Will Nevada see $13 billion again

Quote: pacomartin

It would allow development in an area where it is possible to come on a day trip from L.A. area. Although I think it is highly unlikely that the nicer areas of the Strip would be reproduced in Barstow, you might end up with a copy of Laughlin.

I would say that's somewhat similar to the casino cluster in the Coachella Valley on I-10: Morongo, Fantasy Springs, Spa, Agua Caliente, Spotlight 29, Augustine, Red Earth. Being a little farther south, it'd also be a (long-ish) day trip from San Diego. And applying Nevada's rules to the games at these venues would almost certainly make them more attractive than the local options in L.A. or San Diego.

We are now at the 4th anniversary of the peak of Nevada gaming revenue. The strip went down for 2 years, and has made an anemic recovery (77% of which was due to baccarat). The rest of Nevada outside of the strip just keeps going down and down. It is similar to Atlantic City although AC is approaching their 5th anniversary of dropping revenue. AC began in January 2007 when the first racinos opened in Philadelphia.

It was easy for analysts to say that off-strip gaming in NV would take a long time to recover. But there is no sign of even an anemic recovery at all in four years. It may be condemned to languish permanently. The nation no longer needs small time casinos outside the strip.

Strip revenue could return to it's peak (someday). Despite the talk in Florida, there still is no destination gaming resorts being developed anywhere in North America. Despite some upticks in non-gaming revenue, gaming is not showing any signs of picking up steam.

Comment	Month	State	Strip $billions	Rest of NV
Latest reported	Oct-11	$10.63	$6.01	$4.62
Low for off-strip	Sep-11	$10.55	$5.94	$4.61
Low for the state	Jul-10	$10.28	$5.62	$4.66
Low for the strip	Oct-09	$10.38	$5.49	$4.90
Peak of market	Oct-07	$12.97	$6.95	$6.03
Historic	Oct-04	$10.38	$5.24	$5.14

How many more new casinos are scheduled to open in
other states in the next 2 years? Dozens, at least. Thats
on top of whats open now. I have 15 casinos within a
2 hour drive from my house. 10 years ago there were
4. How can Vegas ever 'come back' with competition
like that.

Some people I know went to Vegas with their family for
the first time last summer. It blew them away. When
they got back I asked them if they were planning another
visit. They said why on earth would they want to go back,
they already saw it. If they want to gamble, they can do
that locally. That pretty much says it for a lot of people.
Its too expensive, too far away, and is no longer the only
game in town.

Quote: EvenBob

How can Vegas ever 'come back' with competition like that.

Well we should define 'come back'. For the strip I was talking about returning to their high of $7 billion. But keep in mind that October 2007 is before any of the new casinos opened in 2008 (Palazzo, Encore, City Center, M resort, greatly expanded Hard Rock, and smaller ones) and the new condo/hotel towers (Palm Place,Trump Tower, and dozens of others). Those projects were all built anticipating that the $7 billion would grow by a few billion. But at the current rate it will take another 4 years just to 'come back' to $7B. Of course, what will happen if by 2020 the Encore and City Center are still the newest casinos in the city.

As for the "rest of Nevada" including other areas of urban area, plus Laughlin, Reno, Sparks, etc. The high was $6 billion. I don't see them ever reaching $6 billion again. I mean as long as "forever" makes sense economically. The population growth will stall, and there is no reason to visit in those record numbers again.

Now, how to get another half century out of Circus Circus and Riviera.

People have to have a reason to go to Vegas. Its certainly
not gaming anymore, they can get that anywhere. So its
restaurants and shows. With more and more local casinos
having great eating choices and building facitities for shows,
what will Vegas have that brings people back.

This reminds me of the big movies vs TV debate back in the
50's. The movies invented VistaVision and PanaVision and 3-D
and put up drive-ins, and none of it worked. The movie
business is a shadow of what it was before TV. Before 1950,
something staggering like 9 out of 10 Americans went to the
movies at least once a week. Vegas is where the movies were
in 1950, fighting for its life against what the folks can get at
home.

Thoughts:

(1) The economy is still in recession which explains why destination travel to Vegas is still depressed.
(2) The major market for Reno is northern California gamblers and locals. Northern California casinos are now displacing business in Reno. And Reno hasn't upgraded its downtown casinos in eons.
(3) The major market for non-strip casinos in Vegas is locals, fleas, and advantage players. Their economy is highly stressed and housing has dropped substantially with the overall result of there not being alot of disposable income.
(4) The market for Laughlin and western Nevada casinos is Californians who have their local casinos now to play at.
(5) Airport traffic for McCarran has been on an upswing every month since January but is still 13.1% off the 2007 peak year. Strip revenue is up 9% since its low in October 2009 (October 2010 was the first month in YOY growth seen at McCarran in 31 months). This means that the tourists are coming back to the strip, slowly, but surely.

My feeling is that more Americans are gambling because of opportunity. Those people who desire to go to Vegas go to Vegas. For example, I've had casinos in my home town for the last 15 years, but I still make my trek to Vegas. So I see the Vegas central strip (from WynnCore down to Mandalay Bay) coming back to life. Heck, even Circus Circus is making money.

Quote: pacomartin

Well we should define 'come back'.

Yes. I'm sure the bean counters and economist types will have some differences of opinion and will endlessly split hairs about inflation/deflation and various percentages of revenue versus visitors or something, but we should indeed define our terms.

What is a come back? A dream held by a has-been movie star?

Actors used to dream of Broadway and Radio City Music Hall ... perhaps they still do but if so they do that dreaming while working at Dinner Theaters in the Sun Belt. And I doubt they are known as "Hams" these days... Hamlet? Ain't that a small town?

Performers may have dreamed of Vaudeville but its no longer known as Vaudeville its now Dark Cabaret in hordes of campus towns.

"Las Vegas" still exists in the hearts and minds of the public but the gambling is in Tribal Casinos and the Tribal Casinos are now building hotels and spas and day care centers and looking more and more like Vegas. The "I came, I saw, I went back home and gambled" may be a bit extreme but long flights and long lines for being fondled at the airport are part of the death knell for Vegas.

Reno values their casinos for their real estate value, not their gambling licenses value. Thunder Valley stole Reno's thunder!

Sure Las Vegas is still there and still gets visitors but there is little rational reason for visiting Las Vegas to gamble. The best food, the best "history", the best "ambiance" ...? So what you can hire a porn slapper to stand outside your local Tribal Casino if you that desperate for an authentic Vegas experience.

So Las Vegas will struggle onward with the casinos fighting a losing battle for quite some time.

Quote: FleaStiff

So Las Vegas will struggle onward with the casinos fighting a losing battle for quite some time.

Well it seems pretty bad to me. If the strip went down $1.5 billion in 2 years with all that extra capacity, and has only climbed back $0.5 billion in the following two years, that's pretty anemic. Furthermore $400M of that rise for the last few years was baccarat which requires very few casino employees.

Without baccarat, the rest of Nevada continues to languish, only setting a new low last month. Revenue for "Rest of Nevada" is equivalent to what it was in the year 2000. The "Rest of Nevada" has not gone down as much as Atlantic City however, which shows you that it can always be worse.

Comment	Month	State	Strip $billions	Rest of NV
Latest reported	Oct-11	$10.63	$6.01	$4.62
Low for off-strip	Sep-11	$10.55	$5.94	$4.61
Low for the state	Jul-10	$10.28	$5.62	$4.66
Low for the strip	Oct-09	$10.38	$5.49	$4.90
Peak of market	Oct-07	$12.97	$6.95	$6.03
Historic	Oct-04	$10.38	$5.24	$5.14

"Extra capacity"?
Ain't no extra capacity.
Oh there are plenty of empty rooms and zillions of steeply discounted rooms... but that is not capacity unless you have the housekeepers, waiters, dealers, valets, etc. to handle the guests who might fill those rooms. And it seems the casinos fired so many people.

But is it "excess capacity"? Heck, if you are trying to fill up this great big tank labeled "Vegas Hotel Rooms" ... look at the hose you are using? 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?

Trip to Vegas? Trip to the Happy Wampum is more like it. A half naked black jack dealer in Vegas and a half naked black jack dealer thirty minutes down the road are fungible goods.

I disagree.

Air traffic to Las Vegas has increased year over year every month for the last year, up 4.4% over last year but still off 13% from 2007.
On the strip, Slot "coin in" has increased year over year pretty much each month for the past eight months (but still 20-25% off of its 2007 highs). So as the recovery goes, people are coming back to the Vegas strip, slowly.

Slot trends are continuing along. Multi-denomination machines are earning about 44% of all slot revenue. Penny machines are replacing the nickel to dollar machines (mostly the nickel machines). The machines over a dollar are slowly phasing out (earning about 3% of total slot revenue).

Las Vegas is losing natural business as casinos open throughout the United States (especially in California), but with air traffic and revenue returning to Vegas despite other casinos opening, Vegas is (right now) making a slow and steady comeback. With inflation, it will come back to 13B. And as California makes a comeback, you will see the desire of people to make the 4 hour trek from the LA to Vegas increase instead of using the native casinos. I think it will take 4 years. I don't think the Echelon and Fontainebleau properties will ever come to fruition.