How A lot Can Mini-Casinos Contribute to Pennsylvania’s Gaming Income?

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The first clue as to how much revenue a Pennsylvania mini casino can generate with players who like to play close to home will come next week – but just a clue.

That’s because the November monthly sales figures released by the Pennsylvania Gaming Control Board are the first financial information on the new Live! Pittsburgh Casino, but only open for one week.

The Cordish Companies-operated venue near Greensburg, about 35 miles east of Pittsburgh, opened on November 24th with 750 slot machines and 30 table games. It seeks to attract customers from Westmoreland and the surrounding counties as it competes with Rivers Casino in Pittsburgh and Meadows Racetrack & Casino in adjacent Washington County, which each have about three times as many slots and tables.

The mini-casino is opening amid the great uncertainty in the gaming industry due to the COVID-19 pandemic, but Cordish officials are counting on how many local residents have been starved for entertainment. They also profess their confidence that players will feel reassured by all of the advanced health and safety precautions they have taken in the converted department store space in Westmoreland Mall.

At the same time, they’re opening in a setting in western Pennsylvania where the area’s casinos have seen more lost revenue year-over-year since reopening in June than anywhere else in the state. Now that a new competitor is in the market, the chances are their revenues will drop even further.

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Retail games are falling as online betting increases

While the shutdown of the first 12 Pennsylvania casinos from March to June was costly to both operators and the state, which generates around 40% of land-based casino revenue, the state’s gaming industry is now generating more revenue overall than ever before.

However, this is misleading in terms of how traditional slots and table games fare in casinos.

October set a record revenue of $ 320.2 million from all sources for every month in the 14-year history of Pennsylvania’s casinos. The new high could be explained by records of $ 59.8 million in online casino revenue in Pennsylvania and $ 36.8 million in sports betting revenue.

With coronavirus concerns about shutting down casino amenities and reducing attendance, slots revenue at the 12 hotels declined $ 154.2 million in October 2019, down 17.2% from October 2019, and table game revenue decreased 63 . $ 3 million down 13.4%. There were somewhat similar declines in August and September, although total revenue improved again year-over-year due to online gaming.

The table below shows how the year-over-year change for the four west-facing casinos – Rivers, Meadows, Lady Luck Nemacolin, and Presque Isle Downs & Casino – has generally worsened than is the case nationwide.

One factor that might be at work is that the population of western Pennsylvania is older than that of the east. Industry officials across the country have reported that senior casino patrons have dropped more than other guests due to concerns about COVID-19.

This is a demographic challenge that Live! Pittsburgh, as Westmoreland County’s population aged 65 and over is 23.3%, compared to a national average of 18.7%.

However, Sean Sullivan, general manager of the mini-casino, has expressed a lot of optimism about the property’s prospects.

Could satiety / cannibalization be an issue?

Industry veteran Sullivan ran many casinos, including the Meadows, from 2009 to 2018, so he knows the region well. And he believes the live! Real estate has a niche that will attract many businesses.

“I love the energy” of the place, he said on the opening day. “When places are smaller and more intimate, the energy is contagious. [COVID’s impact] It really hurts the bigger places like the rivers and meadows that are struggling because it takes quite a number of people to create this energy. “

He also admitted little concern about the possibility of oversaturation of the regional market with the arrival of the mini-casino.

“There’s always this conversation, no matter what state or jurisdiction, when too much is too much,” Sullivan said, but he added that people in and around Westmoreland County will appreciate having “a favorite casino in.” their hometown. ” I’ve had people say, “Thanks for being here – I don’t have to drive an hour.”

He believes that with the addition of a new one, all of the state’s western casinos will survive well, even if there is little new initial impact – or cannibalization.

“Current operators are always threatened by new operators,” said Sullivan. “We’re going to hurt Rivers and the Meadows, but not a major one. We’re going to take over a bit of their business – a lot of it is about proximity – and this property will compete well. “

He also admitted that he wasn’t closely following the revenue trends of the other casinos in the area, but believes Live! will earn far more revenue than the state’s smallest volume generator, Lady Luck in adjacent Fayette County.

Expanding the casino could add $ 500 million annually

Lady Luck belongs to the state’s Resort Casino category with its own restrictions on what it offers, so there are typically 600 slot machines available – although that number has been reduced to 322 due to the state’s COVID-related capacity restrictions. The property has 27 game tables.

This venue, attached to the Nemacolin Woodlands Resort, generated slots and table revenue of around $ 33 million in 2019, although it can’t keep up due to the coronavirus in 2020. In its rural location, far from any major population center, it is by far the smallest revenue generator among casinos in Pennsylvania.

Sullivan said he believed Live! will surpass Lady Luck and get closer to competing with Presque Isle Downs. They share locations in busy business corridors near medium-sized cities. Prior to COVID in 2019, Presque Isle Downs had 1,525 slot machines, 41 tables, and sales of more than $ 129 million. The Erie County venue has only employed 1,065 slots in the past few months, and slots revenue has fallen by more than a quarter.

For Live! However, it could be a stretch. fitting Presque Isle considering how much fewer slots and tables it can have.

Average earnings per slot per table in the four western casinos were generally lower than in the state as a whole. In the COVID era, slots in the region are making around $ 200 per day per machine or a little more – well below the nationwide average of $ 299. Table games vary more widely, with Rivers generating far more of them than the other casinos in the region – around $ 55,000 per position per month – although this is actually just the equivalent of the national norm.

When Live! If this were just the average of what other casinos on its side of the state have been doing lately, it could potentially have annual slot sales of $ 54 million and table sales based on its 750 machines and 30 games Generate $ 9 million. However, this is without taking into account any reduction that may occur in the most recent averages due to the additional competition in the market.

However, if those numbers hold true for the first of five planned mini-casinos, the mall gaming site on US Route 30 could generate more than $ 60 million in annual gaming revenue to work with iGaming to help drive the decline in slots and tables in the first dozen casinos to offset revenue in the COVID era.

With two more mini-casinos expected to open next year and two more to open later, that could translate into a total of $ 300 million or more from mini-casino revenues. Add $ 200 million or more to potential income from the great Live! The Philadelphia Casino opening in early 2021, and at some point slot machine and table game revenue at brick and mortar Pennsylvania casinos, could approach $ 4 billion a year, compared to $ 3.26 billion in 2019. Again, this is not for the unknown amount of cannibalization responsible for the existing revenue that could come from the expansion.

Much will also depend on the ongoing effects of COVID or ricochet off COVID. And the first little hint of what the future might look like will appear next week in this November sales report.

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