LOS ANGELES (Reuters) – The dice are falling a little lighter in Las Vegas, where high stakes gambling is down as much as 10 percent amid the worldwide economic slowdown.
Casino operators and analysts said a number of other factors are also behind the drop-off, including a quirk of the calendar and the exit of a handful of key casinos from the high-end gaming arena. But most agreed that soft economies in the United States to Asia are largely to blame.
“There’s no question that a portion of it’s got to be tied to the economy here and abroad,” said Jim Murren, chief financial officer of MGM Mirage, which controls an estimated 60 percent the high-end play in Las Vegas. “There’s no question a global slowdown is going to hurt high-end.”
In the 12 months ended April 30, the amount of money wagered on the Las Vegas Strip on baccarat — considered the main barometer of high-end play — totalled $2.8 billion (two billion pounds), down 10.9 percent from the year-ago period, according to the Nevada Gaming Commission.
The drop-off has big implications for the major casino companies, whose quarterly earnings can be materially helped or hurt based on the outcome of single players betting hundreds of thousands of dollars per hand.
Bear Stearns analyst Jason Ader said the softening economy has been an important factor behind the drop-off, but added that a quirk of the calendar that saw Chinese New Year fall on the same weekend as the Super Bowl also played a part. Both events are major draws for high rollers in Las Vegas.
“Two of the three biggest weekends for gaming are the Super Bowl and Casino Malaysia Chinese New Year,” said Ader, adding that the third big weekend is the Western New Year. “This year, both of those weekends for high rollers fell on the same weekend. … It makes it that much harder” for casinos to cater to both groups.
Since Chinese New Year came just three weeks after Western New Year, many Asian high rollers who might have come to Las Vegas for both holidays may have opted instead to only come for one or the other, Murren said.
Murren said that changing tastes, both among high rollers and among casinos that cater to high rollers, have also played a part in the drop-off for baccarat, an elegant card game that has been popular with the rich at play for decades.
“Our customers and the customers that play baccarat are no longer just playing baccarat,” Murren said. “Many of our customers, especially from Asia, used to just play baccarat. Now there’s blackjack, roulette and in some cases craps.”
The volume of high-end play has also been affected by the departure of several key casinos from the market over the last year, most notably the Rio, owned by Harrah’s Entertainment Inc. and the Las Vegas Hilton, owned by Park Place Entertainment Corp., said Brian Egger, an analyst at Credit Suisse First Boston.
“The Rio and Las Vegas Hilton have meaningfully changed their focus on this market,” Egger said. “Some of that business will go to (Caesars Palace, also owned by) Park Place and MGM, but it also means that some of the players that were in that market are no longer focused on it.”
While play among domestic high rollers has also slowed, one factor that had surprisingly little impact on the segment was the collapse in high-tech stocks and overnight IPO millionaires, Murren said.
“We’ve seen a flattening of the national high-end play, but not a decline,” he said. “But we never got any high-end play from Silicon Valley. The techies never played. Whatever money they had they used to buy overpriced houses and (BMWs). They never spent money in Vegas.”