Market Beat: An update on gaming
The Nevada Gaming Control Board recently released revenue numbers for the month of February. Gaming revenue in the state dropped by 13.7 percent in February compared to 2013. Statewide, casinos took in $926 million.
Revenue from the Las Vegas strip was $555.7 million, which was a 20.2 percent drop from February 2013. The take for Washoe County casinos dropped slightly, by 1.41 percent to $58.7 million.
Casinos at North Lake Tahoe had the largest decline in the state with a drop of over 22 percent. Casinos at the south end of the lake recorded a fall of 9.5 percent. The poor skiing conditions last month may have played a role in the revenue drop at Lake Tahoe.
In spite of the drop in gaming activity in Nevada, casino stocks in general have had a very good year. Wynn Resorts has had a gain of over 85 percent in the last 12 months, MGM is up over 100 percent, Las Vegas Sands posted a gain of almost 50 percent, and Caesar’s Entertainment is up almost 25 percent.
One reason the casino stocks are still performing well is that gambling on the island of Macau has continued to increase. Macau’s revenues were up 13 percemt in March, and its monthly haul of $4.4 billion, over four times the take for the entire state of Nevada, was their third highest on record.
Wynn, Las Vegas Sands and MGM all have substantial casino operations on the island of Macau. Gaming on Macau should continue to be profitable for existing casinos for some time as the demand is growing, but new casinos aren’t being built at the present time.
One interesting item in the Nevada report was the revenue numbers for online gaming. This month was the first time in Nevada’s history that the online gaming numbers were released. February’s results for all Nevada casinos included $824,000 in revenue from online gaming.
Online poker has only been around for the last 10 months and so far has added $8.5 million to casinos’ coffers. Online poker is still in its early stages, and it will be very interesting to see how much revenue it will eventually generate.
Local stock International Gaming Technology, IGT, generates some of its revenue from online poker following its acquisition of Double Down Interactive. IGT is down about 14 percent over the last year and has recently announced some layoffs.
It will be interesting to see how Nevada’s revenues will hold up in the future, especially in the Reno/Tahoe area.
Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information on his money management service can be found at his blog at http://www.sellacalloption.com or by calling 775-657-8065. Past performance does not guarantee future results. Consult your financial adviser before purchasing any security.