Another casino or two coming down the Pennsylvania Turnpike By December 6, 2012 at 10:41 am It is an old story already, but one that is being still reported; there are too many casinos in the Northeast and there are more on the way. The stories usually appear each month when the monthly gaming revenue figures are released; monthly revenues figures are compared to the same month in the previous year and are used as benchmarks for growth and the health of the industry. The first state to release gaming revenue figures is Pennsylvania; it reports slot revenues for the previous month within the first few days of the new month – table game revenues are not reported until the third week of the month. On December 4th, Pennsylvania report slot revenues of $192.5 million, up .34 percent, but there is one more casino than last November; on a same store-basis, slot revenues were down 1.9 percent. That is not terrible news, but it is also not good news. There are two more casinos coming down the line in Pennsylvania and there is another coming in Ohio, one in Maryland, several in Massachusetts and New York is considering expanding past the current racinos into full-fledged casinos. All of those casinos are not good news for Philadelphia, the state of Pennsylvania, New Jersey or any other nearby states with casinos. The subject came up so early this month because Philadelphia is entering into the selection process for another casino in the city; so far, six would-be operators have applied for a license to operate a casino in Philadelphia. All of those companies and individuals have the expertise and the money to hit the ground running. Hitting the ground running means they will have the property, amenities and marketing skills to take a bite out of the existing casinos in the area immediately – and of course those in Atlantic City. As I said, this is far from a new story, but it is a news story. It begs the age-old question, “how many is too many?” The question can be asked about anything or any business, this time it is being asked about casinos in Philadelphia. Why even ask the question? After all in capitalism we let the market sort things out, those with the most customers and profits succeed and grow and those with those least customers and profits fail and die. Why should casinos be any different? It is different in some people’s eyes because the process is so highly regulated, taxed and fee based. And because such a large portion of the profits goes to the state, in Pennsylvania over have of the revenue generated goes to the state in the form of taxes and fees. Lots of people have skin in this game, namely every single person who lives in Pennsylvania. That is why analysts, politicians, consultants and industry insiders are often found on the oppose side of an expansion question; they often oppose any expansion of the gaming and the granting of new licenses hoping to protect the existing operations. For example, in the last election in Maryland, Penn National spent over $40 million opposing another license in that state. Philadelphia is just getting started in the licensing process, so we will have to wait a while to see how this plays out. It will take a year to award the license and then another year or more to build a casino. The long lead-in time will also serve as a long debate period over how much is too much? At some point, the forces for protecting the existing industry and cash flow will begin to win out over the forces for expansion. For me, the question is when will that happen, not just in Pennsylvania but in all of the states with casinos? “We believe the Philadelphia gaming market has reached a point of saturation and any new gaming will likely take share from existing operators,” said Farrell Jr. “A new destination casino in Philadelphia offering more non-gaming amenities could meaningfully cannibalize both SugarHouse and Harrah’s Philadelphia.” Just as hearings are about to begin on the six applicants vying for the city’s second casino license, SugarHouse finished just eighth out of 11 statewide venues last month in gross slots revenue, generating $14.7 million…Parx in Bensalem, the state’s top-grossing casino, made $29.9 million, down just modestly from a year ago, while Harrah’s Philadelphia in Chester also had a revenue decline of 2.71 percent, and generated $20.4 million last month. The declines underscore what some gaming analysts have been saying for a while: The Philadelphia market, with four casinos within a 25-mile radius, is saturated. Suzette Parmley, Philadelphia Inquirer, 12-5-12 Construction on a $50 million casino at a Fayette County resort has begun, and a mid-summer opening is projected, according to a resort spokesman. Work on the Lady Luck Casino at Nemacolin Woodlands Resort in Farmington began in early October, shortly after the state Supreme Court upheld its gaming license, said Jeff Nobers, resort spokesman. Isle of Capri Casinos Inc., which will run the gaming facility, has projected a July opening, Nobers said. “It’s moving along a little more quickly than they anticipated,” Nobers said. Liz Zemba, Pittsburgh Tribune-Review, 12-5-12