Inside Gaming: Nevada Casinos Down Again in May, Blame Baccarat
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Nevada Casinos Endure Nearly 6 Percent Revenue Decline in May
Yesterday Nevada regulators shared their monthly report of gaming revenue in the state, and the news wasn't especially great. Collectively casinos were down almost 6 percent year-over-year, the sixth-straight down month and largest decline so far this year.
According to the Nevada Gaming Control Board, the total gaming win statewide added up to just over $981.8 million, down 5.96 percent from the $1.04B in revenue in May 2018.
Casinos on the Las Vegas Strip always have a large effect on the state's overall totals, and in May that was certainly the case as the 50 reporting casinos there were collectively down just over 11 percent year-over-year, earning $517.3M compared to $581.5M a year ago.
As CDC Gaming Reports highlights, analysts are singling out baccarat as a culprit affecting the May numbers. The win amount from baccarat was down about 55 percent both statewide and on the Strip in May.
"That was pretty much May in a nutshell," opined Michael Lawton, senior research analyst for the NGCB. Indeed, if baccarat were not taken into account, the total gaming win would have been slightly up year-over-year.
Lawton noted how slot machine revenues were up 1.5 percent statewide for the month, the eighth out of nine months they have increased. The fact that in Vegas "visitor volume grew 1.7 percent to 3.69 million tourists in May" according to the Las Vegas Convention and Visitors Authority has also kept the May totals from causing too much despair.
We were discussing here a couple of weeks ago how after a year's worth of sports betting in New Jersey, the Garden State was starting to rival Nevada when in came to the amount being wagered on sports each month. That's because the "handle" or amount wagered on sports in New Jersey in May totaled $318.9 million, an amount that came close to NV's April sports betting handle.
As reported yesterday, Nevada's total was $317.6 million in May, meaning the amount wagered in sportsbooks in New Jersey casinos and racetracks just barely exceeded Nevada for the month. Revenue-wise, NJ won about $15.5 million from sports bettors in May, while NV took in $11.3 million (down just over 45 percent year-over-year).
While industry observers do expect New Jersey eventually to top Nevada on a regular basis when it comes to sports betting, some are pointing out the milestone reached in May isn't necessarily as meaningful as it might appear.
NJ Online Gambling notes how in an effort to get new customers, sportsbooks in NJ have been offering promotions that include bonuses and free wagers. Those bets have been included in the overall totals by the state's regulators, "and they could account for 15-20% of the wagers right now," according to NJ Online Gambling.
Also significant is the fact that May is typically a slow month for sports betting since "NV is still a significantly more robust market when it comes to March Madness and football wagering." Even so, with nearly three times Nevada's population, New Jersey's sports betting handle should soon begin routinely exceeding that of Nevada.
Eldorado-Caesars Deal Fuels Speculation About Strip Properties
The week started with big industry news when it was announced on Monday morning that Eldorado Resorts had agreed to acquire and merge with Caesars Entertainment Corp.
The cash-and-stock deal worth $17.3 billion involves Eldorado taking on Caesars' debt as well. When eventually finalized, the result will be the largest gaming company in the United States. The company will be headquartered in Reno (where Eldorado is based). It will also be known as Caesars going forward, the much better-known brand of the two companies.
Among the many narrative threads continuing to spin out from the story is one concerning Eldorado's future intentions for the 50-plus Caesars properties it will be acquiring, nine of which are located on or near the Las Vegas Strip. Thus does Eldorado finally get a foothold in Las Vegas to go along with its other properties in Reno and elsewhere in Nevada.
It seems clear that Eldorado does not plan to keep all nine of those properties and will likely sell some as part of the effort to begin whittling down the approximately $8.8 billion debt it is assuming from Caesars, not to mention its own debt of just over $3B. Eldorado Resorts CEO Tom Reeg made that position known in his comments earlier this week, as shared by CDC Gaming Reports.
"As I sit here today... I think that there's more Strip exposure than we would need to accomplish our goals with our regional database," explained Reeg. "So I would expect that we would be a seller of a Strip asset, but that decision has not been made."
In the CDC piece, longtime industry reporter Howard Stutz interestingly speculates about which of the nine Strip properties might go on the block, using a process of elimination to suggest Caesars Palace, Bally's Las Vegas, Paris Las Vegas, Harrah's Las Vegas, The Linq, and Flamingo Las Vegas to be likely keepers.
That would leave The Cromwell Las Vegas, Planet Hollywood Resort and Casino, and Rio All-Suite Hotel and Casino (technically located about a mile off the Strip) as possible assets Reeg may want to unload.
What would this mean for the future of the World Series of Poker, currently ongoing for the 15th straight year at the Rio? Who knows, although the website Vital Vegas that focuses on Las Vegas-related news and rumors seems confident about next year at least.
Illinois Governor Signs Gambling Expansion Bill
Finally, earlier this month that Illinois lawmakers passed a wide-ranging gambling expansion bill allowing the addition of several casinos including a "mega-casino" in Chicago, the adding of slots and table games at existing gambling venues, as well as the addition of sports betting in the state.
As anticipated, Governor J.B. Pritzker today signed the bill into law The Chicago Tribune reports.
With the governor's signature, Illinois joins the ever-growing list of states in which sports betting is either currently legal or soon will be. It isn't clear as yet whether regulations will be in place for Illinois residents to wager on sports in time for the 2019 National Football League season that starts in September.
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