Quietly, Colorado may have one of the nation’s best regional gaming jurisdictions, according to one industry analyst.
And the state’s three rural gambling communities are getting stronger as expansions by two Nevada-based casino operators take shape.
In a research report to investors released last week, Union Gaming Group analyst John DeCree said Cripple Creek, Central City and Black Hawk benefit from relatively low gaming taxes, virtually zero competitive supply, and favorable macroeconomic trends in the major feeder markets.
“Overall, the Colorado mountain towns are some of the best gaming markets today,” DeCree said.
In 2017, Colorado’s 35 casinos grew gaming revenue 2.1 percent to more than $828 million, according to figures supplied by the Colorado Department of Revenue’s Division of Gaming. The year marked the third straight with a gaming revenue increase. Analysts have said the numbers are especially strong given that Colorado has a $100 maximum wager limit.
Meanwhile, according to the American Gaming Association’s “Get to Know Gaming,” the casinos supported more than 10,000 jobs and generated more than $343.9 million in federal, state and local tax revenue.
DeCree toured the communities, which draw much of their business from the state’s major metropolitan areas of Denver, Boulder, Fort Collins, and Colorado Springs. He said recent changes made to Colorado gaming regulations covering taxes collected for free slot play could provide the casinos with a rebate.
Colorado has a graduated gaming tax rate with a maximum of 20 percent. Under newly enacted rules, the casinos could receive a pro rata share of tax collected on free slot play if gaming revenue grows 3 percent or more annually.
“The Colorado mountain towns are very strong slot markets, so this should be a nice added bonus for the market as a whole,” DeCree said.
Two development projects – a $269 million expansion to the Monarch Black Hawk resort by Reno-based Monarch Casino & Resort and a $70 million renovation to Bronco Billy’s in Cripple Creek by Las Vegas-based Full House Resorts – will grow both markets, DeCree said.
The Monarch is already underway. It encompasses the construction of a 500-room hotel tower that will include additional non-gaming amenities and another 6,500-square-feet of casino space.
“Monarch is one of the leaders in the market in spite of its limited amenities and no sleeping rooms,” DeCree said, adding the expansion will be “game changing” in Black Hawk when it opens in 2019.
He said the construction has caused “virtually no disruption” to the casino’s current business, with the casino floor, buffet, and sports bar operating with “no sign” of the construction on the other side of the building.
Monarch upped the cost of the project by $40 million during its first quarter earnings call, which accounted for an increase in material costs.
Plans for the Full House project include the development of a 150-room-to-200-room hotel at Bronco Billy’s that will include a parking garage, new non-gaming amenities, restaurants and additional casino space.
The expansion is somewhat controversial in Cripple Creek. As part of the deal, Full House received approval to close a street that currently cuts through the site, ultimately allowing the company to develop one contiguous, connected resort. A rival casino owner in May filed a law suit against the city to block the expansion.
DeCree said the Bronco Billy’s expansion is “right at what is the 50-yard line of the main strip,” and the project makes the property “a category killer.” However, he believes other businesses in the community will eventually benefit. He said the Cripple Creek market currenty lacks hotel rooms, food and beverage options, and retail, and its casinos have few table games.
“We expect Full House’s casino-hotel expansion will stimulate additional development around town, including some upgrades from its existing competitors, which should ultimately help make Cripple Creek more of a local destination for Colorado Springs,” DeCree said.
DeCree said there was little concern the two projects would create “cross-market cannibalization.” Black Hawk draws from Denver, and Cripple Creek is roughly an hour’s drive from Colorado Springs.
“Most of all, we believe the major Colorado (markets) mentioned are considerably undersupplied from a gaming perspective, making expansion projects like Monarch Black Hawk and Bronco Billy’s quite compelling,” DeCree said.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
