2008 National Industrial Casino & Racino Gaming Revenue Analysis

A Interval of Adjustment

Oops! That large hissing sound is the gaming balloon that had been developing above the years, slowly shedding air. But, it has not been a tide that decreased all ships however, as some rising and increasing gaming jurisdictions confirmed powerful progress in 2008.

Total, the industrial and racetrack on line casino sectors (excluding Indian gaming), experienced a 3.five per cent drop in gaming revenues for 2008, making a whole of $36.two billion, down some $800 million from 2007. It was the Racino sector that has tempered this fall, as they confirmed a acquire of nearly $1 billion in 2008, therefore bringing the Professional sector market place decrease to $1.8 billion, or six.seven percent. Nevada was the greatest loser in 2008, dropping practically $1.3 billion, far more than 50 percent of which stemmed from the Las Vegas Strip segment.

Hunkering Down

For the most part, on line casino operators ended up caught reasonably flat-footed by the extent of the 2008 profits downturn, as it was not till the 3rd and fourth quarters when it really nosedived. Using the crest of year over yr marketplace growth across the country and the availability of ample credit score and equity funds, new building and growth proliferated in recent several years. Right now, confronted with the realities of declining, or at greatest stagnant demand, several of these tasks are now regarded more than-leveraged and/or over-sized. As 바카라사이트 gaming firms are making an attempt to renegotiate their debt – manufactured much more tough by reduce valuations – while also paring down operational costs. The latter has turn into a really problematic conundrum when dealing with the competitors, especially in people jurisdictions that are now vying for market place shares with new emerging casino tasks in neighboring locations. A matter we talk about much more totally in the Condition by Point out investigation segment of this publication.

As a outcome of these situations the gaming industry landscape is now strewn with impending fatalities. Amongst the a lot more noteworthy troubled corporations are Station Casinos, Empire Resorts, Harrah’s Amusement, Greektown Holdings, Legends Gaming, Tropicana Entertainment, Herbst Gaming and the listing grows each and every week.

“How long will these economic conditions persist, and are we at the bottom however?” are questions no 1 seems to be answering but. What is clear however is that most gaming jurisdictions will have to discover how to deal with a more compact pie.

Note:
This investigation involves only gaming revenues of certified casinos and pari-mutuel shops that supply on line casino game titles, and not Indian gaming functions, card rooms, or small non-on line casino type slot locations. The entire report, like profits tables is offered on our world wide web page.

Enter/Output Model

A crucial factor that appears to have arisen from the ashes of this current craze is that many on line casino initiatives had been just also large to help them selves. The enter, in conditions of investment decision dollars, was not proportional to the output, in conditions of net revenue after debt services, in contrast to earlier reached final results. A lot more and/or even bigger is not constantly much better. Observing the rise in non-gaming profits at the Las Vegas Strip resorts, gave impetus to the growth of far more complete features in a lot of other jurisdictions. The flaw in this approach however is that the fees associated with widening marketplace penetration and occasioned-use, are considerably greater than those incurred to attract the foundation marketplace.

As daytripper markets grow to be far more competitive, casino venues will have to depend far more and a lot more on their in-home resort patrons, and size their houses (and expectations) accordingly. Even though Steve Wynn began a key craze in generating up-market place mega-locations, there simply was not sufficient demand from customers on the Strip to warrant the many other comparable initiatives that followed that aimed at the same specialized niche.

The trick is to strike a happy medium in project configurations which of training course need significantly less of a ‘seat-of-pants’ strategy, and one particular that is more analyzed. A shameless plug for growth consultants like ourselves.

Other Gaming Actions

Despite the fact that there are no released comprehensive information of American Indian gaming revenues, anecdotal evidence seems to recommend that this section has been as hard strike as the Industrial sector. The two Connecticut Indian gaming installations report slot income of $one.6 billion in 2008, symbolizing a drop of about 7 p.c, or almost $114 million, much more than doubling the 3.five percent drop from the 12 months before. This market place is evidently still reeling from the ripple-influence of a casino enlargement in Rhode Island, and the opening of slot functions in New York and Pennsylvania.

The Arizona Section of Gaming reviews that contributions primarily based on a gaming income method from the state’s 23 Indian gaming casinos, have been declining every quarter in 2008 compared to the earlier yr lowering .eight p.c in the initial quarter, 7.5 percent in the next quarter, nine.five % in the third quarter, and 16.one p.c in the fourth quarter.

Some SEC reporting Indian gaming houses report equivalent decreases. Seneca Gaming, which operates 3 Course III casinos in upstate New York, studies that whilst calendar calendar year 2008 confirmed an virtually two % development price in gaming revenues, there was an eight.7 % drop in the third quarter and an virtually 10 percent decrease in the fourth quarter of 2008, in comparison with 2007. Gaming revenue developments at nearby Niagara Falls, Ontario have been down one.5% in 2008 when compared with 2007.

It really is been a blended-bag for state lotteries across the country. The North American Association of State & Provincial Lotteries stories that U.S. lotteries created a total of $sixty.6 billion in sales in fiscal 2008, up about three % from the previous 12 months however some jurisdictions described decreases, most notably California, which showed an 8 p.c drop. Inasmuch as some of these states are on numerous fiscal year ends, it would seem that the data does not reflect the affect of 3rd and/or fourth quarter benefits.

According to info supplied by Equibase, horse racing pari-mutuel revenues continue their downward spiral, slipping 7 percent to $13.seven billion in 2008, as opposed to $fourteen.7 billion in 2007.

Prepared & Proposed New Expansions

As formerly noted, it has been new gaming jurisdictions that have spawned significantly of the expansion in once-a-year casino/racino revenues over the many years, and their affect is apt to proceed into the in close proximity to future.

Florida
Miami Dade voters authorized a ballot problem that permits every of three pari-mutuels to have a on line casino facility of up to 2,000 slot machines. The Flagler Puppy Observe and Miami Jai-Alai are reportedly arranging opening in late 2009 or early 2010, although the Calder set up in Miami Gardens has nevertheless to introduced its strategies. There are numerous other proposals currently being deemed that would more grow on line casino advancement during the state.

Illinois
The point out last but not least acquired all around to reissuing its tenth license, late in December, 2008 awarding it to Midwest Gaming & Entertainment, LLC for a 1,two hundred+ sport on line casino located in Des Plaines just east of O’Hare. The new facility is not likely to open up until 2010. There has also been some discussion about making it possible for an improve in for every spot gaming positions and slots at racetracks, despite the fact that neither initiative appears to have any traction at this time.

Kansas
The state’s expanded lottery system that allows for the development of four on line casino gaming zones and slots at present horse and dog tracks appears mired, as only a single facility is presently underneath building, although 3 other proposals have been rescinded. The only bidder on the Cherokee County deal, claimed it could not contend with the new Quapaw tribal on line casino in Oklahoma, which is located so near to the condition line that its parking lot is in Kansas. The Boot Hill On line casino Resort in Dodge Town is planing a December 2009 opening with 575 slots and ten table video games, alongside with a next phase owing to open up in 2011 with 875 slots and twenty desk games. The state has prolonged the application process for the other 3 zones until finally April, 2009.

Kentucky
There is even now a whole lot of ‘jockeying’ likely on, but the prospect of as many as 8 slot parlors and racinos seems to be back on the front-burner, but very likely not solved for the duration of the present legislative session.

Las Vegas
There are about 14,000 rooms scheduled to occur on line in 2009, with the most recent becoming the 390 place M Resort in Henderson. There are expansions underway at each Caesars Palace and Challenging Rock and new lodges include two parts of the City Center project, and the Fountainebleau.

Louisiana
Pinnacle Entertainment’s new casino advancement initiatives in Baton Rouge and Lake Charles, while delayed, are documented to even now be on-track for opening this year and/or early 2010.

Maine
There is a monthly bill beneath thing to consider that could much more than double Penn National’s slot machines to three,000, as effectively as a proposal that would take away the restriction that slots be positioned inside five miles of the observe. Scarborough Downs, which has been unsuccessful in convincing regional inhabitants to let slots, may be considering transferring to a far more hospitable town.

Maryland
A referendum was authorized in November, 2008 that permits for the improvement of five casinos with a complete of 15,000 slots, and now the bidding war is afoot though it is not as intensive as the state had predicted.

Mississippi
Grand Soleil Casino Resort in Natchez had been slated to open up in 2008, but has run into numerous financing issues and although the lodge portion is open up, the riverboat is noted to open up in the Spring of ’09. Harrah’s Margaritaville On line casino in Biloxi, while scaled again relatively, is still on track to open this 12 months.

New England
Massachusetts, a sleeping-large in terms of marketplace prospective, is even now maneuvering to open up casinos/racinos, and/or a Class III Indian gaming facility, but can’t seem to muster the political help. A latest review accomplished by Dartmouth University estimates that Massachusetts resident invested more than $920 million final yr at Connecticut casinos and slot equipment parlors in Rhode Island and Maine. The New Hampshire legislature lately declined an choice to build casinos, nonetheless the topic is probably to be revisited, specifically if Massachusetts decides to go ahead. There are also attempts in Maine to reconsider its choices.

New Jersey
Atlantic City’s casinos have imposed their political will on staving off the addition of slot devices at racetracks by recently agreeing to continue augmenting purses with an additional tax. The governor even so, has appointed a new panel to review the state’s sagging racing plan which ironically, can only be preserved by permitting the tracks to have slot devices specially at the Meadowlands. (See The Nor’easter Squeeze area)

New York
Just when it appeared as if Aqueduct’s four,500 VLT facility would finally be produced, the profitable bidder indicated an lack of ability to make the required $370 million charge, citing the existing lending local weather, and throwing the venture back into the lap of the governor. Although the market need in the location could be regarded as fairly robust, the prospect of further competitiveness from nearby Belmont could have an affect on Aqueduct’s underlining financial feasibility, especially considering that somewhat less than thirty% of the net win is retained by the operator.

Programs to relocate Monticello Raceway into a vacation resort intricate are getting reconsidered perhaps owing to the two the probable opening of at the very least one or probably two racino operations in the NY metro region, and the resurfacing of initiatives to development a Course III Indian gaming facility in the Catskills.

Ohio
However yet another gaming proposal is currently being place forth in Ohio, right after final year’s model was turned down by the voters. This prepare phone calls for one particular casino each in the state’s biggest metropolitan areas: Cleveland, Columbus, Cincinnati and Toledo. There would be a minimum investment decision needed of $250 million, as well as an first licensing price of $50 million, and a 33 per cent tax on gaming revenue.

Pennsylvania
The Sands in Bethlehem is because of to open up in the Spring of ’09, and the new Rivers task in Pittsburgh is predicted to be operational in August, ’09 even though Philadelphia’s two slot facilities nonetheless wallow in a political mire, but are anticipated to start off development this calendar year.

South Dakota
The Lodge at Deadwood is slated to open in the Tumble of 2009, and incorporate 300 video games, one hundred forty rooms and a broad selection of amenities.

Texas
Legislators are proposing a voter referendum that would amend the condition structure to enable on line casino gambling in selected regions, as effectively as allow gambling on American Indian lands in Texas and at existing racetracks.

West Virginia
The Greenbriar, the state’s venerable vacation resort facility has filed for personal bankruptcy, but has a new suitor in Marriott Accommodations, who have reportedly tendered an offer. State authorities has proffered the idea of enabling the resort to supply on line casino online games, but this energy is in way too early a stage to have any traction a single way or one more.

Indian Gaming
A latest Supreme Court docket ruling that restricts the getting of lands into have confidence in on behalf of federally recognized American Indian tribes has further stymied some new Course III gaming tasks across the nation. Furthermore, there have been eleven Indian on line casino initiatives turned down by the DOI final 12 months because of its new rule that casinos have to be in close proximity to enough to a reservation that tribal associates can operate at them. It has been recommended that the new Obama administration may be much more sympathetic to the improvement of Indian gaming tasks, but this concern has however to be addressed.

Meanwhile, there are other Course III initiatives in the a variety of phases of improvement. The Seneca casino undertaking in Buffalo, NY, while running a little short-term facility, has delayed an previously under development permanent facility till the market place rebounds. They have also expressed an interest in establishing a casino in the Catskills. The state gaming compact with Seminoles in Florida is becoming challenged, and could influence their programs for greater projects. There are new Indian gaming initiatives set to open in Michigan and Oklahoma this calendar year, and others are in the planning stage. Texas may let the reopening of Indian gaming amenities and permit other venue and there are programs afoot by the Navajos in Arizona to build additional casinos. California is poised to open up two to a few new Class III casinos in 2009/10.

The Nor’easter Squeeze

Complete gaming earnings in Atlantic Metropolis has declined 7.6 per cent, from $4.nine billion in 2007 to $4.five billion in 2008 with decreases continuing into 2009, as the city is obtaining itself in an intensive comp-war with the Pennsylvania venues. At a single time the only casinos in the Northeast have been positioned in Atlantic Town, in which it appeared as if it may well actually even eclipse the Las Vegas Strip’s yearly gaming revenues.

Slowly nonetheless its market place share was getting encroached upon, initial by the development of a large Course III gaming procedure 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 prepared opening of slot operations in Maryland, the impending opening of a new on line casino in Bethlehem, PA, and eventually two functions in Philadelphia, the noose is tightening about Atlantic City’s potential prospective customers. It truly is reliance on day-trippers lulled it into a bogus feeling of security, and it now finds by itself obtaining to redefine its mission assertion to “vacation spot resort.”

The only dilemma with this technique however is that it is unwell-outfitted to pull it off. For all intents and purposes, Atlantic Town is beneath-roomed and/or over-gamed. There is simply not ample day-tripper marketplace to go all around, and their successful trading region is tightening, as the peripheral populations northward now/will have more all set accessibility to a widened offer in New York (Yonkers, and shortly at Aqueduct and probably Belmont), westward in Pennsylvania and southward in Delaware, West Virginia and Maryland.

Other than the ocean access, the city’s only genuine aggressive rewards are its lodge capacity and the availability of desk online games, despite the fact that the latter is very likely to eventuate in Pennsylvania, and probably Delaware. In order to sufficiently contend as a vacation spot vacation resort the city demands to build extra guest rooms and not always gaming potential. By comparison, the Las Vegas Strip properties – accurate gaming places, in that they do not have considerably of a working day-trip industry, apart from for the ‘locals’ – have an typical of .87 gaming positions for each visitor place even though Atlantic City’s common is two.74 positions per guest room.

It is not a coincidence that Atlantic City’s two biggest hotels, the Borgata and Harrah’s Marina, the two of which included new rooms in 2008, ended up the minimum impacted by the most current downturn. The Borgata experienced a gaming revenue fall of one.six p.c, although Harrah’s Marina reported a 4.nine per cent boost in contrast to 2007. Additionally, the most difficult hit venues, specifically 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, such as the the Trump qualities and Resorts with the hoped for sale of the Tropicana has been more delayed, and dropping valuation.

With a steady increase in gaming revenues through 2006, the metropolis seemed primary for further growth, which precipitated preparing for 4 new resort tasks, every single of which have now been indefinitely delayed. Revel Entertainment Group’s $2.5 billion venture continues to be an iron skeleton, Pinnacle Entertainment has declared it might find to sell its razed Sands website, MGM Mirage has shelved its on line casino plans, and Penn Countrywide appears to have stopped its pursuit of the Bader Field airport web site.