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High slot hold masks disappointing fundamentals

Las Vegas Strip gaming revenue rose 3.6% YoY in October.  While this was better than we expected, the upside surprise is entirely due to higher slot hold.  Since September ended on a Sunday, due to an accounting policy, ~$50 million in slot revenue was carried into October; hence, a higher than normal hold rate (8.1%) resulted.  On a hold-adjusted basis, total gaming win would have fallen 6.4% YoY.  More importantly, slot handle fell back into the red (-3.7% YoY), abruptly ending its one month gain.  According to our trend projection model, we believe slot handle, on a rolling 3-month basis, will remain weak for the rest of the year.

Baccarat volume rose a meager 5%, a rate similar to September but much slower than the 20-30% growth seen in June-August.  Table volume ex baccarat was up 2%; on a rolling 3-month basis, table handle ex baccarat fell 1%.