Baccarat gambling declined heavily on the Las Vegas Strip
Key US casino indicators that investors should watch closely (Part 4 of 4)
Baccarat gambling
Baccarat gambling is a high-stake table game. It’s more popular in Macau than in the US. VIP Baccarat represents roughly two-thirds of the total gaming revenue in Macau.
On the Las Vegas Strip, the total casino revenue fell 16.4% to $555 million in December 2014. Baccarat gambling accounted for the largest share of the decline—according to the latest data released by the Nevada Gaming Control Board.
Baccarat winnings, on the Las Vegas Strip, fell 40% to $148 million in December 2014. Baccarat gambling’s decline in revenue pulled down the Las Vegas Strip’s overall revenue. There were 325 Baccarat tables on the Las Vegas Strip as of December 31, 2014.
Major contributor to casino tables
Baccarat revenue is responsible for generating almost half of table games’ total revenue. Since 2007, Baccarat is the only table game that expanded casinos’ win. On average, Baccarat accounts for ~45% of all the Las Vegas Strip’s win—as shown in the above chart.
In 2015, Las Vegas casino revenue growth may depend on more Baccarat gains. The would increase the overall variance of the gaming results.
Casino operators—like MGM Resorts (MGM), Wynn Resorts (WYNN), and Las Vegas Sands (LVS)—benefit from Baccarat gambling.
In order to get exposure to all of these companies, investors could invest in ETFs—like the Consumer Discretionary Select Sector SPDR Fund (XLY) and the Market Vectors Gaming ETF (BJK). Las Vegas Sands, Wynn Resorts, and MGM Resorts comprise ~20% of BJK. This is significantly higher—compared to XLY.
To learn about secondary factors that influence the US casino industry, read External Factors Signal Better Times Ahead For US Casino Industry.
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