Thursday, July 7, 2016
May 2016

A not so Merry Month
Featuring the ghost of a Saturday gone
Short Synopsis - Spoiler Alert!

A year ago, I was trumpeting the health of the gaming industry nationally. May 2015 was a very good month. This year's May did not measure up to last year's. The difference is not some dramatic trend or startling new event, it's a missing Saturday. That's all, one simple Saturday, but as anyone in operations knows, Saturday is the best day of the week, usually worth nearly twice as much as a normal weekday. In May 2016 that missing day was the main reason that gaming revenue nationally was down 2.48 percent to $3.475 billion. 
The May 2016 numbers:
Atlantic City gaming revenues fell 0.6% to $219.8 million. Associated Press, 6-15-16
Colorado casino revenue fell 2.3% to $71.4 million. Gaming Commission, 6-16
Delaware gaming revenue rose 0.85% to $35.5 million. Gaming Commission, 6-16
Detroit casino revenues fell 3% to 118.5 million. Crain's Detroit Business, 6-15-16
Florida slot revenue rose 0.64% to $46.8 million. Gaming Commission, 6-16
Illinois gaming revenues rose 3.4% to $215.3 million. Gaming Board, 6-16
Indiana gaming revenue fell .9% to $184.3 million. Gaming Commission, 6-16
Iowa casino revenues fell 3.4% to $124.4 million. Gaming Commission, 6-16
Kansas gaming revenue fell 10.8% to 30.3 million. Gaming Commission, 6-16
Louisiana gaming revenue fell 11.6% to $254.7 million. Gaming Commission, 6-16
Maine gaming revenue was flat at $11.3 million. Gaming Commission, 6-16
Maryland gaming revenue rose 8.4% to $104.4 million. Baltimore Sun, 6-6-16
Massachusetts slot revenue was $13.4 million. Gaming Commission, 6-16
Mississippi gaming revenues fell 4.4% to $176.8 million. Gaming Commission, 6-16
Missouri gaming revenues fell 5% to $144.2 million. Gaming Commission, 6-16
Nevada gaming revenue fell 4.5% to $958 million. Las Vegas Sun, 6-30-16
New York VLT revenue rose 0.17% to 176.5 million. Gaming Commission, 6-16
Ohio gaming revenue rose 0.69% to $144.7 million. Cleveland Plain Dealer, 6-8-16
Pennsylvania gaming revenue rose 1% to $280.1 million. Gaming Commission, 6-16-16
Rhode Island VLT revenue fell 10.8% to $42.7 million. Gaming Commission, 6-16
South Dakota gaming revenue fell 1.1% to $25.9 million. Gaming/Lottery Commission, 6-16
West Virginia lottery revenue fell 5.2% to $96.7 million. Charleston Gazette, 6-26-16
Total national gaming revenue was down 2.48% to $3.475 billion. David Rohn, 6-30-16

Program Notes

Not every state reported less revenue; seven (Delaware, Florida, Illinois, Maryland, Ohio, New York and Pennsylvania) reported increases. Of those, five - Delaware, Florida, New York, Ohio, and Pennsylvania - saw less than one percent increases, which is not much to write home about. The other two, Illinois and Maryland, were outliers for unique reasons. Illinois is still adding VLTs; in May 2016 there were 3,000 more VLTs in the state than in 2015. Maryland had no riots in April or May. (In 2015 the Horseshoe in Baltimore was still suffering from the impact of riots in April over the death of Freddie Gray.)

There is one missing state in the upside list: Kentucky. Kentucky has not yet made public the May revenue from its horse racing machines, but it is certain that revenues were more this year, because Kentucky is still rapidly adding games. (The 2.48% decrease excludes Kentucky for both May 2016 and May 2015.)

Within the states reporting a decrease in revenue there are also minor differences in reasons, but the one big exception was Nevada. It is always a potential exception because of Las Vegas. Statewide Nevada was the victim of the missing Saturday just like every other state. However, Las Vegas is a horse of a different color; no other gaming jurisdiction in the world has 250,000 hotel rooms. Those rooms drive the city and the industry's economy, but when the rooms are not full it shows up in the numbers; Las Vegas is also home to mega entertainment events that also add to the strength of the casino industry on the Strip.

In May, for Las Vegas, those two factors, room occupancy and special events, had a major impact on gaming revenue. Although air traffic to Las Vegas was up, overall visits and hotel occupancy in Sin City were down. In May of 2015 Las Vegas had the Pacquiao-Mayweather fight and the inaugural Rock in Rio music festival, both of which drew big crowds. Their absence this year was evident: table games and sports betting revenue was down 19.65 percent. Table game win was the decisive factor; the amount of money wagered on the Strip on table games is so large that even a small change in win percentage drags down the numbers for the whole state. Slot revenue was only down 2 percent, which is in line with expectations when there is one less Saturday
Additional Indicators

Outside of gaming, the broader economy was solid in May; consumer spending rose to its fastest pace since 2009 and the University of Michigan consumer sentiment index increased from 89 to 94.7. Sales for new, single-family homes shot up to an eight-year high. And gas prices are still lower than they were a year ago, something that is apparent in increased travel.
All that good consumer news is a key reason why experts believe U.S. economic growth will pick up in the spring after a sluggish winter. The economy only grew 0.8% in the first quarter, but many experts forecast second quarter growth rising to 2.5%. Patrick Gillespie, CNN News, 6-3-16
Thirty-four million people are expected to travel this Memorial Day weekend and about one-third of them will be flying out of airports. In the last few years, AAA has seen a major spike in travel for this summer holiday. The jump is mostly tied to the current economic climate both here at home and internationally. With much of the country seemingly back on track and making its way to recovery, more families are able to set aside some money for extra luxuries like travel. WNCN-TV, 5-27-16
On Wall Street, gaming stocks on the Adams Index were down 4.96 percent to close at 325.27 for May; the Dow Jones was up .59 percent to 12,787.l3. The Dow has very little implication for gaming; the decline of gaming stocks probably reflects, more than anything else, the woes of Macau. Macau gaming revenue fell 9.6% to $2.3 billion for the month.
The others other two anomalies in the reporting, Connecticut and horse racing, are down much like the rest of the gaming in the country:
Connecticut slot win fell 5.4% to $89.7 million. New London Day, 6-15-16
National horse racing handle fell 3.95% to $1.2 billion. Blood-Horse News, 6-4-16
Both April and May illustrate the importance of the calendar. April had two more weekend days this year than it had in 2015; nationally gaming revenue was up 3.5 percent. In a nearly mirror-opposite result, May was down 2.48 percent, largely due to one less Saturday.
Every month, in every jurisdiction and for the most part at every casino, analysts search for explanations for changes in revenues. When results exceed expectations, everyone celebrates and not a few take credit. But when results fail to meet expectations, no one wants the blame. When looking for an explanation or an excuse, it is best to start with a calendar comparison. No one should get credit or blame for one less or one more day, as in February, or for a rogue weekend, but that is often the best an explanation that you're going to find. 
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