Over Half US Casino Markets Post Declines In 2013December 9, 2013 2:58 pm
So far this year, US casinos have generated $31.5 billion in revenues through to October, a 4% improvement from a year earlier. However, the rebound is uneven and out of the 23 states offering casino gambling, 13 are actually showing declines in their year-on-year revenues.
Furthermore, eight of the ten states that reported growing revenues in 2013 have expanded their gaming operations in the last 18 months, typically meaning they have acquired their extra business from nearby states. For instance, revenue at Mississippi’s 30 casinos has plummeted 22% since 2007, with much of the decline attributed to competition from neighboring Arkansas, which has seen its casino revenues increase six-fold from 2007 to 2012.
Atlantic City’s casino business is another prime example of a gambling market in decline, with its revenues shrinking from $5.2 billion in 2006 to just $3 billion last year, after Pennsylvania and Delaware opted to jump on the casino offering bandwagon.
In addition, this ‘cannibalization’ process is even taking place within regional markets, and as Penn National’s chief operating officer, Timothy Wilmott, said referring to Caesars Entertainment’s “discounting” practice at its new Horseshoe Cincinnati in Ohio:
“I can’t think in my almost 30 years in this business (of) a new property opening that discounted their product — their brand new product — to these levels to try to create (customer) trials at the expense of profitability.”
Even Las Vegas is not immune to this effect, and although it may have returned to its pre-recession levels in terms of visitor numbers, visitors aren’t gambling as much as they used to as they often can enjoy gambling at leisure within an hour or so of their own hometowns. Not surprisingly, casino markets are finding it increasingly important to offer extra entertainments and leisure activities for its visitors, and as UNLV director of the Center for Business and Economic Research, Stephen Brown, said recently:
“A property really can’t compete for the upscale visitor if it doesn’t have shopping. High-end retail is really what’s propelling the growth in taxable sales in Las Vegas.”