High rollers bring baccarat boom to Las Vegas - Monday 21st of January 2013
A select group of players concentrated among a few Las Vegas casinos wagered an eye-popping $1.3 billion on baccarat games in December — a record for any single month in state history.
Although most gambling games in Nevada are getting significantly less action in the recession, baccarat, a high roller game offered by 17 properties on and near the Strip, is booming.
Strip casinos won $155.7 million from baccarat players in December, surpassing previous records for revenue and wagering volume set in December 2007 at the tail end of the tourism boom. By comparison, the industry’s most popular games, slots and blackjack, have retreated to revenue levels seen in 2003-04.
December’s opening of MGM Mirage’s $8.5 billion CityCenter, a high-end complex anchored by the luxury Aria, was primarily responsible for the boost in baccarat play.
More than $42 million of the estimated $56 million in gambling revenue generated by Aria in the two weeks after its Dec. 16 opening came from baccarat, according to Las Vegas analysts Union Gaming Group and others that have examined state figures released this month.
(Although property-specific information is confidential by law, Aria’s opening yielded a spike in a little-watched gambling category, offering an unprecedented look at a resort’s initial performance.)
By those estimates, each of Aria’s 21 baccarat tables generated about $2 million in revenue in two weeks. Those are big numbers, even by the standards of baccarat, a game that can attract wagers of more than $100,000 a hand. Baccarat tables in the Strip’s biggest casinos generated about half-a-million dollars a month last year, state figures show.
New Year’s Eve has always been a big event for baccarat, which is favored by wealthy Chinese whose net worth is growing even as the economies of the United States and other parts of the world are hurting.
Casino openings typically aren’t a good measure of long-term business performance, as they generate huge crowds who flock to experience the buzz of a new resort. That’s especially true of CityCenter, the nation’s largest and most expensive privately funded construction project. Its five-year development was closely followed in the media and marketed globally by MGM Mirage.
Yet analysts believe Aria’s baccarat action is an early sign that the property — although likely stealing some business from other Strip resorts — is attracting additional high roller business to Las Vegas.
“This speaks very well to continued (baccarat) demand at all properties, not just CityCenter,” said Grant Govertsen, a Union Gaming Group principal. “There’s no doubt CityCenter is cannibalizing business. But perhaps they are cannibalizing business less than investors expected.”
MGM Mirage stock soared on the news but plummeted again Thursday after reporting poor fourth-quarter earnings that revealed big declines in some other parts of the business.
During the company’s conference call to discuss earnings, CEO Jim Murren said international business, driven by Asian customers, reached a new high last year and that its share of the high roller market has increased, in part because of Aria.
Other properties are benefiting as fourth-quarter baccarat volume rose at casinos other than Aria, Murren said.
The company had its biggest crowds for Chinese New Year this year, he said, while credit lines and front money that facilitate high roller action are up significantly from a year ago. Many Asian players are first-time customers who are coming to town to see Aria, he said.
Baccarat is helping to fill the state’s depressed tax coffers but doesn’t benefit the vast majority of Nevada casinos, including most on the Strip, that don’t offer it or cater to high rollers. Overall, the Strip experienced its biggest decline in gambling revenue in history last year, and statewide gambling revenue fell to 2003 levels.
Lower-tier properties can’t afford the potential hit that a single baccarat player’s multimillion-dollar win could mean for the bottom line.
And yet, baccarat play on the Strip — which accounts for slightly more than half of all the gambling revenue won by casinos statewide — is making Nevada’s numbers look better than they would otherwise.
November and December were the only two months of year-over-year increases in gambling revenue on the Strip in 2009. Excluding baccarat, overall Strip gambling revenue would have fallen 5 percent to 6 percent during those months.
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