Anticipating the pain of monthly revenue reports

It is hard to admit it, but sometimes I am simply wrong –  wrong thinking and completely off base.  Almost monthly I am reminded of one of those wrong thinking moments – when the gaming revenue figures for Nevada are released.   Nevada is a really complex mix of very different jurisdictions and each marches to a different drummer – the most obvious illustration of that is the Las Vegas Strip.  Customers for the Strip come from everywhere in the world, where as every other jurisdiction in the state pretty much gets its customers from one or two sources.  Those world-wide customers on the Strip also play different games than the predominantly local or region customers for the rest of the state – they play table games much more.  When the Las Vegas Strip is up the state is up – that is because the numbers from the Strip are so large that they distort the picture for the state – especially when baccarat play is up or down dramatically. Baccarat fluctuations are caused by a few people, usually from Asia, betting a great deal of money – when they lose the Strip and the state are up, when they win the Strip and the state are down.   That and the fact there are 150,000 hotel rooms in Vegas and 85 percent of the rooms are occupied every night of the year make Las Vegas a world of its own.

Reno on the other hand gets its customers from the local area and from northern California; there are no high-rolling Asian players, just regular slot players for the most part – half live locally and half have to drive over the Sierra Nevada Mountains to get to Reno and its slot machines; that of course is Reno’s problem.   Reno has been on a long slow slide since California, Oregon and Washington added a wide variety of gaming options for their citizens’ gambling pleasure.  Once a month or so, a newspaper reporter will call and ask me for a quote concerning the month’s gaming numbers; the reporter wants my opinion on the implications of the numbers and my prediction for the future.  For what is beginning to seem like an eternity to me, I have said that Reno will eventually hit bottom and then can slowly begin to improve – not to the high points of the 1980s when there was no competition, but improvements from the previous year.  That is the hope  we all cherish, a future that is better than the present, isn’t it?

On those occasions, I opine that without any new competition in our feeder markets or worsening of the recession, things should start to get better for Reno casinos.  There is no new, major competition on the horizon before the end of 2013 when the next mega casino is supposed to open near San Francisco;  and the economy is stable currently, if not growing.   Minus new competition and with a stable economy, Reno should be on the verge of hitting bottom and turning in the opposite direction, after 25 long years of decline.  The market at this point should have absorbed the competition and made the necessary adjustments – some 20 plus casinos in the area closed in the interim.  A ray of hope, not a blinding white light of hope, but hope nevertheless.    Well, the gaming revenue numbers came out for April today and, to use the words in the Reno Gazette-Journal‘s headline, gaming revenue plummeted in April – casinos in Reno were down 18.7 percent.

Now rationally, I know there has to be a bottom, but subjectively I am beginning to feel like the father of a friend of mine – sick to my stomach every month when the numbers are due to be released.  My friend’s father had been a minister in the Czechoslovakian government after WWII – he was arrested and imprisoned by the communists; every Saturday for 8 years they took him out of his cell and beat him.  He had been out of prison for 10 years by the time I met him, but he still got sick to his stomach on Saturdays.  Even when it ended he could not believe it physiologically.  He had a nagging worry that there might never be an end and the beatings would begin again and last until he died.

I have nearly reached that point – there might not be an end to the decline of Reno’s casinos.  After all, there have been industries in the past that disappeared – like those related to steam or horse travel – some industries disappeared completely and some nearly so.  I wonder if Reno is not faced that kind of ending; years and years of monthly beatings – that is until there is nothing left to beat.   I wonder the same thing about Atlantic City, but no one asks me to predict its future, so Atlantic City’s results do not cause my stomach to turn upside down – but I suspect there are those in that city who do experience that feeling.  Atlantic City was down 9.5 percent in May – a 48-month trend.  But next month when the numbers are due to be released for Nevada I will have that same sick feeling in my stomach – fearing another beating is on its way.