Majestic Research

Global Gaming Business

Making Money on Madness: Strip Trends During First Weekend of NCAA Basketball Tournament

By Matthew Jacob
Published: March 27, 2006

In addition to increased activity in the Strip’s sports books, the first weekend of the NCAA men’s basketball tournament generally drives high levels of gaming activity across the Strip’s casino floors. First-round games were played March 16 and 17, and second-round games were played March 18 and 19. In this report, we analyze Las Vegas Strip game usage for the Thursday through Sunday period (March 16 through March 19). According to our proprietary data and analysis, overall Las Vegas Strip game usage jumped 14.5 percent during the first weekend of this year’s tournament versus the first weekend of the 2005 tournament. Even excluding Wynn Las Vegas, which opened in April 2005, Strip game usage increased 7.1 percent year-over- year during the tournament’s first weekend.

Trends during the first weekend of the tournament were significantly stronger than the Las Vegas Strip game usage trends we observed during January and February, when game usage was up just 2.3 percent overall and declined 4.5 percent year-over-year, excluding Wynn Las Vegas.

Las Vegas Strip year-over-year slot trends were stronger than table trends during the tournament’s first weekend. Overall slot usage was 22.1 percent higher year-over-year, while overall table game usage grew 6.8 percent versus the tournament’s first weekend in 2005. Excluding Wynn Las Vegas, slot usage grew 13.9 percent and table game usage grew 0.3 percent.

On average, Strip casinos were busier this year during the tournament’s first weekend. Strip game capacity usage (game usage/game capacity) was 28.6 percent during the tournament’s first weekend, above the capacity usage of 25.7 percent in the prior-year period. Even excluding Wynn Las Vegas‚ Strip-leading capacity usage of 42.2 percent, Las Vegas Strip capacity usage jumped 230 bps year-over-year to 28.0 percent.

Company and Property Specific Trends

Among public companies, only Las Vegas Sands had a year-over-year game usage decline during the first weekend of the tournament. MGM Mirage led public companies with a 10 percent year-over-year increase, followed by Aztar with an 8 percent increase and Harrah’s with year-over-year growth of 5 percent.

During the tournament’s first week-end, Wynn Las Vegas continued to have the leading share of game usage on the Las Vegas Strip. Wynn Las Vegas‚ 6.5 percent usage share was significantly ahead of the much larger MGM Grand, which had a 5.5 percent usage share. Of the top 10 Strip casinos ranked by game usage during the first weekend of the NCAA tournament, MGM Mirage owns six and Harrah’s owns three.

During the tournament’s first week-end, Wynn Las Vegas had leading fair share (147 percent) of Strip game usage. The Rio and Harrah’s Las Vegas were tied for the Strip’s second-highest fair share, each with 145 percent. Harrah’s having two of the top three fair shares on the Las Vegas Strip is evidence of the effectiveness of its Total Rewards customer loyalty program, which allows Harrah’s to cross-market its Las Vegas properties with its net-work of regional casinos.

Matthew Jacob, senior casino and leisure analyst, has been covering the casino industry since 1996. Matthew does research on the casino and leisure sectors, and issues sector reports as well as reports on individual companies, such as Carnival Cruise Lines, Harrah‚s Entertainment, MGM Mirage, Royal Caribbean, Station Casinos and Wynn Resorts. Jacob was an associate casino and leisure analyst at UBS, where the Leisure team was ranked No. 1 by Institutional Investor Magazine in 2004, 2003, and 2002.

Majestic Research is a New York-based independent financial research firm that is revolutionizing equity research by gathering and analyzing massive amounts of proprietary industry data to provide unique, real-time, and highly accurate insights into how a sector or company is performing. Majestic, which is headed by former Instinet CEO Doug Atkin, uses technology to aggregate and analyze data encompassing millions of bits of information such as behavioral and transactional data on more than 50 million Web pages and produce insights that move stock prices. For more information, visit www.majesticresearch.com.