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HFT Takes Over Vegas? April Vegas Performance Disappoints As Luck Runs Out

Tyler Durden's picture




 

We are initiating our most recent monthly overview piece, which will provide a digested analysis of Las Vegas gaming trends. And while we develop a working model, we will crib a little here and there from Goldman's Kevin Coyne who is probably one of the best analysts on the street in the space (with a credit bent, of course). Incidentally we picked a month when the double dip in the general economy is starting to seep into the ultimate gambling mecca. "Total Nevada gaming revenue was down 5.7% yoy in April, a drop-off from the 3% yoy increase in 1Q2010." And an interesting observation: it appears MIT has sent a crack team to rob Vegas silly once again. That or the HFT brigade has abandoned the NYSE and is now operating out of collocated servers next to the Bellagio fountains. A last possibility is that the recent dramatic growth in Boaz Weinstein's Saba hedge fund was due entirely to counting cards - "Bacarrat win percentage was only 8.5% in April, the second consecutive month of worse-than-expected performance for the house. March Bacarrat win was 8.4%, which is well below the trailing twelve month average of 12%." That's ok, Vegas - just invite Goldman Sachs to teach you how to get 100% win percentage on every single table.

From Goldman Sachs

April fooled: Strip revenue down despite more rooms, weekends

Nevada down 6% year over year for the month of April

Total Nevada gaming revenue was down 5.7% yoy in April, a drop-off from the 3% yoy increase in 1Q2010. The decline was particularly disappointing due to the benefit from added capacity throughout the Strip, and the one additional weekend night. Bad luck and poor performance of the Las Vegas Locals market contributed to the decline.

Las Vegas Strip gaming revenue was down $4 million, or 1% yoy. The benefit of the added capacity of MGM’s CityCenter offset the low table win percentage and decline in slot play. The results are down from the 10% yoy increase in 1Q10.

Las Vegas Locals remained weak with revenues down 17% yoy versus down 5% in 1Q10. Downtown Las Vegas was down 9% despite the benefit of the new Golden Nugget tower. Laughlin revenues remained steady with a decline of 5.3% yoy versus down 4% yoy in 1Q10.

Bad luck continues for the house despite 1% increase in visitation

On the Las Vegas Strip, table win was up 4.7% year-over-year due primarily to continued strength in Bacarrat play. The Bacarrat drop was up 30% yoy but the performance was somewhat muted by the lower hold percentage. Bacarrat win percentage was only 8.5% in April, the second consecutive month of worse-than-expected performance for the house. March Bacarrat win was 8.4%, which is well below the trailing twelve month average of 12%. Slot win was down 5% year-over-year due to lower spend per visitor.

In April, visitation was up 1% but Las Vegas wide occupancy was down to 84% from 88% a year earlier. This was due in part to a 6% increase in room inventory to almost 149,000 rooms. Average daily rate was up 3% yoy due in part to a mix shift towards higher priced upscale rooms.

We believe 2010 will remain a challenging year for the Las Vegas Strip operators until the anniversary of CityCenter. We expect gaming bonds to be slightly lower across the board, with the higher-end names such as WYNN (U), MGM (IL), and LVS (NC) seeing more pressure due to the lower Bacarrat win, versus HET (OP/IL). We believe the weakness in the LV Localsand Downtown will put further pressure on BYD (IL).

And some pretty charts:

 

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Wed, 06/09/2010 - 20:24 | 404858 MsCreant
MsCreant's picture

Is April Vegas a stripper?

Wed, 06/09/2010 - 21:51 | 404997 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

As is May Vegas and here twin June.

Wed, 06/09/2010 - 20:25 | 404861 Mr. Anonymous
Mr. Anonymous's picture

Ha.  ZeroHedge covers it all.

Wed, 06/09/2010 - 20:47 | 404893 Chartist
Chartist's picture

Due to the increase in Asian gaming activity, I believe Vegas will never again be as profitable as years passed.

Wed, 06/09/2010 - 21:08 | 404924 Internet Tough Guy
Internet Tough Guy's picture

Vegas is overbuilt and overpriced. $25 minimum tables on the strip on the weekends kills the weekend warrior from california. Major pain for years ahead.

Wed, 06/09/2010 - 21:25 | 404948 mtremus
mtremus's picture

 What most are failing to realize is that nothng will be as profitable is it once was.  In the last 20 yeaars we have witnessed the biggest boom ever. Now it is over. 

Wed, 06/09/2010 - 21:23 | 404945 buzzsaw99
buzzsaw99's picture

The dumb money dried up.

Thu, 06/10/2010 - 05:09 | 405445 MarketTruth
MarketTruth's picture

27   27  27   27   27

Perhaps i did not explain to you the sanctity of the 'nest egg'?

Thu, 06/10/2010 - 07:34 | 405532 ToNYC
ToNYC's picture

Twenty-two was Julie Hagerty's number that never came up, nor her reverence of the nest egg. She popped their seed corn, and Gary Marshall is no Santy Claus.

Thu, 06/10/2010 - 07:35 | 405514 ToNYC
ToNYC's picture

To paraphrase Gertrude Stein, the dumb money never goes away, just the venues change.
Honore de Balzac noted that the secret of great fortunes are forgotten crimes, expertly executed; but GS is so full of intellectual hubris to recollect that one hallmark of an honest casino is that it will have losing days and execute the necessary misdirection. No magic here.

 

Thu, 06/10/2010 - 07:10 | 405515 ToNYC
ToNYC's picture

!

Wed, 06/09/2010 - 21:57 | 405009 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

What about all the forclosure money :o

Wed, 06/09/2010 - 23:04 | 405150 tom a taxpayer
tom a taxpayer's picture

Or is the drop in Baccarat revenue due to an Ed Thorpe Farewell Tour of Las Vegas?

Thu, 06/10/2010 - 07:38 | 405535 ToNYC
ToNYC's picture

Ed Thorp can visit Vegas any time, but they are not amused.

Wed, 06/09/2010 - 23:55 | 405226 percolator
percolator's picture

I'm a long time Vegas resident.  I can tell you from my observations on the strip which I frequent at least a couple times a week is that there were fewer people here in May than April and the first weekend in June it was practically a ghost town on the strip very similar to early 2009.  I'd chalk this up to the first weekend after Memorial Day, but that was a bust relatively speaking.  Don't know about Vegas's take or "drop" if they were lucky or not, but fewer people obviously doesn't help.

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