Convention attendance lifted Las Vegas traffic in September.

The Las Vegas Convention and Visitors Authority said yesterday that three million people visited Sin City in September, a 3.3% increase over September 2008, and the first year-over-year monthly improvement since May 2008. Although there were 95 fewer conventions during the month, convention attendance was up by 12.2%, representing 13.3% of total traffic.

As third quarter earnings reports indicated, casino patrons aren't gambling like they used to, so while improved traffic to the city is a positive data point, the sector isn't out of the woods yet.

A look at the Casino Stocks Index's six-month chart shows that the sector has underperformed the S&P 500 for the period. High volatility adds an additional risk factor for longer-term investors, though traders are likely enjoying the swings.

According to The Wall Street Journal, Las Vegas Sands (NYSE: LVS - News) will resume construction on a second Macau project in January of 2010. Hong Kong-listed Galaxy Entertainment (OTC: GXYEY - News) plans to launch its own 5.9 million-square foot Macau resort in 2011. The project was delayed last November because of market conditions, according to The Journal's report.

Whether in Macau, Las Vegas, Atlantic City, or elsewhere, a pick-up in gambling could mean great things for the casino sector, which has struggled to recover after the recession. The entire sector is positive today, with Boyd Gaming (NYSE: BYD - News), Empire Resorts (NASDAQ: NYNY - News), and Pinnacle Entertainment (NYSE: PNK - News) leading the way.

Melco Crown Entertainment (NASDAQ: MPEL - News), Century Casinos (NASDAQ: CNTY - News), and recently de-listed Riviera Holdings (OTC: RVHL - News) are still in negative territory over the last week.

As of this writing, the Casino Stocks Index is just shy of the 50 worst-performing tickerspy Indexes over the last month, down by -5%.

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