Nevada state officials say their state's overall gambling revenue dropped 2.7% in January 2014, compared to the same month last year. The total revenues for the month were $884 million.
Making the drop-off worse is the fact the 2014 Super Bowl betting set records, and the rake was a ten-year high. For Super Bowl XLVIII, Las Vegas sports books collected $119 million.
Baccarat Is the Main Culprit
Analysts say a major reason for the decline was baccarat. The baccarat winnings were down 16.9% from last year, because players won more often on the game than they did last year. The January numbers appear to be within the standard variance one might expect from gambling revenues.
Because baccarat is a high rollers game, fluctuations on those wagers can affect the bottom line in significant ways. Analysis has shown in the past that even a small number of high dollar players ("whales") can affect the bottom line one way or another. When the whales are winners any given month, casinos revenue percentages go down in significant ways.
Online Gambling Not Blamed for Decline
Officials do not believe online gambling had anything to do with the declining profits. New Jersey and Delaware each have legalized online casinos and poker sites, but these gaming sites only accept players from inside their states. Delaware gaming sites were running last year at this time, while the number of players in the 3 Delaware operations are limited.
Though New Jersey has a much larger player base, most gamblers in the Garden State prefer to play in nearby Atlantic City. Even those who logged on to an online gambling site are likelier to play at those sites associated with Boardwalk casinos, since their gaming dollars stay in the state and their bets trigger incentives in the NJ players clubs. While some offline gamblers might stay at home to play, indications are that most online players have not stepped foot in a brick-and-mortar casino in the past 2 years.
Las Vegas Strip Remained Steady
In fact, the Las Vegas Strip recorded numbers quite similar to January 2013--they were off just 1% from last year at the same time. Casinos in the downtown area of Las Vegas showed a decline of 3%, while North Las Vegas (13.4%) and Boulder Highway (18.1%) had the biggests declines. While the Las Vegas Strip casinos might have hoped to have an increase, it was the gambling locations away from the strip which accounted for the biggest percentage of the bad numbers. Reno showed an increase in revenues from January 2013, while South Lake Tahoe showed a decline.
Though the revenues were down from last year, the State of Nevada collected $69 million in revenues. This indicates a 2% increase in the collected taxes and fees. While this 2% increase would account for less than 10% of the gross revenues gained, it's obvious that Nevada is collecting taxes at a higher rate in 2013 than 2014. This would have a significant effect on the bottom line.
Virgin Casino Site Opens in New Jersey
Richard Branson's Virgin Online Casino is set to open in the New Jersey market. The site is one of 15 approved casinos in the New Jersey market. Gamesys is powering the casino software, while Virgin's land-based partner is the Tropicana Casino.
This is a much-anticipated launch. Gamesys CEO Lee Fenton says his company has been rehearsing the launch since 2012. In all, the website will feature 30 different casino games, including blackjack, baccarat, roulette, craps, slots, and video poker. Traditional poker games like Texas hold'em are not featured in online casinos, but instead are played on iPoker sites.
Early returns have been somewhat disappointing to many New Jersey politicians. In fact, media reports in the past week have indicated state politicians are beginning to point fingers and justify their previous claims. Many lawmakers do not seem familiar with the concept businesses on the Internet tend to take a time to build up a customer base.
While it is still uncertain how much of an impact the Virgin/Gamesys/Tropicana partnership is going in the competition for number one, having another major operator in the market is likely to be good news for the state treasury, along with the overall numbers drawn in by the Atlantic City casinos.
