Strip baccarat play plummets during slow June

August 20, 2002 8:36 AM
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Timing of private high-roller salons by MGM Grand Resort and Caesars Palace may be just right to boost rapidly deteriorating revenues from baccarat, the game of choice for many big players, especially those from Asian nations.

Figures released by the Nevada Gaming Control Board show that casino "win" from baccarat during the month of June, the most recent period reported by regulators, was at what some might refer to as record low levels. Total win at Las Vegas Strip casinos from baccarat during June amounted to $7,798,000. During the previous 10 months, the average per month was nearly $31 million. The June decline was listed as 83.90% lower than the comparable period of a year ago.

But, the lack of players was only part of the problem, officials pointed out. The "win percentage" during June was at a very unlucky 10.13%. During the previous 12 months, the ­­average topped 20%.

The properties looking to establish high-roller salons suggested to regulators that such a facility provided another marketing tool to attract the high-end players to Las Vegas. There’s been no indication just what efforts the casinos will make to increase their win percentage.

Fewer visitors

Contributing to a decline of 9.1% in Clark County gaming revenue during the month of June (13.9% on the Las Vegas Strip), was the drop in visitor volume, according to the Las Vegas Convention and Visitors Authority.

During the period, 2,952,639 visitors were recorded, a decline of 4.4% from last year’s 3,088,692 visitors. Conventions numbered 437,562 attendees whereas last year the number totaled 517,782 attendees.

There also was less traffic at McCarran International Airport where the number of passengers that enplaned and deplaned was down 5.4% at 3,015,176.

The only bright side of the visitor picture, the authority noted, was in the number of automobiles that were recorded on all the major highways leading into the city. The vehicles numbered 83,098, a jump of 11.3% over last year.

Surprise revenue

For Illinois lawmakers who recently increased the taxes on gaming revenues, results for the month of July was music to their ears.

Casino revenues generated $57.6 million in state taxes, a 38% increase over the previous month and a 33% jump over the numbers posted during July, 2001. The increases resulted in the new graduated gaming tax that moves from a low of 35% to a high of 50%. Also adding to the revenue was a $1 boost in the casino admission tax.

According to gaming officials, only one riverboat ”” the Grand Victoria riverboat in Elgin operated by Mandalay Resort Group (MBG) had reached the threshold that requires it to pay 50% of its receipts to the state.

Budgetary forecasters have estimated that the state’s nine casinos would see their gross revenues increase by 2% during the year.

Alternative tax

It’ll be a different kind of tax burden for the casinos in New Jersey.

In order to balance the state budget, which was deeply in the red, lawmakers doubled the state business taxes and introduced an alternative minimum tax that will hit just about everyone.

Also adding a burden to many businesses, including some casinos, the state eliminated the previously approved net operating loss carryforwards for two years.

Without knowing exactly how strongly the new taxes will affect his company, Donald Trump is having his company, Trump Hotels & Casino Resorts Inc. (DJT) record a charge of $3 to $5 million for the calendar year.

Other major hits to be taken by the Atlantic City casinos include about $6 million for Park Place Entertainment Corp. (PPE) the operator of four casino properties on the Boardwalk; Harrah’s Entertainment Inc. (HET), an estimated $4 million, Tropicana Hotel/Casino owned by Aztar Corp. (AZR), nearly $2 million, and the privately-owned Resorts Hotel/Casino, nearly three-quarters of a million.

However, casinos were not singled out for the tax hike, all businesses in the state must reach down deep to meet its new tax obligations.

Sale on hold

The previously-announced purchase of Lone Star Park in Grand Prairie, Texas., by Magna Entertainment Corp. (MIEC) has been delayed while the Texas Department of Public Safety conducts a background check of the company and its officials.

While the investigation has been ongoing, a state official said it probably would not be completed for another two months. If the report is available, the Texas Racing Commission is expected to take up the matter at an October meeting.

The agreement by Magna Entertainment to pay Lone Star Park Ltd., the partnership that developed and operates the racetrack, and LSJC Development Corp, $80 million for the facility and assume a lease obligation for an additional $19 million was made in March.

More recently, Magna Entertainment agreed to buy a majority interest in the Maryland Jockey Club for its two racetracks, Pimlico and Laurel, for nearly $120 million.

Mandalay in lead

With two solid months in June and July, MotorCity Casino, whose majority owner Mandalay Resort Group (MBG) operates the facility, has taken the lead among the three Detroit, Mich., casino for the year 2002.

Total revenues for the period from January to July show MotorCity Casino ahead with $239,393,599, followed by MGM Grand Detroit, $235,019,534 and Greektown Casino, $191,450,057.

Actually, MGM Grand, whose majority owner is MGM MIRAGE Inc. (MGG), led through the first first five months of the year but MotorCity topped its competitor in June $32,864,130 to $30,729, 140. In July, MotorCity easily exceeded its major competitor, $34,576,497 to $30,827,595.

But, the true top revenue grosser in the area is Casino Windsor, across the Detroit river from its three American rivals. Casino Windsor is owned by the Ontario government and is managed by Park Place Entertainment Corp. (PPE).

For the three-month period ended in June, Casino Windsor’s revenues totaled $104.5 million (U.S. dollars) while MotorCity’s revenues reached $100.6 million; MGM Grand was $99.3 million, and Greektown, $80.9 million.

Still, Casino Windsor is still playing catchup with last year primarily because of the security precautions that followed the 9/11 terrorist attacks. During the second quarter of last year the revenues topped $120 million.

The Insider

Analysts at Credit Suisse First Boston has cut their rating on Boyd Gaming Inc. (BYD) from a buy to a hold.

Even though Illinois has announced that it would accept bids for the state’s 10th gaming license, the community of Rosemont, a suburb of Chicago that expected to have the ill-fated boat to be owned by the Emerald Group berthed on its shores, has warned that it will sue rather than bid for the license.

Among the bidders will be MGM MIRAGE Inc. (MGG) which reportedly has instructed its legal counsel to begin looking for potential casino sites in Des Plaines, a community in the northwest suburb of Chicago.

GTECH Holdings Corp. (GTK) announced Monday it was the successful bidder for a multiyear contract from the Kansas Lottery to provide equipment and services for a new lottery system telecommunications network. The contract has an estimated value of $10 million over its six-year life.

Riviera Holdings Corp. (RIV) has entered into a $20 million, five-year revolving credit facility with Wells Fargo & Co.

Delaware racetracks generated $46.4 million in total slot revenue for the month of July. Leading the three racetracks was Delaware Park with $21.5 million.

Harrah’s Entertainment Inc. (HET) says it has repurchased 2.3 million shares of its common stake for a total cost of $103.3 million. This averaged $45.09 a share.