China slowdown hits the Vegas Strip

The Las Vegas strip.
Gavin Hellier | Getty Images
The Las Vegas strip.

We already know that China's slowdown has hurt Wall Street over the past few weeks, as stocks have slid among indications of slowing growth and a Chinese market rout. But China's weakness is also causing problems in that other famous center of American speculation, the Las Vegas Strip.

The Nevada Gaming Control Board released revenue numbers Friday morning showing that Las Vegas Strip revenue for July fell 2 percent year over year, with baccarat serving as a major drag. That game, popular with Asian gamblers, suffered a 21 percent drop in revenue. And baccarat volume (a more direct measure of the amount of chips wagered) looked even worse, plunging 35 percent. This follows a June in which baccarat volumes fell 43 percent.

"At this point, given the swirling macroeconomic uncertainties in China, we expect the Strip baccarat business to remain under pressure indefinitely," Stifel Nicolaus analyst Steven Wieczynski wrote in a note to clients Friday.

If not for baccarat, Strip revenue would have risen 4 percent year over year, notes Wieczynski, thanks to a 9 percent increase in slot revenue.

The one saving grace is that "while this business certainly has a tangible top-line impact, it is primarily comprised of lower-margin revenues, thus its impact on cash flow is less pronounced," Wieczynski wrote.

The Vegas table game with the highest house edge? Three-card poker, with a win percentage of 32 in July.


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