Gaming Industry Rides Up-And-Down Streaks

LAS VEGAS-Casinos here and in the rest of Nevada are riding a series of up-and-down streaks, depending on the geographic market and the game being played, according tothe latest figures from the Nevada Gaming Control Board and an analysis by CB Richard Ellis gaming industry analysts. The state's figures show that Nevada's take from gambling rose 11% to nearly $888.6 million in October, when compared with October 2009, with all but four of the submarkets in the state posting gains. On a fisca-year basis (beginning July 1), the take is up 4.35% for the state.

An analysis by Jacob Oberman and Brent Pirosch, gaming industry analysts for CBRE, said that on a same-store basis, gaming revenue on the Las Vegas Strip increased by approximately 7% year-over-year in October and has fallen by about 2% October year-to-date on a calendar-year basis. Excluding baccarat and mini baccarat, Oberman and Pirosch estimate same-store gaming revenue grew by about 5% year-over-year in October and declined by about 5% in October year-to-date.

The CBRE analysts also cited a trend that appears to bode well for the gaming industry in Las Vegas. "According to a November article from the Review Journal, statistics compiled by the Air Transport Association forecast that the number of seats coming into Las Vegas is trending more positively in 2011," they stated in their analysis. "The reported data suggests that air capacity could rise be up by 0.7% in January and increase steadily on a year-over-year basis through June where McCarran capacity could rise 2.8% year-over-year."

Oberman and Pirosch note that, in their 2011 Las Vegas Strip Forecast & Investment Guide, they based their revenue projections for the Strip on flat air capacity in 2011. "Therefore, projected growth in air supply would certainly be positive," the CBRE team said. However, they added, "Carriers still have several months to make adjustments to aircraft size based on pricing. Given the lower-yielding nature of Las Vegas, bigger aircraft may be added to markets that generate higher fares on a marginal seat basis first." If the ATA forecast does prove out, the biggest beneficiaries of the increases in air capacity would be middle-market properties on the Strip because they are the most leveraged to marginal seat capacity, the CBRE analysts said. "With flat or declining air capacity, our concern was, and still is, that middle-market customers could be shut out of the market," they said.

The Gaming Control Board statistics for October further showed that the take on the Strip rose more than 16% year-to-year in October, reaching $494.8 million. In all of Clark County, the take was up 12.48% to more than $757.4 million. The 19 other submarkets tracked by the state posted increases ranging from 2.77% to 10.43%, while the four submarkets with declining revenue registered decreases ranging from 0.57% to 10.37%.