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US – Analysts and operators hopeful that Las Vegas is bouncing back

By - 2 March 2015

Las Vegas could finally be bouncing back in earnest with gaming revenue increasing 7.75 per cent state wide while Strip casinos grew totals by 15.4 per cent during the first month of 2015.

The January results ended five straight declining months of gaming revenue on the Strip. One operator said its last quarter was better than anything since 2007, another prominent operator said the recovery could well have reached its point of inflection.

Nevada casinos as a whole posted $952.7m in GGR during January, compared with $884.2m a year ago. Strip casinos reported gaming revenue of $576.8m, compared to $499.8m a year ago.

JP Morgan gaming analyst Joe Greff said: “With these gross gaming revenue results, we maintain our positive outlook for the Las Vegas Strip, and believe the overall room rate and visitation driven recovery will continue throughout 2015.”

Union Gaming Group analyst Chris Jones added: “Overall, we are encouraged by January’s results across the board and maintain our favorable outlook for Las Vegas.”

Casinos on the strip were boosted by results in baccarat with revenues increasing 68.5 per cent to $137.7m.

Deutsche Bank’s Carlo Santarelli said: “Baccarat hold had a meaningfully positive influence on the numbers. Core domestic gaming revenues were up five per cent.”
Slot machine handle was up 4.2 per cent to $256.8 million in January. Table game revenue, not including baccarat, increased 6.2 per cent. Sports wagering saw a 12.6 per cent increase to $387.5.

Clark County’s overall gaming revenue was up 7.84 per cent to $838.2 million, yet the rest of the county did not do as well as the Strip. Downtown Las Vegas revenue dropped by 10.6 per cent from last year to $38.6m. North Las Vegas, Laughlin and the Boulder Strip recorded decreases of 6.4 per cent, 0.8 per cent and 15.4 per cent, respectively. Meanwhile, Mesquite’s gaming revenue increased 6.07 per cent.
MGM’s Las Vegas revenue was in line with analyst expectations for the fourth quarter.

CEO Jim Murren said: ” MGM Resorts International reported its best fourth quarter EBITDA since the peak in 2007 and its best full year in six years at its wholly owned domestic resorts. For the full year, CityCenter resort operations and MGM China each achieved record performances. Las Vegas is lifting off, we’re the largest beneficiary of that.”

Station Casinos also presented an upbeat outlook for the Las Vegas locals gaming market, reporting revenue at levels not seen since 2008.

Revenue for the quarter that ended December 31 was $333.7m, an increase of 2.2 per cent. For the year in its entirety, Station Casinos’ total revenue of $1.29bn was a 2.8 per cent increase while cash flow increased 9.1 per cent.

Station Casinos Chief Financial Officer Marc Falcone said: “It may finally appear we have reached that inflection point we have been discussing for several years.”

Station, which operates 17 large and small casinos throughout the Las Vegas Valley, reported a 5.1 per cent increase in gaming revenue during the quarter, the largest growth rate since the first quarter of 2012.

“The majority of key economic indicators have shown signs of improvement for several years and we expect these improvements to continue in 2015,” Mr. Falcone added. “We believe the strength in overall fourth quarter spending may be a sign that our guests now have more money to spend on gaming.”

Boyd Gaming CEO Keith Smith said the company’s Las Vegas properties had their strongest growth quarter since before the recession, but attributed much of the success to non-gaming revenue, which grew 14 percent through increased hotel room rates and restaurant sales.

Boyd Gaming said its net loss for the fourth quarter was $32.4m compared to $47.3m a year ago.

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