Growth Slows for U.S. Casinos

The larger casino companies had a slow second quarter in Las Vegas as gamblers won more and growth in the number of people visiting the city slowed.

New casinos outside Nevada helped the industry eke out some higher earnings, analysts said.

The number of people visiting Las Vegas in the first quarter of this year rose 3.2 percent to 7.1 million from a year ago, following a 20 percent increase to 28.2 million people for all of last year.

Analysts said growth probably slowed in the second quarter from a year ago. In April, revenue from slot machines at Las Vegas's 19 biggest casinos fell 4.5 percent from a year earlier, said Joe Coccimiglio, a Dean Witter Reynolds analyst.

"It's hard because Vegas was so strong last year," Coccimiglio said.

The opening in late 1993 of three large resorts offering a theme park, high-tech theaters and a live pirate ship battle helped attract large numbers of new visitors to the city, he said. No properties with attractions on that scale have opened since.

Casino companies generated most of their second quarter earnings growth outside of Las Vegas.

Harrah's Entertainment Corp. will post second-quarter earnings which are about unchanged for its Nevada properties, Coccimiglio said. The casino business was spun out of Memphis-based Promus Companies. It owns and operates 16 casinos nationwide.

The company benefited from the opening of riverboat gambling halls in Louisiana and Missouri last year and a contract to operate a Native American casino in Arizona.

The added business helped advance the company's second-quarter earnings to 35 cents a share from 30 cents a year earlier, Coccimiglio said.

Earnings at Las Vegas-based Circus Circus Enterprises Inc. will rise to 47 cents a share in its second quarter ending July 31 from 43 cents a year earlier, according to Coccimiglio.

Some of the increase will come from the opening of a gambling hall in Mississippi and a joint venture casino in Windsor, Ontario, last year, Coccimiglio said. The company's Nevada casinos probably will show results little changed from a year ago, he said.

Grand Casinos Inc. of Minneapolis also profited from the opening of new properties, said Robin Farley, a BT Securities analyst. The company recently began operating two new Native American casinos in Louisiana. Its two dockside gambling halls on the Mississippi Gulf Coast produced higher earnings because of increased revenue and reduced costs, she said. Farley estimates Grand earned 58 cents a share in the second quarter, up from 35 cents a year earlier.

Grand also opened a hotel at its Biloxi, Miss., casino. "That has helped by extending the average visitor's stay," Farley said.

MGM Grand Inc. said it expects to report second-quarter earnings lower than year-earlier results of 41 cents a share because high-rolling gamblers won more than usual playing table games at its 5,005-room Las Vegas hotel, the largest in the world. Analysts recently projected the company will earn about 20 cents.

Hilton Hotels Corp. expects to post higher earnings for the opposite reason. Three new luxury suites _ costing a total of $40 million to build _ at the Las Vegas Hilton attracted wealthy patrons who lost more than usual, Coccimiglio said. The higher casino revenue, along with a 5 percent increase in average daily room prices at the 230 hotels it owns, manages or franchises, helped boost the company's earnings to 95 cents a share from 70 cents, he estimated. Results at Mirage Resorts Inc. suffered from renovations at its flagship Mirage hotel in Las Vegas. The work meant about 20 percent of the property's rooms were out of service at any given time, Farley said. The hotel's casino revenue may also fall below average, she said.

Farley estimates Mirage's earnings fell to 29 cents a share from 32 cents a year earlier.

Travelers will continue to trek to Las Vegas, but the rate of growth will remain slower than it was last year, and that will keep a cap on casino revenue, analysts said.

Casino revenue at Las Vegas' 19 largest casinos fell 4.2 percent to $605 million in the first quarter, excluding revenue from baccarat, Farley said. Baccarat revenue is volatile because the game is favored by wealthy patrons who can quickly win or lose several hundred thousand or a few million dollars.

"Overall in Las Vegas, gaming revenue has been somewhat flat (in the second) quarter versus last year," Farley said.

Coccimiglio estimates growth in the number of visitors to Los Vegas will remain soft in the third quarter.

Growth isn't expected to speed up again until 1996 and 1997 when more large resorts are scheduled to open, he said.

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