Posts tagged gaming expansion

Will Expansion Mean Contraction? | Global Gaming Business Magazine

In this month’s Global Gaming Business, I take a look at what impact the expansion of casino gaming has had on mature jurisdictions:

But since then, further expansion has put pressure on “mature” gaming markets like Atlantic City, Mississippi and Delaware, which have seen revenues decline. This raises the question of whether further expansion will do more harm than good.

To get a better appreciation of where we are heading, I compiled a set of data with total annual casino and racino gaming revenues for all 23 states, and slot data for Connecticut’s two tribal casinos.

The results? Since 2001, the Northeast has increased its overall share of the nation’s gaming win, rising from 24 percent to 30 percent. The South and Midwest have remained relatively constant, with some weakening in the South despite the addition of Florida racinos to the mix. And the West, thanks to Nevada, still is dominant, though the Northeast is catching up.

via Will Expansion Mean Contraction? | Global Gaming Business Magazine.

This is the question that everyone’s asking now–I hope that looking at some hard data will help answer the question.

Delaware starts table games

Table games are about to arrive in Delaware. From CBS-3:

Gambling on table games begins this week at the first of Delaware';s three racetrack-casinos.Low-limit test games begin Monday at Harrington Raceway & Casino, and the casino plans to go live with table gaming Friday for the start of the Memorial Day weekend, pending final approval from state inspectors.Dover Downs and Delaware Park also plan to begin offering table games such as poker in a few weeks.

Table games are being viewed as a boost for casinos competing with operations in bordering states, including Pennsylvania where table games begin this summer, and New Jersey’s Atlantic City. They are also expected to increase tax revenues to help Delaware balance its budget.

via Table Gaming Begins This Week In Delaware Casinos – cbs3.com.

I’d like to know what Atlantic City casinos have done to prepare for this. Increased marketing to Delaware patrons? Cut their losses and stopped marketing to Delaware at all?

Atlantic City casinos need to confront the reality of table game competition, since Pennsylvania will be joining in a few months. So whether it’s rule changes to make games more player-friendly, lower minimums, or friendlier dealers, Atlantic City casinos need to establish a competitive advantage in some way that will make gamblers drive that extra hour (or further) to play there.

Casino Nirvana in Arkansas

I was interviewed for this piece last week, and it’s interesting to see how it all came together. I’m glad I’m not the only one who didn’t think that this proposal made no sense. From Arkansas Business:

If a proposed constitutional amendment allowing Texas businessman Michael J. Wasserman to build casinos in Arkansas sounds like a license to print money, you don't know the half of it.

When Arkansas Business sent Wasserman's proposed amendment to gambling experts, they were gobsmacked by the proposal, which they described as so tilted toward the casino operator that it would be unprecedented, if not completely unrealistic.

via Casino Proposal Termed ‘Nirvana’ for Businessman – ArkansasBusiness.com.

Read the article–it is quite a fanciful proposal for casino legalization.

A casino Above

Russians no longer have to worry about being without casinos–a new one has opened up in the south of the massive county. From Fox News:

Half a year after Russia closed all of it's gambling casinos and slot-machine halls, the first new casino opened Saturday under a plan to limit legalized gambling to four comparatively remote areas.

About 500 people showed up for the opening of the Oracle casino in Above City, a gambling zone in southern Russia. But only about 100 of them appeared to be actually placing bets. The casino, in a large shed-like building in a snowy field, has about 200 slot machines and 10 table games.

The zone is about 60 miles from Rostov-on-Don, the nearest sizable city, and 120 miles from Krasnodar.

It's unclear how many Russians will be eager to travel long distances for a gambling excursion, but the casino's operators say they're convinced there's a market and they plan to start building a four-star hotel for gamblers this summer.

“There's a lot of gambling people here” in the region, said Valery Saparin, marketing director for casino operator Royal Time. “We hope that a lot of people will be drawn to us in the near future.”

Casinos mushroomed in Russia's cities after the 1991 collapse of the Soviet Union and slot machines quickly spread beyond gaming halls to shops and malls. The spread of gambling provoked distaste among many Russians over the flashy cars parked outside glittering casinos in Moscow and the harm that gambling can do to society.

All the gambling operations were closed July 1 under a law that was signed in 2006, but that many had expected never would be enforced.

The law limits legalized gambling to Azov City, the Kaliningrad exclave on the Baltic Sea, the Altai region of Siberia and the Primorsky region of Russia's Far East.

via Russia Casino Opens Under New Gambling Plan – IFOXNews.com.

I did a little tooling around the Internets and I couldn’t find any other mention of an “Above City, Russia.” But I did find that Azov City, which is mentioned in the last paragraph, is right where “Above City” should be according to its description in the second paragraph. Whether this is a funny proofreading error or another name for the Azov zone, I don’t know.

How about some fun casino math?

With only 200 machines, and ten tables, the casino has 270 or so gaming positions. With only 100 folks playing at its big opening, that looks like a 37% utilization rate. I have no idea what the benchmarks are for win per position per day in Azov, but they’d better be pretty high to justify building a four-star hotel.

More Florida casinos?

For several reasons, the political landscape in Florida has now shifted, and the expansion of commercial casinos is more likely than it has been in years. From the Miami Herald:

Ellyn Bogdanoff has given up. Once one of the most ardent opponents of gambling expansion in the Florida House, the Fort Lauderdale legislator is now ready to open the doors to full-fledged casinos because, she says, Florida “is losing the battle'' to the Seminole Tribe.

Backed by one of Las Vegas' largest gambling magnates, Bogdanoff wants to allow casinos at five to seven “destination resorts'' throughout the state through the Florida Gaming Equalization Act.

Under the plan, voters would first have to approve the casinos in local referendums. Then, a state gaming commission would grant permits for the convention-focused entertainment centers. Applicants could range from the big names of Vegas to Florida's parimutuel industry. The expansion would offer competition to the Seminole Tribe's Hard Rock casino resorts near Hollywood and Tampa.

Sheldon Adelson, chairman and CEO of the Las Vegas Sands Corp., told The Miami Herald/St. Petersburg Times on Friday that he is prepared to invest in bringing mega-convention centers and casinos to Florida that would include shopping centers, theaters, spas, hotels, restaurants and, yes, full casinos.

One possibility: a $3 billion resort casino that could create as many as 7,000 jobs, he said.

via Lawmakers push for full casinos in Florida resorts – Florida – MiamiHerald.com.

I did a little bit of consulting for a group that was investigating Florida gambling back in 2006, including a presentation before the House of Representatives’ Committee on Business Regulation, so this is an issue that I’m interested in. I’d want to look at the current numbers before saying anything concrete, but my analysis in 2006 showed that there was substantial room for growth in the state’s gaming industry. Since then, there has been expansion–Class III gaming, slots at tracks–and it would be interesting to run the numbers again to see how much more room for growth there still is. If nothing else, the past two years should have proven that the market isn’t infinite.

For those interested in the potential impacts and issues that the “mega-resorts” might have in Florida, I humbly recommend two books: my own Suburban Xanadu (particularly the last chapter), and Eadington and Doyle’s Integrated Resort Casinos.

AC had a bad 2009

The Atlantic City gaming numbers are in, and 2009 was definitely not pretty. From the AC Press:

Casino revenue plunged for the third straight year in 2009, falling below $4 billion for the first time since 1997 as the soft economy and competition from neighboring slot parlors continue to erode the Atlantic City market.

Year-end figures released today by the New Jersey Casino Control Commission show that revenue from slot machines and table games declined 9.8 percent in December and fell 13.2 percent for the entire year for total winnings of $3.9 billion.

Analysts predict there will be no recovery in 2010 because of the persistently weak economy and even fiercer competition from the Pennsylvania and Delaware slot parlors. Both states will be adding Atlantic City-style table games this year in a major expansion of their gambling industry.

Atlantic City has been on the decline since peaking at $5.22 billion in revenue in 2006. Revenue slipped 5.7 percent to $4.92 billion in 2007 and was down 7.6 percent to $4.55 billion in 2008.

In contrast to Atlantic City, Pennsylvanias gaming market posted a 28.1 percent jump in December slot revenue, thanks to the grand opening of the Sands Casino Resort in Bethlehem and the Rivers Casino in Pittsburgh in 2009.

via Atlatnic City casino revenue off 13%, 3rd straight year of decline. – pressofAtlanticCity.com : Latest News.

You can check the Atlantic City casino stats page to verify that, indeed, Atlantic City has retreated to 1997 revenue levels.

Let me put that in a different way. The last time casinos made this much (or little), Bally’s Wild Wild West was the latest and greatest thing on the Boardwalk. Twelve years of growth–factoring in everything from the opening of the Borgata to expansions at the Taj, Tropicana, and Harrah’s–has been wiped out.

I’ve always been opposed to talk of a “death spiral” in my hometown, but it should be clear at this stage that the city needs some bold, dramatic action to turn things around.

If you want to read more about Atlantic City, check out Part II of my brief history of the Tropicana in the month’s Casino Connection. Enjoy.

Morality, economics, and gambling expansion

I’ve got a new column in the LVBP, about the dubious morality (and even more dubious economics) of many states that legalize gambling:

There's a paradox here: Many states legalize gambling only to bring in revenue in lieu of raising taxes. When their citizens can't generate the kind of tax revenues state governments can't do without, gambling is the obvious fix. The only problem is, when people aren't spending on other things, they're not going to be gambling much, either.The whole model of legalizing for revenues and revenues alone is a classic case of putting the cart before the horse.

via Las Vegas Business Press :: David G. Schwartz : States that legalized gambling for revenue did so for the wrong reason.

Read the whole piece if you like. What I’m doing is carrying the typical argument that “this is a business like any other” to its logical conclusion. If it really is, then artificially limited the market does everyone except a select few a great disservice.

Of course, I’m not the first person to say this. Peter Collins said it with a great deal more wit in his Gambling and the Public Interest.

Shifting mores in Mass

Massachusetts used to have a reputation as a haven for blue laws–and bluenoses–but gambling is gaining in popularity. From Boston.com:

Three years ago, you couldn’t even buy a six-pack of beer on Sunday in most Massachusetts cities and towns – and now the governor is proposing not just one but three casinos.

Despite some lingering vestiges of a Puritan blue law culture that brought “banned in Boston” to the nation’s vocabulary, Governor Deval Patrick’s willingness to embrace casinos represents a fundamental shift over the last generation in Bay State residents’ comfort level with the ethics and glitz of gambling.

Massachusetts, in fact, has been wading slowly into gambling for decades. In the 35 years since its founding as an alternative to Mob-run numbers rackets, the aggressively marketed state lottery has exploded into a $4 billion annual enterprise. The Massachusetts State Lottery Commission crossed a key line in 1993 when it began sponsoring electronic Keno games with drawings every five minutes that turned hundreds of bars, restaurants, and convenience stores into Keno parlors.

“You have to look at the state’s responsibility as being a great cheerleader for gambling, encouraging people to play Keno, buy scratch tickets, play Megabucks,” said state Senator Richard R. Tisei, a Wakefield Republican who backs Patrick’s casino plan.

Also, the opening of the Foxwoods Resort and Mohegan Sun Indian tribal casinos in southeastern Connecticut in 1993 and 1996 has allowed hundreds of thousands of Massachusetts residents to get their first direct taste of casino gambling.
Casino debate cultivates new attitude in Massachusetts – The Boston Globe

The question is: do changing public tastes drive changes in legislation, or does a more permissive gaming regime lead to increased gambling? Either way, it looks like gambling is becoming more popular–and more acceptable–in Massachusetts, along with many other states.

Gaming Expansion at G2E

I’ve finally gotten official word today: I’m moderating a panel at this year’s Global Gaming Expo. Here’s the session:

Gaming Expansion: Push and Pull Factors in 2008 and Beyond
Tuesday, November 11, 9:15 AM-10:15 AM
In recent years, gaming expansion has been inconsistent, with dramatic victories in Pennsylvania and Kansas, partial success in Florida, and rejection in Rhode Island. This panel will examine the factors that drive gaming expansion for suppliers, operators and states. In addition to handicapping the chances of continuing expansion, attendees will hear several viewpoints on the ongoing phenomenon.

Should be fun. Optimally, I’d like to have someone on the panel who’s opposed–or at least bearish–on continued expansion, but I’m not sure that someone against gambling expansion would go to a gambling industry conference. Still, I’m looking forward to it, and I encourage you to attend, if you’re going to G2E.

Garden Grove casino?

California Indian gaming is a $7 billion/year business already, but it would get substantially bigger, I think, if a casino popped up in the heart of Orange County. From the LA Times:

Even in a city that has entertained the most improbable of dreams, the latest plan to woo tourists and big bucks to Garden Grove is off the charts.

An Indian tribe has formally proposed building a Las Vegas-style casino complex just up the road from Disneyland in the latest and far and away most lavish plan for making Garden Grove a tourist destination.

The Gabrielino-Tongva Tribe’s proposal calls for two opulent casinos housing 7,500 slot machines, two upscale hotels, a 10,000-seat stadium and — the topper— a promise of a college scholarship for every high school graduate in Garden Grove.

The plan, submitted to the city this week, also promises $5.1 billion to the city over 30 years, payment of $100 million for infrastructure improvements within the city and nearly 10,000 permanent jobs.

“Everybody knows Disneyland is a huge tourist attraction and so are big Indian casinos,” said Jonathan Stein, who identifies himself as the CEO of the tribe. “Casinos just generate gobs and gobs of money, and everyone is going to benefit from this.”

But extravagant dreams have come in for hard landings before in this central Orange County city, which longs for identity and revenue but has grown weary of some of the dreamy pitches.

Tribe proposes Vegas-style casino in Garden Grove – Los Angeles Times

Seems like there are long, long odds on this actually happening, but it’s definitely something to think about.