Surprisingly Strong 10 Percent GGR Jump in Nevada’s Locals’ Region: Analyst

Posted on: October 4, 2020, 05:33h. 

Last updated on: October 5, 2020, 12:05h.

Ed Silverstein @casinoorgedsilv Read More

Expertise: Legal, Tribal Gaming.

Gross Gaming Revenue (GGR) in the locals’ casino region near Las Vegas jumped 10 percent in August compared to the month in 2019, according to recently released data.

“Locals growth was stronger than we expected … based on broader regional trends,” Truist Securities said in an investors’ note co-written by analysts Barry Jonas and Jeffrey Stantial. He added that locals GGR was up a surprisingly strong 10 percent.

Much of the increase was credited to gaming activity located in the Boulder Strip region. That market was up 30 percent.

The Boulder Strip includes Henderson, Whitney, and some other communities along the Boulder Highway. Companies that own casinos in the region include Boyd Gaming and Red Rock Resorts. Other sections of the locals’ market are north Las Vegas and some other parts of Clark County. Most players in this region live in Nevada.

Some of the 10 percent increase seen in the locals’ region can be attributed to accounting methods used to calculate GGR.

Reno and Strip Down

In contrast, the Las Vegas Strip’s GGR was down 39 percent when comparing August 2020 and 2019. “Strip GGR was in-line with expectations around a likely much slower recovery,” the note said.

Meanwhile, downtown Las Vegas declined 22 percent when comparing the two months. Reno was “resilient” with a 13 percent drop when comparing August 2020 and August 2019, the note said.

Stephen Miller, an economics professor and director of UNLV’s Center for Business and Economic Research, told Casino.org that Las Vegas still has a long way to fully recover.

While the economic indicators in Las Vegas first dropped like a rock and … have begun to recover, they still have a long way to go to complete their recovery,” Miller said.

“For instance, the number of passengers flying through McCarran International Airport is ‘one of the slower statistics to recover,'” Miller continued.

There were 4.3 million passengers in December 2019, falling to 153,000 passengers in April, and recovering to 1.1 million passengers in June. Drive-in visitors nearly completely recovered, but they are a small share of total visitors, Miller added.

Also, Las Vegas taxable sales were $4.2 billion in December 2019 and fell to $2.5 billion in April. They recovered to $3.4 billion in June.

V-Shaped or K-Shaped Recovery

There are questions, too, whether the economic recovery will be V-shaped or K-shaped, Miller confirmed.

The data that I am looking at now suggest a V-shaped recovery. But a second wave of the virus and/or a bad flu season could call off the recovery,” Miller told Casino.org.

But Miller points out the Las Vegas economy has some sectors that require face-to-face contact between people and other sectors that do not require such close interaction.

“The face-to-face sectors tend to be lower-paid sectors such as leisure and hospitality, eating and drinking places, and so on,” Miller explained. “So, the pandemic is contributing to a worsening of income distribution and economic pain in our economy.”

In that way, it is referred to as a K-shaped recovery “where the haves are doing well, and the have-nots are not doing well,” Miller said.

Miller also wants to see more national relief programs. “Most analysts are surprised by the strength of the recovery so far,” he said. “I attribute it to the unprecedented fiscal action by Congress and the [Trump] Administration through the CARES Act and the related support funding.”

As far as second-quarter personal income, Nevada at 15.6 percent was second among the states in year-over-year growth rate behind Hawaii at 15.9 percent, he said.