitation-driven recovery will continue throughout 2015,” Mr Greff said.
There were also bright spots in gaming in Nevada in 2014, including Clark County. Downtown casinos collected $511.4 million in gaming revenue, 2.1% more than in 2013. North Las Vegas casinos grew gaming revenue 1.9% to $263.9 million.
Reno casinos saw a gaming revenue increase of less than 1% to $552.1 million.
