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pacomartin
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June 17th, 2010 at 4:50:23 PM permalink
On October 2007 Nevada reported a peak running 12 month total of $13 billion. For 30 monthly reports since that time the total has been lower so that it now stands at $10.4 billion.


Macau reported HKD$120.3 billion dollars in revenue last year which is equivalent to US $15.44 billion with the year 2010 looking like it will set record increases. It easily surpasses Nevada and is several times as large as the Vegas strip.

Do you think Nevada will get back to $13 billion ? If you do, Inside or outside of three years?

Reno area of Washoe county has been down now for 45 straight months from it's high of $775 million (down to $579 million). That is down 25% for Reno as compare to 20% for the state of Nevada (from the peak). I am taking it for granted that Reno hit it's peak at the end of June 2006 since that was long before any hit of the recession. It's just overwhelmed by local competition in Sacramento. I am not including Reno in the poll, but if there is anyone who thinks that they will recover someday, I would like to hear their thoughts.


The salvation of the Vegas trip since May of 2009 has been baccarat. The graph shows the jump in revenue from one month to the same month a year later. The blue lines indicate the range of that month back to 2006 which began the latest wave of popularity of baccarat on the strip. If there are no blue lines then the data back to 2006 is within the range of the last jump.

I see a disturbingly small jump for the latest April 2010 numbers. I think that this is because of the new competition in Singapore and the new Wynn Encore in Macau. I have been wrong before, and baccarat may be rejuvenated by the new jet from Paris. But if baccarat starts going down on the strip it will be really bad. The spectacular baccarat returns in Feb 2010 for Chinese New Year's have finally put the strip back in the black for the fiscal year (just barely in the black).
ruascott
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June 17th, 2010 at 5:26:09 PM permalink
To answer your question, yes Vegas will get back beyond 2007 numbers, but no I don't see it happening within 3 years. That would be somewhere near a 30% increase, and this just isn't going to happen.

This has been discussed before, but there is just too much competition for both the gambling dollar, and the overall recreation/tourism dollar today, and the national economy is still some time away from anything looking like a strong recovery.

The comparisons to Macau aren't really reasonable any longer. Macau is the only place in China where casino gambling is legal; China's economy is growing at 7+%/yr still today; and China has over three times the population of the US. Macau of today is comparable to Vegas in the 1980s....or maybe 1960s. It is the ONLY option for gambling in a huge country that is growing more and more prosperous by the year.

Compare that to Vegas and the US. While Vegas is still a huge draw, no one HAS to go to Vegas if they want to play slots, or blackjack, or Craps. Almost everyone other than those in So. Cal. have options that are much closer to home.
Nareed
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June 17th, 2010 at 6:42:07 PM permalink
Quote: ruascott

Compare that to Vegas and the US. While Vegas is still a huge draw, no one HAS to go to Vegas if they want to play slots, or blackjack, or Craps. Almost everyone other than those in So. Cal. have options that are much closer to home.



I think Vegas needs to do two things:

1) market itself, to gamblers, as the bets place to gamble. Sure, there are casinos elsewhere, but Vegas has a alot of casinos in a relatively small area. In other words, a great deal more choices.

2) Look for people with fewer gambling alternatives, or at least fewer easy gambling alternatives.

Consider Mexico. There are slots, bingo and a few electronic games, but no real casinos. There are daily direct flights from three major cities to Las Vegas. Other easy destinations (ie with frequent direct flights from major cities) are: Houston, Los Angeles, Phoenix, Dallas, Miami, NYC and Chicago. What gambling options in these cities or nearby?

Consider that it's cheaper, less time consuming and overall easier to just go to Vegas.
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ruascott
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June 17th, 2010 at 7:34:05 PM permalink
Quote: Nareed

I think Vegas needs to do two things:

1) market itself, to gamblers, as the bets place to gamble. Sure, there are casinos elsewhere, but Vegas has a alot of casinos in a relatively small area. In other words, a great deal more choices.

2) Look for people with fewer gambling alternatives, or at least fewer easy gambling alternatives.

Consider Mexico. There are slots, bingo and a few electronic games, but no real casinos. There are daily direct flights from three major cities to Las Vegas. Other easy destinations (ie with frequent direct flights from major cities) are: Houston, Los Angeles, Phoenix, Dallas, Miami, NYC and Chicago. What gambling options in these cities or nearby?

Consider that it's cheaper, less time consuming and overall easier to just go to Vegas.



I'm not convinced that it is easier/cheaper. Not sure on all, but if I lived there I might think:

Houston: New Orleans/Biloxi is not that far a drive
Chicago: Casinos are a plenty in Chicagoland already
NYC: Currently they go to A/C. The Penn casino will be even closer.
Miami: Bahamas is very close, and for some people perhaps more appealing than LV as you can get their by boat instead of plane. Oh, and I here they have some pretty nice beaches.

Obviously LA and Phoenix are natural destinations already because of the geographic proximity. They are a 4-5 hour drive and/or a cheap quick flight away. Easy long weekend.


I'm not saying that any or all of these replace LV as a destination city for a bit longer vacation. But lets face it, flying is a hassle, and if you are coming from east of the Mississippi it takes a LONG time and a lot of $$$ to get there, even on a direct flight. A lot easier to scratch that gambling itch closer to home.

I realize I'm repeating what a lot have already said before...but man, its going to be a long, hard slog for LV in general over the coming years.

For a good bet, what does everyone think the over/under on # of years until the Echelon and F-Blue are both open?
Nareed
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June 18th, 2010 at 7:03:25 AM permalink
Quote: ruascott

I'm not convinced that it is easier/cheaper.



Oh, it is. Other than Chicago, the options you listed require further travel and/or a car rental. Vegas requires neither.

As for Chicago, that's tough competition. I mean, there are other things to do in the city aside from the casinos. But it takes a much longer flight (Mex City to Vegas is around 3.5 hours, Chicago ought to be at least 5), and Vegas has nicer weather.
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ruascott
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June 18th, 2010 at 7:14:03 AM permalink
Quote: Nareed

Oh, it is. Other than Chicago, the options you listed require further travel and/or a car rental. Vegas requires neither.

As for Chicago, that's tough competition. I mean, there are other things to do in the city aside from the casinos. But it takes a much longer flight (Mex City to Vegas is around 3.5 hours, Chicago ought to be at least 5), and Vegas has nicer weather.



Sorry, I misread your initial post. I thought you were talking about marketing Vegas to people that live in those cities. I see now you are saying Vegas should compete with those cities as tourist destinations.
DJTeddyBear
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June 18th, 2010 at 7:35:30 AM permalink
Yes, over three years.


Vegas will continue to get hammered with dropping numbers until casinos stop opening in new US markets. Eventually, people will tire of the local establishment and return to a real gambling mecca as a diverstion.

Or, for no particular reason, the numbers will bottom out, and normal inflation will eventually bring the numbers back to $13 billion.

Either way, it's gonna take more than 3 years.
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Nareed
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June 18th, 2010 at 8:33:12 AM permalink
Quote: ruascott

Sorry, I misread your initial post. I thought you were talking about marketing Vegas to people that live in those cities. I see now you are saying Vegas should compete with those cities as tourist destinations.



More as a gambling destination, but yes.

Of ourse you won't get many high rollers from mexico, but the sheer number of daily flights means a lot of Mexicans travel to Vegas, it would be interesting to find out how much they spend on average per trip.
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Doc
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June 18th, 2010 at 9:44:46 AM permalink
Quote: ruascott

For a good bet, what does everyone think the over/under on # of years until the Echelon and F-Blue are both open?


I suppose the book makers set the over/under to balance the total bets. If the problem were worded that there is just a single one-on-one wager and you need to set the over/under for your opponent to choose his side on, that strikes me as an interesting issue.

Would you set it at the number of years you think are most likely (or perhaps a "mean" value rather than a "mode") so that you are indifferent as to which side the other party chooses? Suppose you believe (or you think your opponent believes) that the two places won't ever both be open. What is the appropriate over/under? I don't think it would really be infinity -- your opponent would always choose the under, since the over would never be paid. How would you handle that scenario?
Nareed
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June 18th, 2010 at 11:38:49 AM permalink
Quote: pacomartin

I would love to see Las Vegas replace or rival Houston as the air hub to Mexico.



Vegas isn't well-positioned to serve as a hub. In the first place it's too close to two other major hubs: LAX and PHX. In the second place it's a 3.5 hour flight to Mex City, while the flight from Houston is under 2 hours. Third, besides the casinos and shopping, there isn't anything else in Vegas worth the trip; Houston has top-notch medical facilities, a great deal of commerce and lots of shopping (but no casinos). Fourth Houston is a major Continental hub for travel elsewhere in the US, plus travel to Europe. While you can catch a plane from Vegas to anywhere in America, there are few international flights except to Canada and Mexico (for flights to South America, the hubs are Panama and Miami).

Vegas is like Orlando: it attracts lots of visitors but few transients.
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ruascott
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June 18th, 2010 at 11:43:55 AM permalink
Quote: Nareed

More as a gambling destination, but yes.

Of ourse you won't get many high rollers from mexico, but the sheer number of daily flights means a lot of Mexicans travel to Vegas, it would be interesting to find out how much they spend on average per trip.



That would be quite an image change for their current marketing towards the California hipster/douchebag/nightclub crowd. I'm not sure how many Mexican tourists would pay $300 for a bottle of Grey Goose.
ruascott
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June 18th, 2010 at 11:53:11 AM permalink
Quote: Doc

I suppose the book makers set the over/under to balance the total bets. If the problem were worded that there is just a single one-on-one wager and you need to set the over/under for your opponent to choose his side on, that strikes me as an interesting issue.

Would you set it at the number of years you think are most likely (or perhaps a "mean" value rather than a "mode") so that you are indifferent as to which side the other party chooses? Suppose you believe (or you think your opponent believes) that the two places won't ever both be open. What is the appropriate over/under? I don't think it would really be infinity -- your opponent would always choose the under, since the over would never be paid. How would you handle that scenario?





Yeah, typcially I'd think you would set the over/under where its an appealing bet either way. For this example, lets say the over/under on the Echelon opening is +/- 6 years. (That's just a stab in the dark, I haven't really put any thought into the reasonableness of that number.)

I'd probably put the F'Blue at +/- 4 years since its much nearer completion.
Nareed
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June 18th, 2010 at 11:59:42 AM permalink
Quote: ruascott

That would be quite an image change for their current marketing towards the California hipster/douchebag/nightclub crowd. I'm not sure how many Mexican tourists would pay $300 for a bottle of Grey Goose.



Oh, I know a few. They'd also brag about it when they got home.

I've been thinking of adding two vacation days to a holiday in September (Mexican Independence day), but air fare to Vegas for that week is over double what I paid in May, and at least 50% above the regular fare. this, mind you, on Mexico's Bicentennial holiday, when you'd think more poeple would stay closer to home.
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pacomartin
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June 18th, 2010 at 3:03:14 PM permalink
Harrah's is down 25.7% in two years in Las Vegas, and 26.8% in the rest of Nevada.
Vegas numbers (gaming numbers only)
2006-$1726.5 million
2007-$1986.6
2008-$1718.6
2009-$1476.0

2009-$372.0 Rest of Nevada(gaming numbers only)
That's worse than the overall 20% drop in the state of Nevada.

Vegas Strip (18.2% down from it's peak)
Apr 2010- $5,682,288
Oct 2007- $6,945,450
Nareed
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June 18th, 2010 at 3:08:11 PM permalink
Quote: pacomartin

It would be nice to see more Mexico flights however as international flights are the one bright spot in Vegas travel.



I don't think you will. Not soon. I've flown to vegas on Mexicana, twice on the early flight and once on the afternoon flight. The flights were never more than a little above half full, though the afternoon flight had more passangers.

And Mex City. Monterrey and Guadalajara are the only likely originating points. Coneivably Volaris or Interjet could add a flight from Toluca, but unless they offered a much reduced price that won't work at all.

Vegas, BTW, does get a lot of promotion in Mexico. There are visit.vegas.com ads on TV, and they also advertise on the travel section in newspapers.

Quote:

which is around 1,650 passengers a day, and does not include the vast majority of Canadian passengers, as they are typically pre-cleared in Canada.



Ah, that explains why an Air Canada (or was it West Jet? It had a maple leaf on the tail) plane was debarking the same time I arrived, but there were no poeple in the immigration lines.
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pacomartin
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June 20th, 2010 at 1:51:34 PM permalink
As a variation of the above question. Do you think that gaming numbers will have to return to their peak (on the strip) before a construction will begin anew on Fountainbleau or Echelon?

Repeat of Vegas Strip Gaming numbers for preceeding 12 months (18.2% down from it's peak)
Apr 2010- $5,682,288
Oct 2007- $6,945,450


Personally, I think that the only reason that the strip is even at $5.68 billion is because of baccarat. I think the new worlwide competition in baccarat (from Singapore, Vietnam, Taiwan, Hungary, etc) will drive the total below $5 billion eventually.

The current gaming revenue is close to
Jul 2005- $5,668,377
The Wynn opened on April 28, 2005
pacomartin
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June 21st, 2010 at 2:37:23 PM permalink
Macau hit US$5.3 billion in the first quarter of 2010. That is in only 3 months and is up from US$3.37 billion in first quarter of 2009. Adelson is predicting another 30% increase by the end of the year so Macau should end up as $20-$25 billion for the year.

LAX gets 17 million international passengers a year, a distant second only to JFK. Many come from at least 9 major hubs in Asia. Nevada has $43.8 billion in fixed assets invested in it's casinos.

Sooner or later California is going to wise up and build a major commercial casino in urban Los Angeles (like Singapore).



Personally I don't see Nevada hitting $13 billion again. Not ever.
ruascott
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June 21st, 2010 at 5:51:49 PM permalink
Quote: pacomartin

As a variation of the above question. Do you think that gaming numbers will have to return to their peak (on the strip) before a construction will begin anew on Fountainbleau or Echelon?

Repeat of Vegas Strip Gaming numbers for preceeding 12 months (18.2% down from it's peak)
Apr 2010- $5,682,288
Oct 2007- $6,945,450


Personally, I think that the only reason that the strip is even at $5.68 billion is because of baccarat. I think the new worlwide competition in baccarat (from Singapore, Vietnam, Taiwan, Hungary, etc) will drive the total below $5 billion eventually.

The current gaming revenue is close to
Jul 2005- $5,668,377
The Wynn opened on April 28, 2005



I can give a fairly certain no on this question. As Steve Wynn said in his CNBC interview, Vegas is a very hard town to make any money in now. Until the hotels come way down in land and construction costs, I don't know how they get to profitability. I suppose the F-Blue will be finished at some point, since the strucutre is already there. The Echelon may never be built as originally proposed. The strip doesn't need another $2-3B property.
bluefire
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June 22nd, 2010 at 11:30:47 AM permalink
paco, do you know how much of the drop in gambling revenue can be explained by the drop in occupancy rates?
pacomartin
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June 22nd, 2010 at 1:19:34 PM permalink
Quote: bluefire

paco, do you know how much of the drop in gambling revenue can be explained by the drop in occupancy rates?



There is not a strong connection between occupancy rate and gambling revenue. In february 2010 the 32.9% increase in gaming revenue on the strip (largest in 12 years) was not occampanied by a strong increase in occupancy rates. It's a relatively small percentage of the 2,856,456 that came in February that were playing the huge amount of baccarat that drove that massive increase.

Conversely, gaming revenues alone are not enough to drive casinos into profitability. In the first quarter of 2010 when gaming revenue finally hit positive numbers (on the strip) for the first time after 9 straight quarters of losses, Harrah's total revenue went down, and every single MGM strip casino lost revenue and profitability. What really impressed me was that every single casino went down. I would have thought that with those gaming revenues at the very minimum Bellagio would go up.

Las Vegas Sands and Wynn Resorts Las Vegas did improve, but Wynn Resorts still had an operational loss, and Sands did not make a profit after it paid off the prefferred stock (Sands voted to make some stock prefferred about 2 years ago).

Moody's has upgraded the industry from negative to stable . The strip has had some amazing months in baccarat, and the other table games seem to have flattened out. The slots are still dropping but not as bad. Personally I think that we have not seen the end results of the new competition for baccarat dollars.

It also seems to me that the Nevada off the strip is still doing very poorly. It does not seem stable to me.

Sands is upgraded to positive by Mood's since they are controlling so much of Asian gaming.

Once again, if California copies the Singapore model of building one or two extremely attractive casinos in Los Angeles that are designed to appeal to international tourism it would put Vegas in trouble.


bluefire
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June 22nd, 2010 at 10:11:09 PM permalink
That's good info, thanks Paco. I still have to think that there's gotta be some correlation somewhere between the occupancy rates and drop of gaming revenue, even if Baccarat is more than making up for it.

Thinking about the "average" type of player that would be going to Vegas less now, I've got to think it's the penny slot player that they were making tons of money off of. IIRC from your other analysis, Penny Slots have dropped fairly big in revenue as well. Does that correspond at all with the drop in occupancy rates?

If so, maybe there's a sweet spot that Vegas just isn't hitting yet - some place where Penny Slot players will still come for a weekend, but lose a ton on the slots.
pacomartin
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June 23rd, 2010 at 2:10:00 PM permalink
Slots are continually going down as a percentage of gaming revenue on the strip. There is just too many places in the country to play slots.

The $1-$100 machines represent about 1/7 of the slot revenue on the strip. I really think that the strip properties should get together and make some kind of agreement on these machines. They can cater to people who will spend a lot of money on slots if they know that they are getting a gauranteed high player return. The so called destination slot player.
pacomartin
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June 27th, 2010 at 2:10:34 PM permalink
I think Los Angeles will eventually legalize a site for big money table games near the ocean and the airport. Maybe they won't have slot machines, but there are just too many Asian visitors in LA.
FleaStiff
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June 27th, 2010 at 3:51:48 PM permalink
With all those CondoTels in town... are hotel occupancy rates more indicative of low and mid rollers?
High rollers might just be staying at their own condos for a while and not be part of the room rate statistics at all.
pacomartin
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June 27th, 2010 at 4:50:26 PM permalink
I just don't see any real correlation between occupancy rates and gaming revenue. April had the highest occupancy last year and the 7th highest month for gaming revenue for the county.

Of the four months this year April had the highest occupancy in 2010 and the lowest in gaming revenue for the four months. Mostly because baccarat revenue has been the poorest in the last 10 months.


There is not even a strong connection between people and non-gaming revenue. Non-gaming revenue is more closely related to delegates at conventions who spend a lot more than tourists.
rxwine
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June 28th, 2010 at 3:15:10 AM permalink
Quote: pacomartin

I just don't see any real correlation between occupancy rates and gaming revenue.



I've heard it discussed before (probably by news media type) that when Elvis brought in people to see him, he didn't bring many gambling types. I've also heard CES (consumer electronics convention) is a terrible crowd for gaming revenue.

If true, the lack of correlation is not quite as mysterious.
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pacomartin
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June 28th, 2010 at 11:15:12 AM permalink
There is not even a strong correlation between gamblers and big spenders. Hard Rock draws a lot of big spenders who eat at Nobu, and a lot of celebrities, but their gaming revenue is very very low. Even the slot oriented casinos often make more at Laughlin.

I see more TV advertisements for Adventuredome, but I don't know if they offer a yearly pass. It's still pretty small as amusement parks go, but maybe they could get kids to come back 5 times in a year and make their money on food sales.
pacomartin
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July 10th, 2010 at 4:12:42 PM permalink
It seems fairly unanimous that people think that Nevada will return eventually, but it will take over three years.

The Vegas strip is roughly 54% of the state of nevada gaming revenue. Vegas strip is down -18.62% while the state of Nevada is down -19.98% from the peak in October of 2007. The strip is protected by increase in baccarat earnings. Without baccarat the strip would be doing worse than the state as a whole.

As you know baccarat has stuttered the last two months. Personally I think they are feeling the competition with Singapore.

Vietnam should be jumping in shortly as well.

Will Vegas strip return before the state of Nevada as a whole?

Partly that is a statement of where you think construction will resume. Is the future in resorts like Red Rock, M Resort, South Point, Green Valley, Marriot Summerlin, Suncoast and on the low end with places like Eastside Cannery that offer better odds. Perhaps people will shy away from the Vegas strip in search of something more golf oriented and possibly cheaper or with better gaming odds.

Although M Resort was a billion dollars, places like Eastside Cannery cost about $250 million. Certainly a lot less than the multi-billion dollar resorts on the strip.

The strip numbers are:
$5.652 billion May 2010
$6.954 billion Oct 2007

While the overall drop is $1.3 billion, baccarat has gained $220 million per year.
FleaStiff
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July 11th, 2010 at 8:35:35 AM permalink
Quote: pacomartin


Although M Resort was a billion dollars, places like Eastside Cannery cost about $250 million. Certainly a lot less than the multi-billion dollar resorts on the strip.



Eastside Cannery may be referred to as the Boulder Strip and The M Resort may from time to time be referred to as a strip resort because it is actually on Las Vegas Blvd but in reality its only the mega places on the real strip that come to mind when people say "Las Vegas".

The M Resort and the Eastside Cannery go after totally different markets than any "real" Vegas mega resort complex.

Locals in search of bargains, tourists who gamble rather than gawk, realize that the Las Vegas Strip with all its mega resorts and ultra-designed trendy bars and beaches are part of the hype. Locals may work at a beach club, they don't want hype when they themselves gamble. So its off to The M Resort if their money and tastes allow them to indulge but if their money and tastes do not allow play at The M Resort then its Eastside Cannery.

I think the recovery might therefore depend upon how many are going to shift from Hype to Value due to the recession but stay at Value oriented gaming once the recovery arrives.
pacomartin
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July 11th, 2010 at 11:58:31 AM permalink
Quote: FleaStiff

Eastside Cannery may be referred to as the Boulder Strip and The M Resort may from time to time be referred to as a strip resort because it is actually on Las Vegas Blvd but in reality its only the mega places on the real strip that come to mind when people say "Las Vegas".



The Gaming Comission assigns each resort to a geographic region when they report their statistics every month. In many cases the decisions seems very arbitrary. Sometimes they change the regional designation of a small casino (like Wild Wild West or Ellis Island), but they are reluctant to change a large resort because historical data will be compromised.

Unusual groupings made by Gaming Comission
Boyd Orleans Casino is not on the strip but Boyd Gold Coast is on the strip according to NGC despite the casinos only being two blocks apart. Palace Station is considered on the strip, but the Stratosphere is considered a Downtown Vegas casino because it is inside the city limits of Las Vegas. The Palms, Rio, Terribles, Hard Rock, and Airport slot concession are all reported as Vegas strip casinos. The total of strip casinos that make over $1m last fiscal year was 38 (with 23 making over $72 million gaming revenue).

M Resort, and Green Valley are considered part of the boulder strip because they are within the city limits of Henderson (along with Boulder Station, Eastside Cannery, Arizona Charlie's Boulder and Sam's Town). South Point and Silverton are in the balance of Clark County grouping.

Texas Station and Rancho Fiesta are considered part of North Las Vegas, because they are within the city limits of NLV.
========================
The real loser is the tax base of the city of Las Vegas. The only casinos that made more than $72 million last year that are within city limits were the following 5: (1)Golden Nugget, (2)Palace Station, (3) Santa Fe Station, (4)Suncoast, and (5)Rampart at Marriot Summerlin resort. Red Rock is just outside of the city limits. The count was 7 casinos in 2008, reduced to 5 in 2009 and it could drop as low as 3 next year since the two Station casinos are not doing well. The city is desperate for some tax revenue, and diligently tries to get a new casinos to locate within the city limits. The City has about 1/3 of the population of the urban area.

Total for Clark County is 39 casinos that made over $72 million gaming revenue last fiscal year (23 on strip, 5 inside Vegas city limits, 3 in Laughlin, and 8 in other areas of Clark county).

=====================
But in terms of expansion, it costs less to build a Red Rock or a Suncoast or a Silverton casino although the appeal is more limited. I don't think that South Point gets many guests who arrive by jet (unless they are devotees of the horse shows). But it may be easier to risk smaller amounts of capital than to proceed with the multi-billion dollar strip concepts (Echelon $4.8 billion, Plaza $5 billion, Viva $10 billion, a third Wynn resort $3 billion, Las Palmas Hotel & Residences Las Vegas $2.5 billion, and Cosmopolitan at $3.9 billion).

Hard Rock used to be a modest little casino that always made a $2-3 million a year in income ($14 million in 2005). The casino had gross gaming revenue of about $3 million a month.

Today Hard Rock is a much larger operation that loses hundreds of millions of dollars a year. Bigger is not always more profitable. Mandalay Bay is doing very poorly and Wynn and Encore in Vegas are losing buckets of money (although Wynn Vegas made a lot of profit in 2007).

Imperial Palace is always full because a lot of people think that they will spend almost no time in their hotel rooms while in Vegas. In the future some of those people may be enticed to go to the Boulder strip for cheap rooms (which are up to 40 years newer) good food prices, looser slots, and rooftop bars.
pacomartin
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November 20th, 2010 at 11:24:44 AM permalink
I am pulling up this old poll to see how things are progressing. The majority of people said Yes (but over three years). Only one person said never

After five months (April to Sep 2010) the statewide yearly rolling average has dropped $35 million (or -0.34%) with gains on the Strip being offset by losses elsewhere in the state.


I think never or at least ten years is starting to look like the more likely option.

BTW the airport had a slight 2% uptick in passengers in October 2010 vs October 2009. That amounts to an increase of 71,156 over the month. Southwest increased their load by 76,346 without really adding any new flights (just cramming more people into the planes). The rest of the airlines were able to replace the lost USAirways passengers. The international terminal is carrying 5% of the passenger load (although some pre-cleared Canadian passengers come to the domestic terminal). This is only the 3rd uptick in 3 years.
canuck
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November 20th, 2010 at 6:56:14 PM permalink
In addition to the pre-cleared flights from Canada on both US and Canadian airlines, alllegiant airlines currently makes 19 flights per week from Bellingham, WA to Las Vegas. I recall reading that Allegiant has calculated that 55 to 60% of the passengers on those flights are Canadian.
pacomartin
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November 20th, 2010 at 7:52:40 PM permalink
Canadians, British and to some extent Australians really were one of the brightest spots for Las Vegas when the recession started. They all took advantage of the combined weak dollar, and the plummeting room rates to come to Vegas.
pacomartin
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December 7th, 2010 at 12:37:59 PM permalink
A recent article on is entitled Price Waterhouse Report sees Nevada gaming at pre-recession levels by 2014 .

But the article says that Nevada will be back at $12.5 billion in 2014.

The 2007 revenue for the state was $12.85b for the calendar year 2007, and it was $12.97b for the 12 months ending October 31 2007. So they are predicting a 7 year turnaround just to get back to even. Since they are using a lower dollar number for revenue, I would say it is closer to 8 years.
JerryLogan
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December 7th, 2010 at 12:47:52 PM permalink
Why would we expect Asians and Chinese in particular bother coming to gamble over here any more when they can get the same exact thing in the same spectacular resorts over there, and without the language problems, the rude service workers we have here, and without all the riff-raff walking the streets with empty pockets?
pacomartin
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December 7th, 2010 at 1:50:40 PM permalink
Quote: JerryLogan

Why would we expect Asians and Chinese in particular bother coming to gamble over here any more when they can get the same exact thing in the same spectacular resorts over there?



Well one of the arguments for the low gaming tax rate in Nevada is that it would be worthwhile to fly the whales over to the USA and wine them and dine them here, and tax the winnings at about 1/3 the rate.

My expectation was the the Singapore casino would cut massively into Las Vegas baccarat. At first it seemed to be coming true because baccarat went way down in April and May this year, then nearly bottomed out in June. But July-Aug-Sep it seemed to bounce back (still a tiny fraction of baccarat earnings in Asia). October should be released any day now.

I suspect that in the next few years you will see casinos opening in the Philippines, Guam, Vietnam, Thailand, South Korea and Myanamar as each country moves to get a piece of the action.

Of course, since we are talking about the state of Nevada, you have to factor in the continuing decay in almost all markets except for the Vegas strip. Downtown Vegas is hitting unheard of new lows. The city is hoping that relocating the shoe online order company in the old city hall will begin reversing the fortunes of downtown.
JerryLogan
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December 7th, 2010 at 1:56:55 PM permalink
But what happens when you throw in ALL US gaming? How does that stack up against what's happening in Asia?
pacomartin
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December 7th, 2010 at 2:45:41 PM permalink
Quote: JerryLogan

But what happens when you throw in ALL US gaming? How does that stack up against what's happening in Asia?



I believe that legal gambling is still much higher than all of Asia, but I have never seen comprehensive figures. Macau is still well under the figure for commercial casinos all over the USA, even without Indian casinos and Lotteries.

American Gaming 2007 ($b)
Commercial Casinos $34.41
Indian Casinos $26.02
Lotteries $24.78
Pari-mutuel Wagering $3.50
Charitable Games and Bingo $2.22
Card Rooms $1.18
Legal Bookmaking $0.17
GRAND TOTAL $92.27
JerryLogan
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December 7th, 2010 at 3:00:24 PM permalink
Thanks. That's almost mind-boggling.
FleaStiff
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December 7th, 2010 at 3:30:05 PM permalink
American Gaming 2007 ($b)
Commercial Casinos: Is this Nevada plus Non-Nevada but excluding Indian casinos? $34.41
Indian Casinos: Generally local monopolies. Very little "draw". Sure they can book lounge acts, hire tit-pit dealers, eventually learn to market themselves better, but in reality they are generally smaller, geographically remote from Palefaces and mainly offer Day Trips and Body Scan Avoidance in areas limited to an hour or so in a car or bus. $26.02
Lotteries: Generally the province of the poor and desperate rather than real gamblers. No one will ever trek to Vegas for a lottery, even if it were legal in Nevada. Buyers of lottery tickets have dreams but not enough money to buy a plane ticket to Vegas and not enough will power to save their money for a trip to Vegas or learn what to do once they get to Vegas other than play Keno. $24.78
Pari-mutuel Wagering: Largely horses and dogs though now this might include blackjack and poker and slots revenue. $3.50
Charitable Games and Bingo: This is largely Adult Day Care for retirement homes and fund raising party nights. It might be a little more intense in Hawaiian Gardens where they call a number every four seconds but its mainly people who don't go to Vegas.$2.22
Card Rooms: California, Washington, Dakota, Montana, a drop in the bucket and now subject to Indian competition. $1.18
Legal Bookmaking: OTB did wonders for New York City! Relieved bookies of their crappy customers who thought two dollars was a substantial sum to wager and it increased markedly the small-time prostitution money made by bored housewives whose nags came in last.

Missing from the list is another Drop in the Bucket category:
Pseudo Casinos: "Arcades" with Bingo Slots and also Internet Cafes that supposedly simply rent internet time

The only ones that appear to be substantial and to have any real growth potential would be:
Commercial Casinos, Indian Casinos and to a modest extent Pari Mutuel Wagering due to dual-rate race tracks.

Growth should come in non-Vegas areas as travel time and travel frustrations increase. Growth should come in non-Vegas areas as Non-Vegas casinos learn to provide better gambling opportunities and better entertainment. I think the one real impediment to Vegas growth will be Vegas casinos living in the past and not realizing that between Body Scans and The Internet, Vegas is under a threat of becoming a "Has Been" tourist destination. Aging performers often have to spend more and more on marketing themselves in order to just stay even with their income levels.

What great beast slouches towards the North Strip waiting to be born? NONE!!
pacomartin
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December 7th, 2010 at 4:38:15 PM permalink
Quote: FleaStiff

American Gaming 2007 ($b)
Commercial Casinos: Is this Nevada plus Non-Nevada but excluding Indian casinos? $34.41



It excludes the single Indian casino in Nevada. Commercial casinos are legal in several states now, but outside of Nevada they are very heavily monitored and are almost equal partners with state governments.

If several states follow NJ lead, then on-line gaming could be an equal rival with commercial casinos, and lotteries.

Personally, I am not sure why states didn't just permit commercial casinos when confronted with federal laws that permit Indian gaming. I think it would have been fairer, and it would have protected the backcountry from so much traffic.

pacomartin
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January 17th, 2011 at 7:57:56 AM permalink
Here is the latest update on the Vegas strip numbers:
(1) Two year drop: As you know the 24 month drop in overall gaming numbers went from October 2007 to October 2009.
The final drop was 21% or $1.46 billion.
(2) In the 13 months reported since October 2009
a) Baccarat up $307 million
a) Slots down $11 million
b) Blackjack down $15 million
c) Poker down $3.7 million
d) "Other table games" besides 3 mentioned down $20 million

The 2nd and 3rd quarter Vegas casino revenue at Sands Corporation is dropping, but the overall profitability of the Vegas properties seems to be improving. It may be an indicator that they are not spending the big bucks to fly top Asian gamers to USA, but instead entertaining them in Singapore where they get a lot of the tax advantage over Macau.


Statewide is at $10.425 billion. The rest of Nevada other than the strip is still dropping.
Still a long long long way from $13 billion 37 months ago.
Nareed
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January 17th, 2011 at 8:09:50 AM permalink
Are you adjusting figures for inflation?
Donald Trump is a fucking criminal
pacomartin
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January 17th, 2011 at 8:38:31 AM permalink
Quote: Nareed

Are you adjusting figures for inflation?



No inflation adjustment. Also the more relevant analysis is "return on investment" which is horrible. The annual abstract should be released in a few weeks which has all of those calculations for the year. It will provide gaming and non gaming numbers, employment, and capital invested in each market.

Simply pointing out that the only real recovery in the last year has been in baccarat, and as always that is risky because those gamblers come at high expenditure.
FleaStiff
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January 17th, 2011 at 11:35:28 AM permalink
Quote: pacomartin

If several states follow NJ lead, then on-line gaming could be an equal rival with commercial casinos, and lotteries.

Clicks and Bricks? One thing is certain: No Airport Pat-Downs required at your home computer!

Quote: pacomartin

Personally, I am not sure why states didn't just permit commercial casinos when confronted with federal laws that permit Indian gaming. I think it would have been fairer, and it would have protected the back country from so much traffic.

States can't move as fast as Indian tribes can. Also once the Indian tribes learned to make political contributions, politicians learned not to trust them.

FleaStiff
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January 17th, 2011 at 11:35:29 AM permalink
Quote: pacomartin

If several states follow NJ lead, then on-line gaming could be an equal rival with commercial casinos, and lotteries.

Clicks and Bricks? One thing is certain: No Airport Pat-Downs required at your home computer!

Quote: pacomartin

Personally, I am not sure why states didn't just permit commercial casinos when confronted with federal laws that permit Indian gaming. I think it would have been fairer, and it would have protected the back country from so much traffic.

States can't move as fast as Indian tribes can. Also once the Indian tribes learned to make political contributions, politicians learned not to trust them.

Nareed
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January 17th, 2011 at 12:30:43 PM permalink
Quote: pacomartin

No inflation adjustment. Also the more relevant analysis is "return on investment" which is horrible.



I won't dispute that. It's your area.

But without adjustments for inflation then it's 99.99999% certain Nevada will see $13 billion again someday unless: 1) there's a major deflationary event that so shrinks the money supply a cup of coffe is worth 5 cents again or 2) the US goes back to using gold as legal tender (the 0.00001% chance is for this option)
Donald Trump is a fucking criminal
mkl654321
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January 17th, 2011 at 12:42:35 PM permalink
Quote: Nareed

I won't dispute that. It's your area.

But without adjustments for inflation then it's 99.99999% certain Nevada will see $13 billion again someday unless: 1) there's a major deflationary event that so shrinks the money supply a cup of coffe is worth 5 cents again or 2) the US goes back to using gold as legal tender (the 0.00001% chance is for this option)



I don't think it's true that it will "never" happen again (that sort of statement is usually hard to defend), but I think it'll be a long, brutal slog to recovery in the industry. It will take a particularly long time to get back to that $13B if we talk about real (inflation-adjusted) numbers.

The reason as I see it is that the fundamentals of the average Vegas visit have changed. People are spending less money/day, choosing less expensive hotel, dining, and yes, gambling options. During the go-go years, there was a lot of, "what the hell, we're in Vegas", and a disregard for price or value. Nowadays, visitation is only down a little, but revenue/person/day is sharply down. So that tells me that people are having just as much fun blowing 0.6X dollars as they did in the past blowing X dollars.

I think this is a healthy trend, actually, but many of the supermegatoilets built in the last few years were constructed with the assumption that the average tourist's damn-the-torpedoes attitude of the boom years would still apply, so they won't survive long. After all, once you discount the novelty value of the experience, how many people are going to pay $249 a night to stay at the Cosmo when Bally's is $60 a night?
The fact that a believer is happier than a skeptic is no more to the point than the fact that a drunken man is happier than a sober one. The happiness of credulity is a cheap and dangerous quality.---George Bernard Shaw
FleaStiff
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January 17th, 2011 at 1:16:23 PM permalink
Quote: mkl654321

many of the supermegatoilets built in the last few years were constructed with the assumption that the average tourist's damn-the-torpedo attitude of the boom years would still apply, so they won't survive long. After all, once you discount the novelty value of the experience, how many people are going to pay $249 a night to stay at the Cosmo when Bally's is $60 a night?

Maybe quite a few. It depends on headlines and general reputations. One thing that occurs to me is that The Cosmopolitan doesn't have to worry about paying its loan obligations or being foreclosed on. Its already owned by the bank!

Those "mega toilets" were, as with most real estate projects, built with the casino providing the initial funding and the banks providing the rest even as the economy worsened since there were commitments in place and its hard to recoup an investment from an abandoned project.

Will the average customer abandon the high priced rooms? Heck, one third of the customers don't pay for rooms anyway, so what difference does the nominal price make? Its in the hotel's interest to substantially raise room rates rather than lower them if its going to give those rooms away as comps! I think there may be a return to value for what is paid out: room safes, refrigerators, coffee machines, etc.

Now with six casinos catering to dog owners, one wonders if room prices won't be weakening even more soon.
pacomartin
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February 11th, 2011 at 11:10:45 PM permalink
Here is the latest update on the Vegas strip numbers:
(1) Two year drop: As you know the 24 month drop in overall gaming numbers went from October 2007 to October 2009.
The final drop was 21% or $1.46 billion.

In the calendar year 2010 the Vegas strip has gone up by 3.275%.

The state of Nevada is now up a mere 0.190% from the bottom 14 months ago. The small strip gains are offset by losses elsewhere around the state.

The state of Nevada is at $10.405 billion, and at this rate it could take decades to return to it's former peak of $13 billion (unadjusted for inflation).
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