Operators nervous about money laundering
Gaming revenues on the Las Vegas Strip fell 5.6 percent to $520 million in October. A drop in baccarat play was behind the overall decline, according to numbers released by the Nevada Gaming Control Board.
The sudden drop in play by Chinese high rollers began in Macau last summer and has now extended to the United States, CBRE analyst Brent Pirosch told Bloomberg News. Singapore has also seen a decline in baccarat play due to a crackdown on corruption by the Chinese government, as well as a sluggish mainland economy. Baccarat is the most popular casino game in Macau, Bloomberg reported.
“It’s a global VIP problem,” Pirosch said. “It really only takes a few guys not playing, less than 100 folks really driving that high-end play.”
Vegas operators are also on edge about renewed scrutiny of their operations, especially large cash transactions. Last month gaming regulators in Massachusetts announced they were looking at alleged money laundering at Wynn Resorts properties. Steve Wynn is planning to construct a billion-dollar casino in the city of Everett.
According to the Wall Street Journal, the criminal investigation division of the IRS has asked for information on Wynn’s U.S. and foreign clients, its domestic and overseas marketing offices and its internal controls. The inquiry could hamper Wynn’s quest for a $375 million credit line and an $875 million loan to build its $1.6 billion Everett project. Neither the company nor owner Steve Wynn has been accused of breaking the law, according to the report.
Despite the third straight month of gaming revenue declines, analysts were upbeat about the slot win in Vegas, which grew almost 7 percent during October to $260.6 million, reported the Las Vegas Review-Journal.
Analyst Steven Wieczynski of Stifel Nicolaus Capital Markets noted that visitation is up, with a 3 percent increase in total passengers at McCarran International Airport, and a total of 3.58 million tourists visiting the city for the month. Room occupancy, average daily room rates and revenue per available room were up for the month, but convention attendance and gaming revenue were down.
Incidentally, Wieczynski said he still views the Strip’s baccarat business as “healthy” despite the recent decline.
“Baccarat has generated average monthly revenue of $134 million over the trailing 12-month period,” he said. Without baccarat, Strip gaming revenue would have increased 5.6 percent, the Review-Journal reported.
Analysts predict Nevada gambling revenues will slow in 2015, but will be up 2 to 5 percent over the next few years. The growth rates will be modest, conceded legislative fiscal analyst Russell Guindon. “But if you go back and look historically, this is growth,” he told the Sun.
The numbers for iGaming in Nevada are still tepid. Internet poker brought in $665,000 in October. The lackluster market led Ultimate Gaming to close down its operations earlier this month.
