2008 National Professional Casino as well as Racino Game titles Revenue Analysis


A Period of time of Adjustment

Oops! That big hissing audio is the gaming balloon that experienced been developing above the many years, little by little dropping air. But, it has not been a tide that decreased all ships even so, as some emerging and growing gaming jurisdictions confirmed powerful progress in 2008.

Total, the business and racetrack on line casino sectors (excluding Indian gaming), experienced a 3.5 p.c decline in gaming revenues for 2008, generating a overall of $36.2 billion, down some $800 million from 2007. It was the Racino sector that has tempered this drop, as they showed a achieve of virtually $1 billion in 2008, therefore bringing the Industrial sector industry drop to $one.8 billion, or 6.seven percent. Nevada was the largest loser in 2008, dropping almost $one.three billion, much more than fifty percent of which stemmed from the Las Vegas Strip phase.

Hunkering Down

For the most component, casino operators were caught comparatively flat-footed by the extent of the 2008 revenue downturn, as it was not until finally the third and fourth quarters when it actually nosedived. Driving the crest of 12 months over yr market progress throughout the nation and the availability of ample credit score and fairness money, new design and enlargement proliferated in latest several years. Nowadays, faced with the realities of declining, or at very best stagnant demand, many of these initiatives are now considered more than-leveraged and/or above-sized. As a consequence many gaming businesses are trying to renegotiate their debt – manufactured more tough by lower valuations – even though also paring down operational charges. The latter has grow to be a quite problematic conundrum when dealing with the competitors, especially in these jurisdictions that are now vying for marketplace shares with new emerging casino initiatives in neighboring regions. A matter we talk about far more completely in the Condition by State investigation part of this publication.

As a result of these conditions the gaming market landscape is now strewn with impending fatalities. Amid oncapan.com/bbs/partner_site/800 troubled corporations are Station Casinos, Empire Resorts, Harrah’s Enjoyment, Greektown Holdings, Legends Gaming, Tropicana Enjoyment, Herbst Gaming and the listing grows every single week.

“How prolonged will these financial situations persist, and are we at the bottom yet?” are inquiries no one appears to be answering however. What is distinct nonetheless is that most gaming jurisdictions will have to learn how to offer with a more compact pie.

This investigation includes only gaming revenues of accredited casinos and pari-mutuel retailers that provide on line casino games, and not Indian gaming operations, card rooms, or modest non-casino type slot locations. The total write-up, such as profits tables is obtainable on our world wide web website page.

Enter/Output Design

A essential element that looks to have arisen from the ashes of this present pattern is that a lot of casino projects ended up just also big to help by themselves. The input, in conditions of expense bucks, was not proportional to the output, in phrases of internet profit right after personal debt support, when compared to beforehand attained results. Far more and/or bigger is not always greater. Viewing the rise in non-gaming profits at the Las Vegas Strip resorts, gave impetus to the advancement of a lot more comprehensive amenities in a lot of other jurisdictions. The flaw in this approach however is that the expenses connected with widening industry penetration and occasioned-use, are significantly increased than these incurred to draw in the base industry.

As daytripper marketplaces become much more aggressive, on line casino venues will have to rely far more and a lot more on their in-residence hotel patrons, and dimensions their qualities (and expectations) appropriately. Even though Steve Wynn started a main craze in creating up-market place mega-destinations, there just was not enough demand on the Strip to warrant the several other similar assignments that adopted that aimed at the identical niche.

The trick is to strike a pleased medium in venture configurations which of program call for considerably less of a ‘seat-of-pants’ technique, and one particular that is more studied. A shameless plug for advancement consultants like ourselves.

Other Gaming Routines

Though there are no revealed detailed information of American Indian gaming revenues, anecdotal proof appears to propose that this phase has been as tough hit as the Business sector. The two Connecticut Indian gaming installations report slot income of $1.six billion in 2008, representing a fall of about 7 per cent, or virtually $114 million, much more than doubling the 3.5 per cent fall from the calendar year just before. This market is evidently even now reeling from the ripple-effect of a casino enlargement in Rhode Island, and the opening of slot operations in New York and Pennsylvania.

The Arizona Section of Gaming reviews that contributions based mostly on a gaming earnings method from the state’s 23 Indian gaming casinos, have been declining each and every quarter in 2008 in contrast to the earlier yr reducing .eight per cent in the very first quarter, seven.five % in the second quarter, nine.5 per cent in the third quarter, and 16.1 % in the fourth quarter.

Some SEC reporting Indian gaming qualities report equivalent decreases. Seneca Gaming, which operates three Class III casinos in upstate New York, reviews that although calendar calendar year 2008 confirmed an virtually two percent development rate in gaming revenues, there was an 8.seven % decline in the 3rd quarter and an almost 10 p.c decline in the fourth quarter of 2008, in comparison with 2007. Gaming revenue traits at close by Niagara Falls, Ontario had been down one.5% in 2008 in comparison with 2007.

It’s been a mixed-bag for state lotteries across the nation. The North American Association of Condition & Provincial Lotteries studies that U.S. lotteries generated a complete of $60.6 billion in income in fiscal 2008, up about three % from the earlier 12 months nevertheless some jurisdictions reported decreases, most notably California, which confirmed an eight per cent fall. Inasmuch as some of these states are on various fiscal calendar year ends, it would seem to be that the knowledge does not reflect the impact of third and/or fourth quarter results.

In accordance to data provided by Equibase, horse racing pari-mutuel revenues carry on their downward spiral, falling seven p.c to $thirteen.seven billion in 2008, as opposed to $14.7 billion in 2007.

Prepared & Proposed New Expansions

As previously observed, it has been new gaming jurisdictions that have spawned considerably of the progress in once-a-year on line casino/racino revenues above the a long time, and their impact is apt to carry on into the around potential.

Miami Dade voters approved a ballot issue that enables every of 3 pari-mutuels to have a casino facility of up to two,000 slot machines. The Flagler Pet Observe and Miami Jai-Alai are reportedly organizing opening in late 2009 or early 2010, even though the Calder set up in Miami Gardens has however to announced its ideas. There are many other proposals being considered that would more broaden on line casino advancement all through the point out.

The point out last but not least received about to reissuing its tenth license, late in December, 2008 awarding it to Midwest Gaming & Leisure, LLC for a one,200+ recreation on line casino situated in Des Plaines just east of O’Hare. The new facility is not very likely to open until 2010. There has also been some discussion about allowing an boost in for each spot gaming positions and slots at racetracks, even though neither initiative appears to have any traction at this time.

The state’s expanded lottery system that enables for the growth of 4 casino gaming zones and slots at present horse and puppy tracks appears mired, as only one particular facility is presently below development, although three other proposals have been rescinded. The only bidder on the Cherokee County contract, claimed it could not contend with the new Quapaw tribal casino in Oklahoma, which is positioned so shut to the state line that its parking lot is in Kansas. The Boot Hill On line casino Resort in Dodge Metropolis is planing a December 2009 opening with 575 slots and 10 table games, together with a next section because of to open up in 2011 with 875 slots and twenty desk video games. The point out has prolonged the software process for the other a few zones till April, 2009.

There is nevertheless a great deal of ‘jockeying’ likely on, but the prospect of as several as 8 slot parlors and racinos appears to be back again on the front-burner, but most likely not solved during the existing legislative session.

Las Vegas
There are about fourteen,000 rooms scheduled to arrive on line in 2009, with the most latest getting the 390 room M Vacation resort in Henderson. There are expansions underway at the two Caesars Palace and Hard Rock and new resorts consist of two components of the City Middle undertaking, and the Fountainebleau.

Pinnacle Entertainment’s new casino growth initiatives in Baton Rouge and Lake Charles, while delayed, are reported to nonetheless be on-track for opening this yr and/or early 2010.

There is a invoice under consideration that could far more than double Penn National’s slot devices to 3,000, as nicely as a proposal that would take away the restriction that slots be located inside 5 miles of the track. Scarborough Downs, which has been unsuccessful in convincing nearby residents to enable slots, could be thinking about shifting to a a lot more hospitable city.

A referendum was accepted in November, 2008 that permits for the improvement of 5 casinos with a total of 15,000 slots, and now the bidding war is afoot although it is not as intensive as the condition had anticipated.

Grand Soleil Casino Resort in Natchez had been slated to open up in 2008, but has run into a variety of financing concerns and while the lodge part is open up, the riverboat is described to open up in the Spring of ’09. Harrah’s Margaritaville Casino in Biloxi, while scaled back relatively, is nevertheless on track to open up this year.

New England
Massachusetts, a sleeping-large in conditions of industry potential, is even now maneuvering to open up casinos/racinos, and/or a Class III Indian gaming facility, but are not able to seem to be to muster the political support. A modern examine finished by Dartmouth University estimates that Massachusetts resident invested much more than $920 million previous year at Connecticut casinos and slot machine parlors in Rhode Island and Maine. The New Hampshire legislature just lately declined an selection to develop casinos, even so the topic is most likely to be revisited, specifically if Massachusetts decides to go forward. 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 equipment at racetracks by lately agreeing to carry on augmenting purses with an extra tax. The governor even so, has appointed a new panel to research the state’s sagging racing plan which ironically, can only be preserved by enabling the tracks to have slot machines particularly at the Meadowlands. (See The Nor’easter Squeeze segment)

New York
Just when it seemed as if Aqueduct’s 4,500 VLT facility would last but not least be produced, the profitable bidder indicated an incapability to make the required $370 million price, citing the recent lending climate, and throwing the venture again into the lap of the governor. Despite the fact that the market need in the spot could be considered quite strong, the prospect of extra opposition from close by Belmont could have an influence on Aqueduct’s underlining financial feasibility, specifically thinking about that somewhat less than 30% of the internet get is retained by the operator.

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

Yet one more gaming proposal is becoming place forth in Ohio, after previous year’s variation was turned down by the voters. This prepare phone calls for one particular on line casino every in the state’s greatest metropolitan areas: Cleveland, Columbus, Cincinnati and Toledo. There would be a minimum expense essential of $250 million, as well as an initial licensing price of $50 million, and a 33 p.c tax on gaming revenue.

The Sands in Bethlehem is thanks to open up in the Spring of ’09, and the new Rivers undertaking 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 commence construction this yr.

South Dakota
The Lodge at Deadwood is slated to open up in the Fall of 2009, and incorporate three hundred games, a hundred and forty rooms and a extensive range of facilities.

Legislators are proposing a voter referendum that would amend the condition constitution to enable casino gambling in selected areas, as properly as permit gambling on American Indian lands in Texas and at existing racetracks.

West Virginia
The Greenbriar, the state’s venerable vacation resort facility has submitted for individual bankruptcy, but has a new suitor in Marriott Accommodations, who have reportedly tendered an offer. Condition authorities has proffered the notion of permitting the resort to offer you on line casino games, but this energy is in also early a phase to have any traction 1 way or an additional.

Indian Gaming
A latest Supreme Court ruling that restricts the getting of lands into have confidence in on behalf of federally identified American Indian tribes has further stymied some new Course III gaming tasks throughout the place. Additionally, there were eleven Indian on line casino initiatives rejected by the DOI previous yr due to the fact of its new rule that casinos should be around enough to a reservation that tribal members can function at them. It has been advised that the new Obama administration might be a lot more sympathetic to the development of Indian gaming assignments, but this concern has yet to be addressed.

In the meantime, there are other Course III projects in the various levels of improvement. The Seneca casino undertaking in Buffalo, NY, while operating a tiny short-term facility, has delayed an already under construction long term facility till the market place rebounds. They have also expressed an curiosity in developing a casino in the Catskills. The condition gaming compact with Seminoles in Florida is becoming challenged, and could affect their strategies for more substantial initiatives. There are new Indian gaming initiatives set to open up in Michigan and Oklahoma this year, and other folks are in the preparing phase. Texas might enable the reopening of Indian gaming services and permit other venue and there are ideas afoot by the Navajos in Arizona to build additional casinos. California is poised to open two to 3 new Class III casinos in 2009/ten.

The Nor’easter Squeeze

Whole gaming income in Atlantic Town has declined seven.six %, from $4.9 billion in 2007 to $4.5 billion in 2008 with decreases continuing into 2009, as the city is discovering alone in an extreme comp-war with the Pennsylvania venues. At one time the only casinos in the Northeast ended up located in Atlantic Metropolis, where it appeared as if it might really even eclipse the Las Vegas Strip’s annual gaming revenues.

Little by little nonetheless its market place share was being encroached on, 1st by the advancement of a massive Course III gaming procedure in Connecticut, and then yet another slots operations in Rhode Island, and then movie lottery terminals at New York racetracks, racinos in West Virginia and Delaware, and most not too long ago Pennsylvania.

Now, with the planned opening of slot operations in Maryland, the impending opening of a new casino in Bethlehem, PA, and sooner or later two operations in Philadelphia, the noose is tightening about Atlantic City’s foreseeable future prospective customers. It really is reliance on working day-trippers lulled it into a untrue perception of safety, and it now finds alone obtaining to redefine its mission assertion to “location resort.”

The only dilemma with this approach nevertheless is that it is ill-geared up to pull it off. For all intents and functions, Atlantic Town is below-roomed and/or in excess of-gamed. There is just not enough working day-tripper marketplace to go about, and their powerful investing location is tightening, as the peripheral populations northward now/will have a lot more prepared accessibility to a widened provide in New York (Yonkers, and soon at Aqueduct and potentially Belmont), westward in Pennsylvania and southward in Delaware, West Virginia and Maryland.

Other than the ocean obtain, the city’s only real competitive positive aspects are its lodge capacity and the availability of desk game titles, even though the latter is very likely to eventuate in Pennsylvania, and possibly Delaware. In order to sufficiently contend as a destination resort the town demands to produce added guest rooms and not always gaming capacity. By comparison, the Las Vegas Strip homes – correct gaming destinations, in that they do not have much of a day-trip market, besides for the ‘locals’ – have an average of .87 gaming positions per guest space while Atlantic City’s common is two.74 positions for each visitor area.

It is not a coincidence that Atlantic City’s two premier resorts, the Borgata and Harrah’s Marina, both of which included new rooms in 2008, ended up the least impacted by the most current downturn. The Borgata experienced a gaming revenue fall of one.6 percent, while Harrah’s Marina documented a four.nine % boost compared to 2007. In addition, the hardest hit venues, namely 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 dropping valuation.

With a steady rise in gaming revenues by way of 2006, the metropolis appeared key for more improvement, which precipitated arranging for 4 new vacation resort initiatives, each and every of which have now been indefinitely delayed. Revel Entertainment Group’s $2.5 billion venture remains an iron skeleton, Pinnacle Leisure has introduced it may possibly find to sell its razed Sands internet site, MGM Mirage has shelved its casino programs, and Penn National seems to have stopped its pursuit of the Bader Discipline airport internet site.

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