The implied September baccarat volume looks pretty weak based on MGM’s pre-announced results.
We think September Strip Baccarat volume may fall 50-60% after posting 40% and 87% YoY increase in July and August, respectively. That would bring total baccarat volume growth for the quarter to 26-29%. Good, but not as good as everyone thought on Friday when the blockbuster August numbers were released by the Nevada Gaming Commission.
With its pre-announcement yesterday, MGM showed a baccarat volume decline at its wholly owned properties (so excluding Aria) of 6%. That is a very poor showing. It is our understanding that MGM’s baccarat market share was 35-40% and over 50% including Aria. Applying some simple math to MGM’s reported baccarat volume and the Nevada state figures leads us to the conclusion that September baccarat volume may be down 50-60%, even if MGM’s market share fell 10 percentage points. Of course, if they maintained share, then September Strip baccarat volume would have fallen even more.
We don’t want to marginalize the baccarat business. After all, this segment carried the Las Vegas Strip through the downturn and volumes continued to grow this year. However, relative to expectations, investors have to be disappointed with the full quarter volumes after Friday. We will need to reevaluate our model projections for WYNN and LVS again after raising our Las Vegas estimates following Friday’s Nevada release.