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Las Vegas Strip Gaming Revenue Drops 16%

January 9, 2009

Las Vegas Strip casino gambling revenue tumbled 16 percent in November, its 11th straight monthly decline, because the global recession and a reduction in the number of flights to the city deterred visits.

Gambling proceeds from the Strip fell to $437.7 million from a year earlier, Nevada’s Gaming Control Board said today in an e- mailed statement.

Las Vegas in 2008 will deliver its biggest annual gambling decline since data started being compiled in the mid-1980s as consumers limit purchases. People may further seek to reduce debt and spending as their net worth falls and job losses accelerate, analysts say.

“You are conscious of every decision you are making when you’re spending money right now,” Eric Langan, Chief Executive Officer of stripper nightclubs owner Rick’s Cabaret International Inc., said in a Dec. 29 conference call. “That’s why people aren’t in Vegas.”

Casino revenue at the largest U.S. gambling center slid 9.3 percent to $5.65 billion in the first 11 months of 2008, according to Bloomberg data. In the fiscal year starting in July, proceeds dropped 14 percent to $2.45 billion through November, the board said in the statement.

MGM Mirage, with 10 Strip casinos, dropped $1.01, or 7.1 percent, to $13.29, and Las Vegas Sands Corp. fell 22 cents, or 3 percent, to $7.02 at 10:57 a.m. in New York Stock Exchange composite trading. Wynn Resorts Ltd. lost $1.99, or 4.3 percent, to $44.46 in Nasdaq Stock Market trading.

Revenue for all casinos in Nevada retreated 15 percent to $836.8 million in November. Proceeds for Clark County, which includes downtown Las Vegas as well as the Strip, fell 15 percent to $702.6 million, the board said in the statement.

Passenger traffic at Las Vegas’s McCarran International Airport tumbled 15 percent in November from a year ago. Arrivals and departures slid 7.1 percent in the 11 months through November compared with a year ago, the Clark County Department of Aviation said Dec. 26, as airlines reduced the number of flights and demand deteriorated.

Airlines have cut about 15 percent of seats available on McCarran flights for the fourth quarter, said Terry Jicinsky, senior vice president of marketing at the Las Vegas Convention & Visitors Authority.

The spending slump forced Las Vegas Sands Corp. to raise $2.14 billion in November to avoid bankruptcy. The casino company, run by billionaire Sheldon Adelson, also suspended construction in Macau, China, to conserve cash.

Last month MGM Mirage, the casino company majority owned by billionaire Kirk Kerkorian, agreed to sell Treasure Island Hotel & Casino to real-estate investor Phil Ruffin for $775 million. The sale will help MGM Mirage raise funds it needs to refinance debt and finish its $11.2 billion CityCenter project on the Strip as casino cash flow falters.

Wynn Resorts, the biggest U.S. casino company by market value, opened its second Las Vegas property, Encore, Dec. 22. Wynn has avoided cutting any jobs in the recession by moving some Wynn workers next door to Encore, and hiring some new employees as part-timers until demand improves, billionaire Chief Executive Officer Steve Wynn said in a Nov. 20 interview.

Gambling revenue in Atlantic City, the second biggest U.S. casino center after Vegas, fell 7.8 percent in November, the New Jersey Casino Control Commission said in a Dec. 10 statement. A previous smoking ban and slot-machine competition from neighboring states also hurt proceeds.

-- AP