June revenue on the Las Vegas Strip plunged 61% to $238 million. Locals revenue was down 28% (those stimulus checks only go so far). Statewide, it wasn’t quite so bad, off 46% to $567 million. Casinos reopened June 4, which explains the declivity a little bit, and were operating at half-capacity, which explains a lot more. On the brighter side, locals’ slot handle was only off 16%, “which we view as a positive given properties did not open until June 4th and consistent with [Boyd Gaming’s] commentary last night re: a stable LV Locals market,” wrote JP Morgan analyst Joseph Greff. “Similarly, we believe these results reflect LV Strip traffic coming from mostly, if not all, drive-in visitors, operating with limited amenities (F&B, no shows, nightclubs, etc.), and the staggering of reopenings.” Bottom line: buy Boyd and Station Casinos (RRR), sell everybody else.
David, I am not good with accounting, so if you could clarify, please. The strip had $113mm intake, and low hold. Does that mean that the average person playing slots and VP were able to keep more of what they put into the machines at a higher winning percentage, or does that $113mm indicate what the house actually won, and not what was put into the machines. Basically, was the house hold percentage less now than it was a year ago? Could they have lowered the house hold to get more players? I doub’t that, specially for Caesars properties.
Lucky, the coin-in would have been much higher than $113 million, which is what the slots won. And the hold was lower, the lowest since December 2015. Low hold = more players? I wouldn’t rule it out. Does that help?
Yes it does, thanks. I would be amazed to hear that Caesars, in the control of their new masters, has set the machines to a lower house hold. But stranger things have happened. Thanks.
Most likely, hold was low because when casinos removed slots due to social distancing, they removed the revenue-sharing and leased games, which generally have above-average holds. A very basic example: your casino has 100 games each, at holds of 7%, 9% and 11% — for a 9% average. However the 11% games each carry $50/day in lease costs. Now you must remove 60 games due to social distancing, most casinos will try to reduce those lease fees, leaving 100 @ 7% and 9% and 40 @ 11% (and saving 60 x $50 = $3000 in lease fee per day). Your casino’s avg hold has now dropped by half a percent to 8.5%. (again, this is a very simplified scenario, there are other factors as well)