No market was hit harder by the downturn than the local LV market. Here’s one of the reasons why BYD may finally have turned onto recovery road.
- BYD generates 30% of its property EBITDA in the LV locals market and is benefiting from improving top-line trends in that market and a lower cost structure
- After peaking in Q4 of 2009, mortgages with negative equity and delinquencies are moving lower at an accelerating rate in Nevada
- We’ve consistently found that while other macro variables are important, housing price was the most significant driver of gaming revenues across the country and especially in the LV locals market
- The relationship has actually dissipated over the past 2 years as housing prices recovered but gaming revenues have not
- Our theory is that gaming growth has resumed and should begin to grow at an accelerating rate over the next few years as more and more consumers pull their heads above water in their mortgages. In other words, rising home prices and gaming revenues will again be highly correlated
