US-China Trade War May Be Hurting Las Vegas Strip Baccarat Revenues
Posted on: November 11, 2018, 08:00h.
Last updated on: November 9, 2018, 10:51h.
Is Las Vegas starting to feel the pinch from the US-China trade war? It may be a coincidence, but revenues from baccarat — the game favored by the Chinese high-roller, and a key driver of growth in the Las Vegas casino sector — have dipped on the Strip since July, when US President Donald Trump imposed billions of dollars in tariffs on Chinese imports.
Meanwhile, the National Foreign Trade Council (NFTC) reports that business groups, tourists, and students from mainland China are visiting the US in lower numbers. Passenger figures from direct flights from China to Las Vegas have also fallen each month since July.
Domestically, the economy is good, which is reflected in the healthy performance of games Americans like to play, like slots. Between July and September, slot revenue grew 2 percent in Las Vegas, while baccarat fell 18 percent.
During the recession the situation was reversed and baccarat dollars from Asian tourists provided a much-needed boost to the casinos’ bottom lines when native gamblers tightened the purse strings and stayed at home.
Baccarat became an important segment in Nevada after US operators established operations in Macau in the mid-2000s and were able to build up player lists of Chinese high-rollers. Since their Vegas operations paid less tax, it made sense to lure the VIPs to Las Vegas, even it meant chartering a private jet or two.
Vanessa Sciarra, VP of Legal Affairs and Trade & Investment Policy at the NFTC, said this week the trade war is unlikely to do any serious damage to Nevada’s economy, but she believes the effect was real and represented a “loss of irreplaceable dollars for some time, maybe a long time.”
“I think the numbers are going to keep trailing down and I think you guys are going to feel it,” she told Nevada Current.
One of the dangers here is that these trade disputes tend to spill over to other areas,” Sciarra said. “Technically speaking, trade and tourism have nothing to do with each other, but the reality is we think the Chinese are either telling people not to go to the United States, denying their visas to come here, or Chinese people don’t want to come here because they are afraid to come.”
According to the Las Vegas Convention and Visitors Authority, China represents around 4.5 percent of international visitation. It’s a relatively small number, but baccarat is a game played for high-stakes, where a lot is wagered by a few.
If Las Vegas baccarat does turn out to be lasting collateral damage in the trade war, casinos will likely find other ways to plug the hole, but they won’t be popular, as critics of paid parking and high resort fees can attest.