After three years of decline, the Nevada casino industry finally started growing in fiscal 2011 and GBGC had expected even better results in fiscal 2012. This continued improvement, however, did not materialise. The total casino win (incl. sports books and racing) did grow, but at a rate of only 0.7% YoY, after 2011 growth of 3% YoY. Total growth was due to rising machine and sports book revenues. Table revenues fell, including baccarat, as did revenues from racing.
Total Nevada revenues were also expected to be higher in light of good start to the calendar year as January 2012 was the first month with casino revenues over US$1 billion since September 2008 (mostly due to calendar effects, i.e. Chinese New Year falling in that month). February 2012 also showed an annual growth despite the reverse calendar effect. But in the remaining four months to June 2012 only April figures showed year-on-year growth.
The data for Nevada’s main market, the Las Vegas Strip, show even slower growth of only 0.6% YoY in 2012. As Vegas visitation and occupancy rates continued to rise in fiscal 2012, it seems that spend per head is the problem. Indeed, Las Vegas GGY per visitor is at US$173.4 much below the 2007 peak of US$196.2. In line with the casino revenues, spend per head declined between 2008 and 2010 and then grew in 2011. But, unlike the total revenues, spend per Las Vegas visitor declined in fiscal 2012.
Vegas visitation numbers have also proving less sturdy than expected in the past few months. By March 2012 visitation figures had increased YoY for 25 consecutive months. But in April 2012 the trend came to a halt with visitation down 0.9% YoY. The data for the following two months is better (2.25% average growth YoY), but still below average for the first three months of 2012 (3.67% YoY average) and the whole of 2011 (4.3% YoY).
Taking into account 2012 results, current trends and the state of the economy and consumer spending, we have revised our 2015 forecasts for Nevada down. We now expect Nevada to exceed its 2007 peak a few years later than expected, but this time with the help of Internet poker revenues. GBGC’s Nevada forecasts are available in the Key Markets Database, as part of the GBGC Platinum subscription.