The whales of August

By David McKee ~ October 8th, 2010 @ 12:36 pm

Nevada had another big casino bounce — $944.5 million, its largest since February’s $947 million. However, some of the positive auguries are real and some are misleading. To get the big one out of the way, Strip slot revenues were up 13% — but on lower coin-in, which means that somebody’s been tightening the slot hold again. Back out approximately $28 million in slot win that’s a holdover from the final weekend in July (Nevada uses some arcane slot-accounting rules) and the increase dwindles to a fraction of a percent. With the exception of last February, slot handle has down every since month since the end of 2007.

Also, one can scarcely overstate the degree to which VIP play has been propping up the Strip this year (five months of double-digit growth, plus one of triple-digit growth in wagering). The whales bet leviathan-like amounts of money in August (+87%) and casinos played lucky, winning 47% more, year over year. The Strip has been very lucky in other table games, averaging a 13% higher win even though players are wagering only 7% more money. Table game winnings for Strip casinos were up 29% in August, continuing a volatile but overwhelmingly positive year. This was accomplished, mind you, in an August that was “unfavorable,” i.e., had one less weekend day than last year. Following an 8% table revenue jump in July, this “speaks well to the stabilizing domestic gaming patron theme,” according to Wells Fargo analyst Carlo Santarelli.

So, August basically continued the 2010 narrative of lively table play and flat slots. Locals and outstate revenues were — in what may be the more hopeful indicator — up 11.5% and 3.5%, respectively. Except for Reno (-2%) and Laughlin (-5%), every non-Strip jurisdiction did better than average. The biggest percentage gainers were North Las Vegas (14%), the Boulder Strip (3%), the Carson City area (7%) and even hard-buffeted Lake Tahoe (8%). All this, of course, must be taken with the caveat that it includes some — possibly substantial — leftover slot revenue from July. Santarelli writes that he “wouldn’t read too much into [the numbers] and we continue to believe the road to recovery in the locals market is long.”

Breach of contract

Few casinos are required by law to maintain X number of employees. Harrah’s New Orleans is such a rare creature. It’s been out of compliance for two months this summer. Recently, that’s been remedied by a prolonged hiring fair — and partly through some clever reshuffling of the full-time vs. part-time mix of the workforce. However, any adverse scrutiny of Harrah’s should be tempered by knowledge that the company hasn’t used the reducing of some employees to part-timers as an excuse to yank benefits. Many other companies would not be so scrupulous.

Hard up for casino operators, increased flexibility is being offered by the State of Kansas. Both Global Gaming and perceived also-ran Peninsula Gaming were allowed to sweeten their revenue projections by the Kansas Lottery Commission, for whom they’ll be working. Peninsula also improved its chances by being permitted to add a second, less-controversial prospective location in Mulvane. It’s the spot vacated by Harrah’s Entertainment when it skittered out of Kansas (again) in September, possibly frightened away by the prospect of a Class II tribal casino nearby. Don’t expect a final choice of operator before mid-December.

Death Ray? What Death Ray? How is Vdara management handling its big PR problem? By 86’ing people who ask about it, that’s how. And there I was thinking Luxor was the MGM Resorts International property located on the banks of deNile.

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