• Navigate This Market Turbulence: All Hedgeye Research → 3 Months 66% Off

    Preserve. Protect. Grow. Former hedge fund manager and CEO Keith McCullough has successfully navigated the Dot Com Bust, Great Financial Crisis and Crash of 2020. Get 66% off the smartest investing insights money can buy.

With some states releasing September gaming revenue figures next week, year-over-year comparisons could provoke some ill-founded optimism.

Over the next three weeks, gaming revenues will be released by the states and we expect that these figures will show the regional gaming industry through rose-tinted glasses.  The delta will look much better than August.  However, looks can be deceptive. Labor Day fell on September 1st in 2008, which means that most of the weekend’s gaming revenues were collected in August.  Labor Day this year was on September 7th, which resulted in all of the Labor Day weekend gambling revenues being attributed to September.  This calendar effect significantly contributes to the easy comparison for the coming monthly revenue figures that is shown in the chart below.


The hurricanes of 2008, Gustav and Ike specifically, destroyed homes and businesses in many Southern states last September, with Gustav making landfall during the Labor Day weekend.  Louisiana and Texas were hit particularly hard which had an adverse effect on the casinos’ revenues in Louisiana.  While the hurricanes had a broad impact on the gaming market in Louisiana, some properties were impacted more severely than others.  L’Auberge du Lac was closed for nine days, Boomtown New Orleans was closed over the Labor Day weekend (Pinnacle even had to close the Admiral riverboat in St. Louis for seven days due to flooding caused by Ike).  Delta Downs and Treasure Chest closed twice for a total of 10 and 13 days, respectively, including two weekends - one of which was Labor Day.  The impact on Louisiana’s gaming revenues is clear to see in the Lousiana Delta Chart.


The headline figures for states’ revenue releases could prompt an overly positive reaction among some investors in the coming weeks.  The Louisiana comparisons will not be helpful.  For the rest of the country, combining August and September 2009 and comparing to August and September of 2008 will give a more telling indication of the health of regional gaming.