Union Gaming Analytics Operator Index

Welcome to the December 2014 edition of the Union Gaming Analytics (UGA) Index of Gaming Operators.

The UGA Index for the period ending Dec. 31, 2014, was down 7.97 percent sequentially to 91.08 from 98.98 at Nov. 30, 2014. As an illustrative example, if an investor bought $100,000 of the Index on Dec. 31, 2013, the investment would hypothetically be worth $91,084 on Dec. 31, 2014. Note, however, that the UGA Index is compiled for illustrative purposes only and is not being offered as an investment vehicle by Union Gaming Analytics or any affiliated entities.

In comparing the UGA Index to the broader markets, on a sequential basis, the Dow Jones Industrial Average was up 0.26 percent and the S&P 500 Index was up 0.41 percent.

The UGA Index comprises 28 domestic and global casino operators.

Top index performers included:
• Isle of Capri Casinos, Inc. was up 15.6 percent and contributed 0.56 points to the index during December 2014.
• NagaCorp Ltd. was up 2.3 percent and contributed 0.08 points to the index.

Underperformers included:
• Macau Legend was down 23.8 percent and contributed -0.85 points to the index.
• SJM Holdings Limited was down 19.7 percent and contributed -0.71 points to the index.
• Emperor Entertainment was down 18.7 percent and contributed -0.67 points to the index.

Macau November Revenues
In December, Macau gross gaming revenues (GGR) declined 30.4 percent to MOP23.3 billion (USD2.9 billion) against a tough comp at +18.5 percent. The calendar comp was slightly unfavorable with one fewer Sunday and the visit by President Xi Jinping also negatively impacted GGR. For the full year 2014, GGR declined 2.6 percent, which represented the first full year decline in GGR since the liberalization of gaming in Macau.

Las Vegas November Revenues
For November 2014, Las Vegas Strip gaming win was down 4 percent to $508.3 million. Strip baccarat win was down 1.1 percent to $127.6 million on 12.4 percent hold. Table game win (ex-baccarat) was down 13.9 percent to $150.5 million. Looking at the results with a bit more granularity, blackjack was down 15 percent to $62.6 million, craps was down 11.4 percent to $15.6 million and roulette was down 34.7 percent to $15.7 million. On the slot side, win was up 2 percent to $230.2 million. In November, statewide gaming win was flat at $876.3 million. Downtown Las Vegas gaming revenues were up 12.8 percent to $42.8 million.

Regional Trends
Regional markets continued to experience weakness in revenues seen in regional jurisdictions over the past couple of months. In November, Indiana reported an 8.1 percent decrease in gaming revenues, Louisiana down 6 percent, Mississippi down 4.8 percent, Iowa down 4.6 percent, Missouri down 4 percent and Illinois down 3.7 percent.

Online Real-Money Gaming
Revenues from online gaming/poker continue to show a slower ramp up than many had expected. It could be some time until these revenues reach significant levels and begin to contribute to state coffers at levels the states were expecting. The New Jersey Department of Gaming Enforcement released November 2014 Internet gaming revenues of $8.7 million, down 8.4 percent from October’s $9.5 million. For November, Nevada reported online poker revenues of $0.6 million and Delaware reported online poker rake and fee revenue of just $0.2 million. Beginning in the February report, the Nevada state revenue released a separate breakout for interactive poker revenue as a third market entrant (Real Gaming) went live during February. Payment processing issues, large banks not allowing transactions to be made with their credit/debit cards, as well as geolocation verification are continuing to weigh on results from all jurisdictions.

Other Events

Macau Data Points
During November, Macau visitation increased by 15 percent year-over-year. Mainland China visitors rose by 28 percent year-over-year to 1,975,951, led by Guangdong province (898,373) and Fujian province (78,196). The number of mainland visitors travelling under the Individual Visit Scheme grew by 35 percent year-over-year to 940,056. The average length of stay of visitors decreased by 0.1 day year-over-year to 0.9 day and overnight and same-day visitors had an average stay of 1.9 days and 0.2 day, respectively.

Las Vegas Data and News
The Las Vegas Visitors and Convention Authority released November visitation statistics. Visitation was up 1.4 percent to 3.29 million visitors. Convention attendance decreased 10.4 percent for the month on a 5.6 percent increase in conventions and meetings held during the month. Citywide occupancy was up 110 basis points, Las Vegas Strip RevPAR was up 4 percent and Las Vegas Strip ADR increased 2.5 percent to $122.60.

New York Gaming Expansion News
The New York Gaming Board announced the winners of the new gaming licenses in the state. The board chose to award only three licenses (out of potential four). The winners of the licenses included the Montreign Resort Casino in the Catskills, Rivers Casino & Resort in the Capital region and Lago Resort & Casino in the Southern tier.

Revel Seeks Sale to Second-highest Bidder
Revel Casino Hotel in Atlantic City, N.J., filed a motion to terminate its agreement with Brookfield Property Partners. Brookfield had secured the winning bid at auction for Revel in October but backed out of the deal in November due to bondholders’ refusal to rework debt associated with the construction of Revel’s power plant. Revel intends to seek a sale to the second-highest bidder, Polo North County Club, owned by Glenn Straub.

What to Look For in Next Month’s Index
Next month’s discussion will include commentary on regional gaming and updates on gaming expansion opportunities in the United States.

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