Foot traffic in U.S. regional casinos was down one percent in December, according to a January 5 investor note from J.P. Morgan. Analyst Daniel Politzer extrapolated a gambling-revenue decline of 2.5 percent from the lower attendance.
Politzer blamed the declivity on inclement weather in the northeastern and midwestern United States. Hitherto, regional casino revenues had been up between three and five percent, depending on the month.
The analyst also suggested there would be a muted impact from New Year’s Eve, which fell on a Wednesday. Overall, fourth-quarter revenue was predicted to be up 1.4 percent, as opposed to a four percent hike in the third quarter.
“For regional casinos, we count weekend days as Fridays and Saturdays and have found that historically, [gross gaming revenue] on Fridays and Saturdays averages 1.8x that of Sunday-Thursday,” Politzer wrote, explaining his methodology. “Similarly, we believe the best way to look at GGR changes is on a weekend-adjusted basis, though there was no impact this month.”
As for the sequential slowdown in casino revenue, Politzer said it was as yet unclear to what extent it was driven by economic fundamentals, rather than by a decline in promotional activity. Even so, he saw scant risk to Wall Street forecasts, which had the gaming group up one to two percent in the fourth quarter.
Caesars Entertainment was projected at a two percent growth, while Penn Entertainment was predicted to be 1.5 percent higher and Boyd Gaming one percent more. MGM Resorts International was forecast to be flat, year over year, while Churchill Downs might see a three percent slowdown.