Ohio casinos cut Pa.’s take
PITTSBURGH – Casinos, racetracks and new ways to bet a buck are sprouting from Atlantic City to Pittsburgh to Cleveland, competing for gamblers’ dollars and siphoning each other’s profits in the process.
”Just as Pennsylvania took from New Jersey, Ohio is going to take away from Pennsylvania,” said Joseph Weinert, senior vice president of Spectrum Gaming Group, a gambling industry consultant in Linwood, N.J. ”It’s an arms race, of sorts.”
Pennsylvania surpassed Atlantic City with gross casino revenue of slightly more than $3 billion in 2011 to become the country’s second-largest gambling market behind Las Vegas. Gaming revenue from slots and table games in Pennsylvania casinos in 2012 grew to nearly $3.2 billion, while Atlantic City’s fell to $3 billion from a record $5.2 billion in 2006 – the year Pennsylvania opened its first casino.
The state has 11 casinos, and the 12th is slated to open this summer at Nemacolin Woodlands Resort in Fayette County.
But revenue from slot machines in Pennsylvania has been down for three consecutive months and four of the past five months compared with the previous year’s returns. Slots revenue dropped to $229.3 million in March, from $233.1 million in the same month last year. But the two months were the highest-grossing months ever for Pennsylvania, the Gaming Control Board said.
Although annual overall gaming revenue continues to grow in Pennsylvania largely because of the success of table games increasing competition from Ohio, Maryland and Delaware is having an effect, said Richard McGarvey, a gambling board spokesman.
”The amount of casinos that have come online in the past few years really changed the face of East Coast gambling,” he said.
Presque Isle Downs & Casino is feeling the brunt of increased competition in Western Pennsylvania. Gambling revenue at the Erie site dropped 18 percent for the last half of 2012 after the opening of Horseshoe Casino Cleveland in May.
Managers with MTR Gaming Group, which owns Presque Isle, could not be reached for comment.
March slots revenue at The Meadows Racetrack & Casino in North Strabane declined 5.4 percent from a year ago. March slots revenue at Rivers Casino on the North Shore increased 2.8 percent.
”It’s an ever-changing business,” said Craig Clark, Rivers’ general manager. ”You don’t like to see a decline, but when new markets open, customers will want to see it.”
Before the first of Ohio’s four casinos opened last year, Rivers drew about 8 percent of its customers from that state, Clark said. That figure now is about 5 percent.
To stay fresh, the 4-year-old casino added high-end table games and slot machines, soundproofed its poker room and will expand its Players Club area, Clark said. In February, Rivers hosted its first NASCAR event, featuring Jeff Gordon.
”That’s where the convenience factor and customer loyalty starts paying off when there’s more competition,” Clark said.
The Meadows continues to make improvements, said Sean Sullivan, vice president and general manager.
The Washington County property added a $14 million parking garage and installed carpeting at a cost of more than $1 million, added high-end slots and table game rooms, and improved its player rewards program and marketing.
Management is working with Horizon Properties to develop ”The Street at The Meadows,” a 22-acre retail center, and is finalizing a contract to build a hotel. It is designing a multipurpose events center that could host concerts, weddings and conventions, Sullivan said.
”Gambling to me is just another form of entertainment,” he said. ”If you are just a casino, your market shrinks. That’s why you want to be an entertainment center.”
The tri-state gaming industry might be getting crowded, but analysts say ther’s room in the market for more.
One company is betting on two projects within 20 miles of each other.
Penn National Gaming Inc. plans to build a $125 million Hollywood Slots at Mahoning Valley Race Course in Austintown, featuring a one-mile thoroughbred track and slot-style video lottery terminals. The gaming company, one of the country’s largest, reportedly is negotiating to help finance and operate another racetrack / casino, Valley View Downs in Lawrence County, Pennsylvania.
A Penn National spokesman declined to discuss its talks with Endeka Entertainment, the Philadelphia group behind the $400 million Valley View Downs project. The facility would include a full casino and harness racing.
Endeka officials did not return messages seeking comment.
Questions and delays over financing have dogged the project. But Lawrence County officials on Tuesday could select Citigroup to underwrite their $50 million share of project financing. Endeka has until May 31 to secure at least $170 million in financing to build the facility and keep its harness racing license and the ability to secure one of Pennsylvania’s last casino licenses. The group has not yet applied to the Gaming Control Board for a casino license, McGarvey said.
“We believe there is sufficient market for both of them,” Penn National spokesman Bob Tenenbaum said.
A gaming industry analyst with Fitch Ratings in New York said he isn’t surprised Penn National could be involved with two facilities in a market unlikely to draw many customers from outside a 50-mile radius.
“Penn National has a history of hedging against competition,” said Alex Bumazhny, director of the rating agency’s gaming, lodging and leisure group. “They figure if somebody is going to open another casino there anyway, it might as well be you.”