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Nevada Gaming Revenues in January, 2008 Fell Almost 5% in a Year-over-year
 Comparison; No Clear Trend Developing in Nevada's Monthly Gaming Win

By Howard Stutz, Las Vegas Review-JournalMcClatchy-Tribune Regional News

Mar. 8, 2008 - --Wall Street was looking for a clear indication Friday into whether Nevada's casino industry is facing an economic slowdown in 2008. That picture is still a little cloudy.

Statewide, gaming revenues in January fell almost 5 percent in a year-over-year comparison. Casinos won $1.064 billion from gamblers in January, 4.75 percent below the $1.117 billion won in January 2007. On the Strip, casinos won $597.3 million during the month, off 1.33 percent compared with $605.4 million won a year ago. The figures were released by the Gaming Control Board.

Other mitigating factors affected the money casinos won from gamblers during the month, said Frank Streshley, the control board's senior research analyst. Severe weather kept gamblers from reaching casinos in the northern part of the state while lucky baccarat players walked away from Strip casinos as winners more frequently.

However, customers visiting the locals casino market around the Las Vegas Valley didn't wager quite as much on slot machines as they did a year ago.

Streshley said there hasn't been a clear trend in Nevada's monthly gaming win.

In October, for example, Nevada casinos won an all-time single monthly record for gaming revenues, collecting $1.164 billion from gamblers. A month later, casinos statewide had a 14 percent decrease in gaming win compared with November 2006, the largest single-month revenue drop in almost five years.

"We're struggling in looking at the monthly numbers because gaming fluctuates up and down," Streshley said. "We can go from a record month to a double-digit decline a month later. It's very hard to get a handle on it."

Statewide, customers wagered almost 5 percent less than last year. The amount bet on table games was $2.5 billion, down less than a percentage point from last year, however, slot machine gamblers wagered $10.2 billion during January, off 6.1 percent or $665 million less than what was wagered in January 2006.

Bear Stearns gaming analyst Joe Greff said casinos on the Strip would have shown an increase in gaming win during January if baccarat was taken out of the picture. Those customers had a good month winning against the house.

The amount wagered on baccarat on the Strip was 6.1 percent higher than a year ago while the casinos' win was $81 million, a decrease of 10.1 percent.

"Excluding baccarat, the total win on the Strip in January actually grew 0.2 percent year over year," Greff said in a note to investors. "The weak baccarat hold percentage turned what would have been about a 1.2 percent growth year over year on the Strip, into a 1.3 percent gaming revenue shortfall. That said, we note that the January 2007 hold was higher than normal, and as such, created a difficult comparison."

Streshley said some Strip wagering could have been affected by the Jan. 25 fire at the Monte Carlo, which closed the 3,000-room hotel-casino for three weeks. Even though business was moved to other Strip properties, he believes there is some impact "when 3,000 rooms are removed from the market."

Dan Ahrens, a Dallas-based investment adviser who follows the gaming industry and manages a mutual fund based on gaming stocks, said in a commentary this week the better Strip casinos will pull business from weaker properties during challenging economic times. He said business will also come from foreign gamblers, attracted to the United States by favorable currency exchange rates.

"There certainly is no recession among foreign VIP gamblers," Ahrens said. "Although we will see various periods of ups and downs and a mixed bag of U.S. gaming revenues, top properties will fare much better than most regional operators during tough economic times."

All of the Clark County markets reported gaming win decreases in January. Countywide, including the Strip, casinos won $928.6 million, a 4.05 percent decrease compared with $967.9 million last year.

Streshley said the most relevant factor to evaluate in the locals market is the amount wagered on slot machine play. In North Las Vegas during January the volume of slot machine wagering was down more than 8 percent. Slot machine wagers were also off almost 5 percent in the balance of Clark County and more than 3 percent on the Boulder Strip.

"That shows us somewhat that consumer spending is down," Streshley said.

Casinos in downtown Las Vegas suffered a 6.7 percent drop in gaming revenue during January.

Severe winter storms in Nevada's northern half kept customers from traveling to and from California, Streshley said. Subsequently, casinos in Washoe County suffered a more than 9 percent decline in gaming revenues, the area's largest monthly decline since April 2003. Casinos in Elko County had a 3.8 percent decline in gaming win, their first decline in 12 months.

The amount of gaming taxes collected by the state based on January's gaming win decreased for the third straight month and for the fourth time in the last eight months.

Nevada collected $81.5 million in gaming taxes for wagering activity in January, off $11.8 million or 12.63 percent compared with $93.3 million collected a year ago.

For the fiscal year's first eight months, the state has collected almost $517.9 million in gaming taxes, 3.55 percent less than $536.9 million collected for the same time period a year ago.

When compared with the forecast predicted by the state's Economic Forum, gaming tax collections are down more than 8.5 percent, or $48.2 million below projections.

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To see more of the Las Vegas Review-Journal, or to subscribe to the newspaper, go to http://www.lvrj.com.

Copyright (c) 2008, Las Vegas Review-Journal

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