Dog days on the Strip

August numbers are in and casinos on the Las Vegas Strip tanked, down 12.5%. Credit Suisse analyst Cameron McKnight called this result “not as bad as feared,” which prompts one to wonder what a worst-case scenario would look like. The core customer, he wrote, remains intact, pointing to only a minor (1%) decline in slot revenue on flat handle. “However, we estimate that gaming only accounts for 25-30% of total Las Vegas Strip casino revenues – which clearly varies by business model and operator,” wrote McKnight, trying to prettify the picture. Mind you, last month was competing with an exceptionally strong August 2017, when gambling revenues were up 21%, propelled by the Mayweather/McGregor farce, er, fight. McKnight puts particular stress on mass-market play and “excludes the volatile baccarat business, in which only a handful of casinos participate.”

Among the perils he cited were the continuing fallout from 10/1, the avoidance of Las Vegas by certain big acts (like the Beyoncé/Jay Z tour) and MGM Resorts International‘s heavy exposure toward hotel revenues (“sometimes submerged rocks are only visible at low tide”), not to mention inflated gasoline prices. Then there’s triple-zero roulette, the industry’s latest “fuck you” to players. Strip casinos grossed $478 million, with baccarat win down 9% and the house getting absolutely clocked on all other table games, plummeting 31% on 21.5% less wagering.

Even locals casino felt the pain. Downtown casinos grossed $46 million (-5%), North Las Vegas ones $23 million (-6%), Boulder Strip $62 million (-16%) and miscellaneous Clark County down 1.5% to $99 million. This may be the real story, in that a strong southern Nevada economy had been driving the locals market along at a powerful clip. Laughlin ($38 million) was down 2% — what person in their right mind goes to Laughlin in August? — but Reno ($61.5 million) bounced up 7% and Lake Tahoe rose 5% on a $27 million gross. Rural markets, in fact, did quite well. Elko grossed $24 million (+6%), Carson Valley snared $10 million (+3%) and the rest of the state — including all-important Wendover — was up 5.5% to $44 million. It’s good to see northern Nevada performing so well, given its long history of adversity.

* Persistence continues on the chimerical Los Angeles-to-Las Vegas train route. The idea has a new angel, Miami-headquartered Brightline. It has taken over Xpress West and, this is to its credit, is building a privately funded rail line from Miami to Orlando. Unfortunately, Brightline is adhering to Xpress West’s “train to nowhere” concept that is predicated to Angelenos driving to Victorville and then hopping a train to Vegas. If they’ve made it that far on their own steam, why not go all the way? Wes Edens, co-CEO of Fortress Investment Group calls the route “too long to drive and too short to fly.” Having flown from Las Vegas to SoCal cities several times, I’m not sure I’d agree with Edens.

Also dropping out of the Victorville-to-Vegas route is the People’s Republic of China, which had paid to lip service to the Xpress West route but had never contributed so much as a yuan. By going slower to Vegas and using diesel engines (so much for maglev), Brightline thinks it can shave the cost of the project by as much as half, including eschewing tunnels for at-grade use of the I-15 median. In lieu of goofy ideas of putting a train station at the Plaza Hotel (shown, home to seedy Greyhound buses) or out near the Cannery Casino in North Las Vegas, Brightline is eyeing a site near Mandalay Bay. Considering that the company has achieved results in Florida that compare favorably with California‘s ultra-costly bullet-train for experiment, there’s reason to have a bit more optimism about this latest try.

* Earlier this week we addressed the struggle of the United Keetoowah Band of Cherokee Indians to get the approval of Enid, Oklahoma, city fathers for a tribal casino. Now the tribe has produced a poll which shows 60% approval within Enid for the casino. At the same time, the Enid News & Eagle published its own poll, which displayed 62% support. And no wonder, given that the casino is projected to draw 370,000 customers a year to Enid, no small coup for the town. This is a case where the tribally commissioned poll is the more credible one, since the newspaper’s was a voluntary, online poll — not exactly the more scientific method. While the Keetoowah don’t need the city council’s approval to keep moving with the casino process, a civic endorsement would surely help when the Department of the Interior takes up the land-into-trust application.