Slots surprisingly fall 8 percent in April

Slot revenue decreased in AprilIn recent times we have gotten used to table game revenue usually declining, with most of those declines coming from decreases in baccarat. Conversely we have gotten used to slot revenue increasing. With those thoughts in mind, expectations for April – with all the activities, special events and tax refund checks – were that we would see large improvement in slot revenue all over Clark County and a bump in table game revenue for the Las Vegas Strip resorts.

However, state revenues overall were down 2.44%. But the real story for the state remains Clark County, which accounted for 86% of the state’s overall gaming revenue, 84% of slot revenue and 94% of non-slot gaming revenue (table games, poker, bingo sportsbook, etc.).

If it had not been for the higher action in baccarat and the abnormally high hold percentage of the game along with the huge increase in sports wagering, Clark County would have had a decrease of approximately 5.5% instead of the recorded decrease of 3.9%. While baccarat action was higher than usual with all the premium customers coming to town for various special events, the customers had almost an allergic reaction to the slot machines, with double digit decreases in most slot categories.

There were very surprising reductions in slot revenue in every category of slot machines except for the $25 and $100 machines, and even in those the increases were so small that combined they were up only about $70,000. In total, decreases in slot revenues were such that, overall for the county, the slot gaming revenue was down just shy of 8%.

What went wrong? Normally when there are high levels of events, gaming revenues are supposed to go up as there is more action on the Strip, resulting in more people employed, enjoying greater tip revenue. Increased Strip activity historically down-streams revenue, via employee tips and paychecks, to local area casinos. That did not seem to happen in April.

In speaking with various casino operators from the Strip the revenue pushes of the resorts have greatly changed. First, in general, people’s gaming budgets tend to be comprised of or limited to their disposable uncommitted cash. Yes, there are hard core gaming customers that put gambling above rent, but they are the exception, not the norm.

Not only are budgets limited to disposable dollars, there are also limits on the amount of time available for various activities. Thus it becomes a matter of what slice of that Las Vegas trip-budget-of-time-and-money is going to go to gaming vs. food vs. beverage vs. entertainment.

In the old days the majority of a visitor’s time would be spent in the casino but as noted by gaming operators as well as the LVCVA visitor surveys, visitors are spending much less time on traditional gaming activities.

With the above in mind, Mr. and Mrs. Goodcustomer are invited to the opening of T-Mobile Arena. They come with a $5,000 budget and plan on staying three days. As the opening took place during a busy period of time, instead of $150 a night for their stay, they are paying $250 a night before room tax. To prep for the opening they go to the spa ($300), shop for new clothes ($500), get show tickets, good seats ($500).

Three days of breakfast total around $90, lunches $135, dinners with drinks $600. They go to another show for $200, taxis/car rental, $175.

All that spending leaves about $2,000 for their gaming budget, provided they do not do another show, have a real expensive dinner or go clubbing; each could cost as much as another one or two thousand dollars.

With the remaining budget, if any, they have still to find the time to go gamble. Due to the range of activities available there is more competition for the player’s time/attention than ever before.

In the old days, shows, food, beverage and hotel rooms were comped if you spent all your money in the casino. In today’s world the resorts seemingly would rather get the sure money from the entertainment/clubbing, dining experience and pricey rooms, and if the customer has both money and any time leftover, well, there is a casino around here someplace.

As new technology, more reflective of customer preferences and entertainment desires, further merges into casino games, perhaps the casino side of the business will arise again. Until then the casino seems to be slowly losing out to all the other selfie experience options.

The Analyst is an experienced gaming industry executive who offers insight each week on events and issues affecting the industry. Contact The Analyst at [email protected]

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