A Interval of Adjustment
Oops! That giant hissing seem is the gaming balloon that had been expanding over the years, slowly and gradually losing air. But, it has not been a tide that decreased all ships however, as some emerging and increasing gaming jurisdictions showed powerful expansion in 2008.
All round, the business and racetrack on line casino sectors (excluding Indian gaming), seasoned a three.five % decrease in gaming revenues for 2008, creating a overall of $36.two billion, down some $800 million from 2007. It was the Racino sector that has tempered this drop, as they showed a acquire of almost $1 billion in 2008, thereby bringing the Commercial sector market place decrease to $1.8 billion, or 6.7 per cent. Nevada was the largest loser in 2008, dropping virtually $one.3 billion, a lot more than half of which stemmed from the Las Vegas Strip segment.
For the most portion, casino operators had been caught fairly flat-footed by the extent of the 2008 income downturn, as it was not until the third and fourth quarters when it genuinely nosedived. Riding the crest of yr above 12 months market place development across the country and the availability of sufficient credit history and equity funds, new design and growth proliferated in modern years. Today, confronted with the realities of declining, or at very best stagnant demand from customers, several of these projects are now regarded in excess of-leveraged and/or over-sized. As a result several gaming firms are attempting to renegotiate their personal debt – made more tough by decrease valuations – whilst also paring down operational costs. The latter has turn into a very problematic conundrum when working with the competitors, especially in those jurisdictions that are now vying for market shares with new emerging casino initiatives in neighboring areas. A matter we examine far more fully in the Condition by Condition analysis section of this publication.
As a result of these conditions the gaming market landscape is now strewn with impending fatalities. Amongst the a lot more noteworthy troubled corporations are Station Casinos, Empire Resorts, Harrah’s Enjoyment, Greektown Holdings, Legends Gaming, Tropicana Leisure, Herbst Gaming and the checklist grows each week.
“How long will these economic situations persist, and are we at the base yet?” are queries no 1 seems to be answering nevertheless. What is distinct nevertheless is that most gaming jurisdictions will have to understand how to offer with a smaller pie.
This evaluation involves only gaming revenues of licensed casinos and pari-mutuel shops that supply casino video games, and not Indian gaming functions, card rooms, or tiny non-on line casino kind slot spots. The complete article, like revenue tables is obtainable on our world wide web web page.
A important factor that appears to have arisen from the ashes of this recent craze is that many on line casino initiatives ended up just also massive to help on their own. The input, in phrases of expense bucks, was not proportional to the output, in phrases of web profit soon after debt provider, compared to formerly reached outcomes. ข่าวฟุตบอลต่างประเทศ and/or larger is not usually greater. Seeing the increase in non-gaming revenue at the Las Vegas Strip resorts, gave impetus to the development of much more complete features in several other jurisdictions. The flaw in this approach nonetheless is that the charges associated with widening industry penetration and occasioned-use, are considerably greater than individuals incurred to entice the foundation market place.
As daytripper marketplaces become a lot more aggressive, casino venues will have to count more and more on their in-home lodge patrons, and dimension their properties (and anticipations) accordingly. While Steve Wynn commenced a main craze in making up-market place mega-locations, there just was not adequate demand from customers on the Strip to warrant the many other equivalent projects that followed that aimed at the exact same market.
The trick is to strike a happy medium in undertaking configurations which of course require much less of a ‘seat-of-pants’ approach, and 1 that is a lot more examined. A shameless plug for development consultants like ourselves.
Other Gaming Activities
Though there are no released comprehensive info of American Indian gaming revenues, anecdotal evidence seems to advise that this section has been as challenging hit as the Professional sector. The two Connecticut Indian gaming installations report slot income of $1.six billion in 2008, symbolizing a drop of about seven p.c, or almost $114 million, far more than doubling the three.5 p.c fall from the 12 months just before. This market is seemingly still reeling from the ripple-influence of a casino growth in Rhode Island, and the opening of slot functions in New York and Pennsylvania.
The Arizona Section of Gaming studies that contributions based on a gaming earnings formulation from the state’s 23 Indian gaming casinos, have been declining each and every quarter in 2008 when compared to the earlier calendar year reducing .8 percent in the 1st quarter, seven.five percent in the second quarter, 9.five per cent in the third quarter, and 16.1 per cent in the fourth quarter.
Some SEC reporting Indian gaming homes report related decreases. Seneca Gaming, which operates three Class III casinos in upstate New York, reports that while calendar 12 months 2008 confirmed an nearly 2 p.c growth fee in gaming revenues, there was an eight.7 p.c decline in the third quarter and an nearly 10 percent drop in the fourth quarter of 2008, in contrast with 2007. Gaming earnings developments at nearby Niagara Falls, Ontario ended up down one.5% in 2008 when compared with 2007.
It truly is been a blended-bag for point out lotteries across the region. The North American Association of Condition & Provincial Lotteries stories that U.S. lotteries produced a complete of $sixty.six billion in revenue in fiscal 2008, up about 3 per cent from the prior yr but some jurisdictions reported decreases, most notably California, which showed an 8 percent drop. Inasmuch as some of these states are on numerous fiscal 12 months finishes, it would seem that the info does not reflect the effect of 3rd and/or fourth quarter outcomes.
In accordance to knowledge presented by Equibase, horse racing pari-mutuel revenues keep on their downward spiral, slipping 7 percent to $13.seven billion in 2008, vs . $14.7 billion in 2007.
Planned & Proposed New Expansions
As earlier mentioned, it has been new gaming jurisdictions that have spawned considerably of the growth in once-a-year on line casino/racino revenues more than the many years, and their effect is apt to continue into the near potential.
Miami Dade voters authorized a ballot issue that enables every single of a few pari-mutuels to have a on line casino facility of up to two,000 slot equipment. The Flagler Dog Monitor and Miami Jai-Alai are reportedly arranging opening in late 2009 or early 2010, while the Calder set up in Miami Gardens has nevertheless to declared its plans. There are many other proposals getting regarded that would additional grow on line casino advancement throughout the point out.
The state finally got about to reissuing its tenth license, late in December, 2008 awarding it to Midwest Gaming & Entertainment, LLC for a one,200+ sport casino situated in Des Plaines just east of O’Hare. The new facility is not most likely to open until 2010. There has also been some discussion about making it possible for an improve in for every place gaming positions and slots at racetracks, despite the fact that neither initiative appears to have any traction at this time.
The state’s expanded lottery software that permits for the advancement of 4 on line casino gaming zones and slots at present horse and dog tracks seems mired, as only a single facility is presently below development, whilst a few other proposals were rescinded. The only bidder on the Cherokee County deal, claimed it could not contend with the new Quapaw tribal casino in Oklahoma, which is situated so close to the condition line that its parking great deal is in Kansas. The Boot Hill On line casino Vacation resort in Dodge City is planing a December 2009 opening with 575 slots and 10 table games, along with a second stage because of to open in 2011 with 875 slots and twenty table game titles. The condition has extended the application method for the other three zones until finally April, 2009.
There is even now a whole lot of ‘jockeying’ likely on, but the prospect of as a lot of as eight slot parlors and racinos seems to be again on the entrance-burner, but most likely not fixed throughout the recent legislative session.
There are about 14,000 rooms scheduled to come on line in 2009, with the most recent becoming the 390 room M Resort in Henderson. There are expansions underway at each Caesars Palace and Tough Rock and new hotels contain two elements of the Metropolis Center undertaking, and the Fountainebleau.
Pinnacle Entertainment’s new casino development projects in Baton Rouge and Lake Charles, while delayed, are reported to nevertheless be on-observe for opening this yr and/or early 2010.
There is a monthly bill under consideration that could far more than double Penn National’s slot equipment to three,000, as properly as a proposal that would eliminate the restriction that slots be situated inside of five miles of the monitor. Scarborough Downs, which has been unsuccessful in convincing regional inhabitants to allow slots, may be considering moving to a a lot more hospitable town.
A referendum was approved in November, 2008 that enables for the development of 5 casinos with a overall of 15,000 slots, and now the bidding war is afoot though it is not as intense as the condition experienced expected.
Grand Soleil Casino Resort in Natchez had been slated to open in 2008, but has operate into numerous financing issues and whilst the hotel part is open up, the riverboat is noted to open up in the Spring of ’09. Harrah’s Margaritaville Casino in Biloxi, while scaled back again considerably, is even now on track to open up this yr.
Massachusetts, a sleeping-large in terms of marketplace likely, is still maneuvering to open up casinos/racinos, and/or a Course III Indian gaming facility, but cannot seem to be to muster the political support. A modern study completed by Dartmouth College estimates that Massachusetts resident put in a lot more than $920 million very last calendar year at Connecticut casinos and slot device parlors in Rhode Island and Maine. The New Hampshire legislature lately declined an alternative to create casinos, nonetheless the subject is likely to be revisited, specifically if Massachusetts decides to go forward. There are also tries in Maine to reconsider its choices.
Atlantic City’s casinos have imposed their political will on staving off the addition of slot equipment at racetracks by recently agreeing to continue augmenting purses with an extra tax. The governor however, has appointed a new panel to examine the state’s sagging racing program which ironically, can only be preserved by making it possible for the tracks to have slot devices especially at the Meadowlands. (See The Nor’easter Squeeze part)
Just when it appeared as if Aqueduct’s 4,500 VLT facility would ultimately be developed, the successful bidder indicated an incapacity to make the necessary $370 million fee, citing the existing lending climate, and throwing the task back into the lap of the governor. Although the market place desire in the spot could be considered very powerful, the prospect of further competitiveness from nearby Belmont could have an effect on Aqueduct’s underlining financial feasibility, specially contemplating that a bit significantly less than thirty% of the web win is retained by the operator.
Programs to relocate Monticello Raceway into a vacation resort sophisticated are being reconsidered probably owing to the two the probable opening of at least one or possibly two racino operations in the NY metro location, and the resurfacing of initiatives to advancement a Course III Indian gaming facility in the Catskills.
But an additional gaming proposal is currently being place forth in Ohio, following very last year’s edition was turned down by the voters. This program calls for one casino every single in the state’s largest metropolitan areas: Cleveland, Columbus, Cincinnati and Toledo. There would be a minimum investment required of $250 million, as well as an first licensing charge of $fifty million, and a 33 p.c tax on gaming earnings.
The Sands in Bethlehem is due to open in the Spring of ’09, and the new Rivers venture in Pittsburgh is predicted to be operational in August, ’09 whilst Philadelphia’s two slot amenities even now wallow in a political mire, but are anticipated to start off construction this 12 months.
The Lodge at Deadwood is slated to open up in the Drop of 2009, and incorporate 300 online games, 140 rooms and a broad assortment of amenities.
Legislators are proposing a voter referendum that would amend the point out constitution to enable on line casino gambling in specified areas, as nicely as allow gambling on American Indian lands in Texas and at current racetracks.
The Greenbriar, the state’s venerable resort facility has filed for personal bankruptcy, but has a new suitor in Marriott Lodges, who have reportedly tendered an supply. Condition authorities has proffered the notion of allowing the vacation resort to offer you on line casino online games, but this hard work is in too early a stage to have any traction 1 way or one more.
A current Supreme Courtroom ruling that restricts the taking of lands into believe in on behalf of federally recognized American Indian tribes has additional stymied some new Course III gaming projects throughout the place. Moreover, there had been eleven Indian on line casino tasks rejected by the DOI final calendar year due to the fact of its new rule that casinos must be in close proximity to ample to a reservation that tribal members can operate at them. It has been suggested that the new Obama administration may be much more sympathetic to the development of Indian gaming assignments, but this problem has but to be addressed.
Meanwhile, there are other Course III tasks in the various phases of advancement. The Seneca on line casino task in Buffalo, NY, while functioning a modest short term facility, has delayed an presently under design long lasting facility till the market place rebounds. They have also expressed an fascination in establishing a on line casino in the Catskills. The point out gaming compact with Seminoles in Florida is currently being challenged, and could affect their programs for larger assignments. There are new Indian gaming tasks established to open in Michigan and Oklahoma this calendar year, and other people are in the preparing stage. Texas could allow the reopening of Indian gaming services and enable other location and there are plans afoot by the Navajos in Arizona to construct additional casinos. California is poised to open up two to 3 new Class III casinos in 2009/10.
The Nor’easter Squeeze
Total gaming revenue in Atlantic Town has declined 7.six percent, from $four.nine billion in 2007 to $4.five billion in 2008 with decreases continuing into 2009, as the metropolis is discovering alone in an extreme comp-war with the Pennsylvania venues. At one particular time the only casinos in the Northeast were found in Atlantic Town, where it appeared as if it may well in fact even eclipse the Las Vegas Strip’s yearly gaming revenues.
Slowly even so its market place share was becoming encroached on, very first by the growth of a huge Class III gaming operation in Connecticut, and then one more slots operations in Rhode Island, and then video clip lottery terminals at New York racetracks, racinos in West Virginia and Delaware, and most recently Pennsylvania.
Now, with the planned opening of slot functions in Maryland, the impending opening of a new on line casino in Bethlehem, PA, and ultimately two operations in Philadelphia, the noose is tightening about Atlantic City’s long term prospective customers. It’s reliance on working day-trippers lulled it into a false perception of security, and it now finds itself having to redefine its mission statement to “location resort.”
The only difficulty with this method nonetheless is that it is unwell-geared up to pull it off. For all intents and needs, Atlantic Metropolis is below-roomed and/or more than-gamed. There is simply not adequate day-tripper market place to go about, and their successful buying and selling location is tightening, as the peripheral populations northward now/will have much more ready access to a widened source in New York (Yonkers, and soon at Aqueduct and perhaps Belmont), westward in Pennsylvania and southward in Delaware, West Virginia and Maryland.
Other than the ocean accessibility, the city’s only true competitive advantages are its hotel capability and the availability of table video games, though the latter is probably to eventuate in Pennsylvania, and potentially Delaware. In get to sufficiently compete as a spot vacation resort the town demands to develop added visitor rooms and not necessarily gaming capacity. By comparison, the Las Vegas Strip properties – real gaming places, in that they do not have much of a working day-vacation market, other than for the ‘locals’ – have an average of .87 gaming positions per guest place while Atlantic City’s average is two.74 positions for each guest place.
It is not a coincidence that Atlantic City’s two premier resorts, the Borgata and Harrah’s Marina, equally of which extra new rooms in 2008, have been the least impacted by the newest downturn. The Borgata knowledgeable a gaming revenue fall of one.six %, whilst Harrah’s Marina noted a four.nine percent enhance in contrast to 2007. Moreover, the hardest strike venues, particularly the AC Hilton, Resorts and the Trump Marina, also have the smallest quantity of rooms. In the meantime some of the venues are teetering on viability, including the the Trump houses and Resorts with the hoped for sale of the Tropicana has been additional delayed, and shedding valuation.
With a regular increase in gaming revenues via 2006, the city appeared prime for further development, which precipitated organizing for 4 new vacation resort assignments, every single of which have now been indefinitely delayed. Revel Amusement Group’s $two.5 billion undertaking continues to be an iron skeleton, Pinnacle Leisure has announced it may well find to sell its razed Sands site, MGM Mirage has shelved its casino programs, and Penn Countrywide seems to have stopped its pursuit of the Bader Subject airport internet site.