Will Nevada see $13 billion again

Quote: FleaStiff

Do people even WANT to fly anymore? When the cost of tickets is high, the delays are high and the indignity level is ultra high how on earth are people going to get to Vegas even if they have free rooms and five dollar table limits?

I don't. I just got back this week and have no desire to ever fly again. I'd love to go back to Vegas, but it is not worth the hassle to fly. I won't substitute any local casinos, either. They are too expensive, bad odds, smokey, and just not Vegas. I'll be in a cabin in the mountains reading a book for my next trip.

Quote: FleaStiff

and five dollar table limits?

$5 table min's are common in Indian casinos, during the week.
Soaring Eagle is huge and their limit is $5 all the time, even on
weekends.

It's worth noting that Nevada still controls a giant piece of the pie in the USA

Top 20 U.S. Casino Markets by Annual Revenue
Casino Market 2010 Annual Revenues
1 Las Vegas Strip, Nev. $5.777 billion
2 Atlantic City, N.J. $3.573 billion
3 Chicagoland, Ind./Ill. $2.057 billion
4 Connecticut $1.385 billion
5 Detroit, Mich. $1.378 billion
6 St. Louis, Mo./Ill. $1.086 billion
7 Tunica/Lula, Miss. $926.92 million
8 Biloxi, Miss. $830.86 million
9 Philadelphia, Pa. $816.31 million
10 Shreveport, La. $764.92 million
11 Boulder Strip, Nev. $757.03 million
12 Kansas City, Mo. (includes St. Joseph) $753.44 million
13 Reno/Sparks, Nev. $684.05 million
14 Lawrenceburg/Rising Sun/Belterra, Ind. $676.17 million
15 New Orleans, La. $640.94 million
16 Lake Charles, La. $639.13 million
17 Black Hawk, Colo. $625.17 million
18 Yonkers, N.Y. $582.23 million
19 Pittsburgh/Meadow Lands, Pa. $531.80 million
20 Downtown Vegas, Nev. $493.39 million
Source: The Innovation Group (5/11)

Macau will probably beat the entire US commercial casino industry in 2011 (it should be fairly close)

Gaming Revenue: 10—Year Trend
Year Total Commercial Casino
2001 $25.70
2002 $28.07
2003 $28.72
2004 $31.17
2005 $32.77
2006 $35.27
2007 $37.52
2008 $36.22
2009 $34.28
2010 $34.60
Note: All amounts in billions

Quote: pacomartin

It's worth noting that Nevada still controls a giant piece of the pie in the USA
Macau will probably beat the entire US commercial casino industry in 2011 (it should be fairly close)

I'm tempted to say "so what"? Competition is strange. One professor said "a university does not compete with other educational institutions, it competes with the bowling alley".

What about casinos? I guess at the "whale" level, Macau and Las Vegas compete, but thats about it.
Macau was a gambling enclave for a long time but its growth was due to easier travel and the quasi-capitalist Chinese system.

I would say that for US Casinos only the USA really matters.

I can't see anyone organizing junkets from the USA to Macau.

Quote: FleaStiff

I'm tempted to say "so what"? Competition is strange. One professor said "a university does not compete with other educational institutions, it competes with the bowling alley".

What about casinos? I guess at the "whale" level, Macau and Las Vegas compete, but thats about it.

Well the strip went down $1.5 billion in two years. It has since recovered $0.5 billion, but $0.4 billion was from increased baccarat play. Since we don't have insight into the makeup of the baccarat players who lost that $0.4 billion, they may be men that were bought at huge expense in terms of high end comps. If they are lost in the future to Macau, or Singapore, or a new casino in Vietnam, then the Vegas strip may return to a new low.

If a lot of that money is tied into the Asian real estate market, then it may all blow up if their real estate bubble bursts.

By global standards, Las Vegas is a relatively inexpensive place to horse around in. We see that in the huge uptick in Canadian and British visitors. Since an overseas visitor stays for a week, instead of 3 days like most Americans, the potential is large. There is still limited flights from Germany and France. Emerging economies in Brazil and Mexico should provide more visitors.

While it is true that France may outwardly despise American culture, their dirty little secret is that many French secretly like McDonald's, Disney World, and some Shlock TV/movies. It is very liberating to be able to run in and buy a hamburger, rather than spend a lot of money sitting down and enjoying a proper French lunch.

As for the rest of Nevada as a whole, it doesn't look like the situation will improve. Except for isolated spots like Elko County that borders Utah, the only direction seems to be down. A new industry needs to be developed, or it will soon resemble the worst of rural Mexico.

Phoenix, has a fairly diverse economy, with five Fortune 500 companies all in different fields ranging from metal to waste disposal to pet care. Nevada needs more diversity.

When looking at Vegas Strip revenue figures, I try to figure out how much was bet. The win amount / win % gets me a measure of the amount BET on the Vegas Strip.

With that measure, slots has been steadily on the rise since March. Year to Date, there is also growth in "amount bet" in 21, Craps, Roulette, 3-Card Poker, and Pai Gow Poker, while Bacarrat, Mini-Bac, and Pai Gow (Tiles) have seen declines. "Other Games" is up 51%, which is good news for the game developers. The Sportsbook is also up. All of these are positive steps for Vegas.

Bacarrat figures swing wildly month to month, and I can only conclude that it's whale play that accounts for the variance in those figures. Bacarrat has about 1/6th of the presence (by number of units) that 21 has, yet the total amount "bet" in Bacarrat exceed Blackjack by about 30%. It's apparent that Vegas is relying more and more on Bacarrat win to stay profitable, and I think it's accomplished by flying whales over from Asia to play there. It makes sense too do do that from a tax standpoint. A whale losing $2,000,000 in Vegas would be subject to 6.75% in tax to the state, a paltry 135,000. The gaming revenue from these two resorts alone are greater than the entire strip. Macau's revenue tax rate is 35%, which is substantial. But Singapore features only a 5% tax (for a premium player who leaves $100,000 in deposits) is lower. There are two casinos in Singapore: one is owned by the Sands, while another was owned by an Asian conglomerate. So someone betting $2,000,000 in Macau would be subject to $700,000 in taxes, not an insignificant number.

The cost to rent and fly a private jet from Beijing to Vegas (13 hour flight) runs on the order of $50 - 60K, so I am thinking that it's much more effective for MGM and Wynn to fly its whales into Vegas to play. However, with Sands' megaresort in Singapore (opened in April 2010), I am guessing that they fly some of their Macau whales there which would account for a drop in Baccarat revenue on the strip.

Quote: boymimbo

The cost to rent and fly a private jet from Beijing to Vegas (13 hour flight) runs on the order of $50 - 60K, so I am thinking that it's much more effective for MGM and Wynn to fly its whales into Vegas to play. However, with Sands' megaresort in Singapore (opened in April 2010), I am guessing that they fly some of their Macau whales there which would account for a drop in Baccarat revenue on the strip.

I should think you are talking about fuel only since that cost estimate seems way too small to include maintenance on jets or charter price. Sands has gotten rid of a lot of their aircraft, so I am assuming that they are flying Macau whales to Singapore. While Singapore does not have the tax rate of Nevada, it is still low enough that it is worth the considerably lower costs of flying people.

You are re-iterating my point about baccarat revenue. Since $400m of the $500m in 'comeback' over the last two years on the Strip is in baccarat, it may be coming at a high price in comps. It can very easily fly off to a new country in search of the newest attraction.

Before Hard Rock went belly up they decided to try and attract the upper middle baccarat player. Their gaming revenue went up, but their costs increased more than the increase in revenue. It's not so easy to play in the big league.

I think it is mostly whale play that accounts for the swings in baccarat, but a lot of it has to do with the ethnicity. The Chinese player tends to play for hours on end, betting and rebetting their winnings. The win percent is always very high during Chinese New Year's. Other players may sometimes lay out a lot of money, but they walk away after a short time. The win percent is very low some months. No other game has those huge swings in win percent.

Nevada had back to back good months. They are inching their way back to the peak (4 years, 4 months ago) of $13 billion in gaming revenue.

The basic fact that 70% of the comeback on the strip has been in baccarat has not changed.

Comment	Month	State	Strip $billions	Rest of NV
Latest reported	Feb-2012	$10.91	$6.23	$4.69
Low for off-strip	Sep-2011	$10.55	$5.94	$4.61
Low for the state	Jul-2010	$10.28	$5.62	$4.66
Low for the strip	Oct-2009	$10.38	$5.49	$4.90
Peak of market	Oct-2007	$12.97	$6.95	$6.03

>Nevada had back to back good months.
>They are inching their way back to the peak (4 years, 4 months ago) of $13 billion in gaming revenue.
Four years ago I daresay that Gaming Revenue was a realistic figure, now its a figure straight out of Wall Street's Hype Machine.

>The basic fact that 70% of the comeback on the strip has been in baccarat has not changed.
Perhaps baccarat has become marginally more popular amongst ordinary folk but lets face it, it is a game played by The Chinese and any game whose revenue is attributable to any one particular group is vulnerable. Popular restaurants display great revenue figures but can lose them over night if the "trendy set" moves elsewhere. If your revenue is based on hype it is in danger. Trends change, there are off-book expenses, such as movie stars having been secretly paid to eat there.

Is such revenue an "asset" that supports further debt? I don't know. Go to a casino and often its old people and orientals. They are the ones with the money. For now.

Quote: FleaStiff

Perhaps baccarat has become marginally more popular amongst ordinary folk but lets face it, it is a game played by The Chinese and any game whose revenue is attributable to any one particular group is vulnerable. Popular restaurants display great revenue figures but can lose them over night if the "trendy set" moves elsewhere. If your revenue is based on hype it is in danger.

I used to talk about that a lot, and it still seems true. But baccarat is holding up year after year and even improving to record levels.

Comment	Month	State	Strip $billions	Strip baccarat $billions	Rest of NV
Latest reported	Feb-2012	$10.91	$6.23	$1.36	$4.69
Low for off-strip	Sep-2011	$10.55	$5.94	$1.17	$4.61
Low for the state	Jul-2010	$10.28	$5.62	$1.10	$4.66
Low for the strip	Oct-2009	$10.38	$5.49	$0.84	$4.90
Peak of market	Oct-2007	$12.97	$6.95	$0.97	$6.03