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The headline numbers don't look good for Las Vegas right now. July's gaming revenue was down 14.4%, to $511.4 million on the Las Vegas Strip, and in the past three months has dropped 6.7%. Comparisons haven't been that bad since we were in the midst of the Great Recession.
A closer look at the numbers reveals that baccarat was the big driver with win down 39.4% from a year ago, to $115 million, versus a very lucky comparison period. Last year, the win percentage was 16.1% versus 11.6% this July, and 12.3% over the past year.
This shows just how luck can play a role in gaming earnings. The house always wins; it just may not win the same amount quarter after quarter.
The Strip is still going strong
When we take a longer-term view of the Las Vegas Strip, we continue to see slow, but steady, improvement. Gaming revenue was up 0.31% for the year ending July, even with the tough comparison month. That's not going to blow anyone's socks off, but it's still growth in a tough economic environment.
What may reverse course in the next quarter, given the 1% decline in baccarat over the past year, is outsized gains for Wynn Resorts (NASDAQ: WYNN ) and Las Vegas Sands (NYSE: LVS ) , which cater to high-end players. The two companies saw 16.2% and 5.6% revenue increases, respectively, last quarter in Las Vegas, driven by a jump in casino revenue.
But MGM Resorts (NYSE: MGM ) and Caesars Entertainment (NASDAQ: CZR ) may have a better comparison, and by that measurement, a better third quarter, just due to less reliance on baccarat. MGM's wholly owned revenue, (which is dominated by Las Vegas), was up just 2% last quarter, and Caesars was down 4.5%, so both were behind high-end rivals. With that said, one quarter doesn't make a good investment, and I think the high end of the market is still a better bet in an economic recovery that's favored the high end of the market.
Foolish bottom line
It may not look like Las Vegas is growing much if you look at the most recent monthly numbers, but long term, it's still growing slowly. For gaming companies there, that's all that can be expected until the economy really picks up steam.
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