2008 Nationwide Business On line casino & Racino Game titles Earnings Evaluation

A Period of Adjustment

Oops! That giant hissing sound is the gaming balloon that experienced been expanding more than the years, slowly and gradually dropping air. But, it has not been a tide that reduced all ships however, as some emerging and increasing gaming jurisdictions confirmed strong growth in 2008.

Overall, the business and racetrack on line casino sectors (excluding Indian gaming), seasoned a three.five per cent drop in gaming revenues for 2008, generating a complete of $36.two billion, down some $800 million from 2007. It was the Racino sector that has tempered this fall, as they confirmed a gain of practically $one billion in 2008, thus bringing the Business sector industry decline to $1.eight billion, or six.seven p.c. Nevada was the biggest loser in 2008, dropping virtually $one.3 billion, a lot more than half of which stemmed from the Las Vegas Strip section.

Hunkering Down

For the most element, on line casino operators ended up caught reasonably flat-footed by the extent of the 2008 revenue downturn, as it was not right up until the 3rd and fourth quarters when it really nosedived. Riding the crest of yr above calendar year market expansion across the place and the availability of enough credit and equity money, new construction and expansion proliferated in recent several years. Nowadays, confronted with the realities of declining, or at greatest stagnant demand from customers, several of these assignments are now regarded over-leveraged and/or more than-sized. As a consequence several gaming companies are making an attempt to renegotiate their personal debt – manufactured much more challenging by decrease valuations – although also paring down operational fees. The latter has grow to be a really problematic conundrum when dealing with the competitiveness, especially in these jurisdictions that are now vying for market place shares with new emerging on line casino tasks in neighboring places. A topic we discuss more completely in the Point out by Point out examination section of this publication.

As a result of these problems the gaming business landscape is now strewn with impending fatalities. Between the more notable troubled companies are Station Casinos, Empire Resorts, Harrah’s Entertainment, Greektown Holdings, Legends Gaming, Tropicana Leisure, Herbst Gaming and the checklist grows every single week.

“How extended will these economic problems persist, and are we at the base however?” are questions no 1 appears to be answering however. What is distinct nonetheless is that most gaming jurisdictions will have to discover how to offer with a smaller pie.

Note:
This analysis consists of only gaming revenues of licensed casinos and pari-mutuel outlets that offer you casino game titles, and not Indian gaming operations, card rooms, or small non-on line casino sort slot places. The entire article, like profits tables is obtainable on our internet web page.

Input/Output Design

A essential element that appears to have arisen from the ashes of this recent pattern is that several on line casino projects ended up just too large to help themselves. The input, in terms of expenditure bucks, was not proportional to the output, in terms of internet income after financial debt support, compared to previously achieved final results. More and/or larger is not often far better. Observing the increase in non-gaming income at the Las Vegas Strip resorts, gave impetus to the advancement of far more complete facilities in a lot of other jurisdictions. The flaw in this method nevertheless is that the charges connected with widening market place penetration and occasioned-use, are considerably greater than people incurred to appeal to the base industry.

As daytripper marketplaces become more competitive, casino venues will have to rely a lot more and a lot more on their in-home hotel patrons, and dimensions their homes (and anticipations) accordingly. While Steve Wynn started out a main development in producing up-industry mega-destinations, there basically was not enough need on the Strip to warrant the a lot of other related initiatives that adopted that aimed at the exact same specialized niche.

The trick is to strike a satisfied medium in project configurations which of program demand less of a ‘seat-of-pants’ approach, and a single that is far more researched. A shameless plug for improvement consultants like ourselves.

Other Gaming Routines

Even though there are no released thorough information of American Indian gaming revenues, anecdotal evidence seems to recommend that this phase has been as difficult hit as the Business sector. The two Connecticut Indian gaming installations report slot profits of $one.6 billion in 2008, symbolizing a drop of about seven %, or practically $114 million, far more than doubling the 3.5 p.c drop from the year just before. This industry is apparently still reeling from the ripple-impact of a casino enlargement in Rhode Island, and the opening of slot functions in New York and Pennsylvania.

The Arizona Division of Gaming reviews that contributions based mostly on a gaming revenue system from the state’s 23 Indian gaming casinos, have been declining each and every quarter in 2008 when compared to the prior yr lowering .8 per cent in the first quarter, 7.five p.c in the next quarter, 9.5 percent in the 3rd quarter, and 16.1 percent in the fourth quarter.

Some SEC reporting Indian gaming houses report related decreases. Seneca Gaming, which operates 3 Class III casinos in upstate New York, reviews that although calendar year 2008 showed an nearly two percent development fee in gaming revenues, there was an 8.seven % drop in the 3rd quarter and an virtually ten per cent decrease in the fourth quarter of 2008, in comparison with 2007. Gaming earnings traits at nearby Niagara Falls, Ontario have been down one.5% in 2008 in comparison with 2007.

It truly is been a combined-bag for condition lotteries throughout the nation. The North American Affiliation of Point out & Provincial Lotteries studies that U.S. lotteries produced a overall of $60.6 billion in product sales in fiscal 2008, up about 3 p.c from the preceding year yet some jurisdictions documented decreases, most notably California, which confirmed an eight per cent drop. Inasmuch as some of these states are on various fiscal yr finishes, it would seem to be that the knowledge does not replicate the influence of third and/or fourth quarter final results.

According to info supplied by Equibase, horse racing pari-mutuel revenues continue their downward spiral, falling seven per cent to $thirteen.7 billion in 2008, compared to $14.seven billion in 2007.

Planned & Proposed New Expansions

As formerly observed, it has been new gaming jurisdictions that have spawned much of the development in annual on line casino/racino revenues over the a long time, and their impact is apt to proceed into the around long term.

Florida
Miami Dade voters accredited a ballot problem that permits every single of a few pari-mutuels to have a on line casino facility of up to two,000 slot devices. The Flagler Canine Observe and Miami Jai-Alai are reportedly preparing opening in late 2009 or early 2010, whilst the Calder installation in Miami Gardens has yet to announced its strategies. There are several other proposals becoming considered that would additional expand on line casino development throughout the point out.

Illinois
The condition ultimately obtained close to to reissuing its tenth license, late in December, 2008 awarding it to Midwest Gaming & Enjoyment, LLC for a 1,200+ sport casino located 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 making it possible for an improve in per spot gaming positions and slots at racetracks, although neither initiative appears to have any traction at this time.

Kansas
The state’s expanded lottery software that permits for the improvement of 4 casino gaming zones and slots at present horse and canine tracks appears mired, as only one particular facility is presently under development, while three other proposals have been rescinded. The only bidder on the Cherokee County deal, claimed it could not contend with the new Quapaw tribal casino in Oklahoma, which is located so near to the point out line that its parking whole lot is in Kansas. The Boot Hill Casino Vacation resort in Dodge Metropolis is planing a December 2009 opening with 575 slots and ten table games, along with a next period because of to open in 2011 with 875 slots and twenty table games. The point out has prolonged the software method for the other 3 zones until finally April, 2009.

Kentucky
There is even now a whole lot of ‘jockeying’ heading on, but the prospect of as many as eight slot parlors and racinos appears to be again on the entrance-burner, but probably not solved for the duration of the present legislative session.

Las Vegas
There are about fourteen,000 rooms scheduled to appear on line in 2009, with the most current being the 390 space M Resort in Henderson. There are expansions underway at both Caesars Palace and Tough Rock and new accommodations contain two components of the Metropolis Heart undertaking, and the Fountainebleau.

Louisiana
Pinnacle Entertainment’s new on line casino development tasks in Baton Rouge and Lake Charles, whilst delayed, are described to nevertheless be on-track for opening this 12 months and/or early 2010.

Maine
There is a bill beneath consideration that could far more than double Penn National’s slot equipment to three,000, as well as a proposal that would take away the restriction that slots be located within five miles of the track. Scarborough Downs, which has been unsuccessful in convincing regional inhabitants to permit slots, could be thinking about shifting to a much more hospitable city.

Maryland
A referendum was accepted in November, 2008 that makes it possible for for the improvement of five casinos with a total of fifteen,000 slots, and now the bidding war is afoot although it is not as extreme as the point out experienced predicted.

Mississippi
Grand Soleil Casino Vacation resort in Natchez experienced been slated to open in 2008, but has operate into various financing issues and whilst the hotel part is open up, the riverboat is reported to open up in the Spring of ’09. Harrah’s Margaritaville Casino in Biloxi, while scaled again somewhat, is nonetheless on monitor to open up this 12 months.

New England
Massachusetts, a sleeping-big in phrases of market place potential, is still maneuvering to open casinos/racinos, and/or a Class III Indian gaming facility, but can not seem to be to muster the political support. A recent research completed by Dartmouth University estimates that Massachusetts resident expended far more than $920 million final year at Connecticut casinos and slot device parlors in Rhode Island and Maine. The New Hampshire legislature not too long ago declined an alternative to build casinos, nonetheless the topic is most likely to be revisited, specifically if Massachusetts decides to go forward. There are also makes an attempt in Maine to rethink its options.

New Jersey
Atlantic City’s casinos have imposed their political will on staving off the addition of slot equipment at racetracks by just lately agreeing to continue augmenting purses with an further tax. The governor even so, has appointed a new panel to study the state’s sagging racing plan which ironically, can only be preserved by allowing the tracks to have slot devices particularly at the Meadowlands. (See The Nor’easter Squeeze section)

New York
Just when it looked as if Aqueduct’s 4,500 VLT facility would ultimately be developed, the profitable bidder indicated an incapacity to make the essential $370 million price, citing the recent lending climate, and throwing the undertaking again into the lap of the governor. Despite the fact that the marketplace desire in the region could be deemed fairly strong, the prospect of extra opposition from close by Belmont could have an impact on Aqueduct’s underlining financial feasibility, specifically thinking about that a bit considerably less than 30% of the internet acquire is retained by the operator.

카지노사이트 to relocate Monticello Raceway into a resort complicated are becoming reconsidered maybe owing to equally the possible opening of at the very least one particular or perhaps two racino operations in the NY metro spot, and the resurfacing of initiatives to growth a Course III Indian gaming facility in the Catskills.

Ohio
Yet one more gaming proposal is becoming set forth in Ohio, following previous year’s variation was turned down by the voters. This plan phone calls for one on line casino each in the state’s largest metropolitan areas: Cleveland, Columbus, Cincinnati and Toledo. There would be a bare minimum investment required of $250 million, as nicely as an first licensing fee of $fifty million, and a 33 % tax on gaming income.

Pennsylvania
The Sands in Bethlehem is because of to open in the Spring of ’09, and the new Rivers project in Pittsburgh is anticipated to be operational in August, ’09 while Philadelphia’s two slot facilities nevertheless wallow in a political mire, but are anticipated to begin building this 12 months.

South Dakota
The Lodge at Deadwood is slated to open up in the Fall of 2009, and include three hundred game titles, one hundred forty rooms and a broad variety of facilities.

Texas
Legislators are proposing a voter referendum that would amend the condition constitution to enable on line casino gambling in designated regions, as nicely as let gambling on American Indian lands in Texas and at existing racetracks.

West Virginia
The Greenbriar, the state’s venerable resort facility has filed for individual bankruptcy, but has a new suitor in Marriott Resorts, who have reportedly tendered an offer. State govt has proffered the idea of enabling the resort to offer on line casino video games, but this effort is in too early a stage to have any traction 1 way or one more.

Indian Gaming
A modern Supreme Court ruling that restricts the using of lands into have faith in on behalf of federally recognized American Indian tribes has more stymied some new Class III gaming tasks across the nation. Additionally, there had been eleven Indian on line casino assignments turned down by the DOI previous year since of its new rule that casinos need to be near ample to a reservation that tribal customers can operate at them. It has been recommended that the new Obama administration may possibly be far more sympathetic to the development of Indian gaming tasks, but this issue has yet to be tackled.

Meanwhile, there are other Class III initiatives in the different stages of growth. The Seneca on line casino project in Buffalo, NY, while operating a little momentary facility, has delayed an presently beneath development long term facility till the market rebounds. They have also expressed an interest in developing a casino in the Catskills. The condition gaming compact with Seminoles in Florida is currently being challenged, and could effect their strategies for larger initiatives. There are new Indian gaming tasks established to open in Michigan and Oklahoma this calendar year, and other individuals are in the organizing stage. Texas may possibly enable the reopening of Indian gaming facilities and permit other location and there are ideas afoot by the Navajos in Arizona to assemble additional casinos. California is poised to open two to a few new Course III casinos in 2009/ten.

The Nor’easter Squeeze

Overall gaming profits in Atlantic City has declined seven.six p.c, from $four.nine billion in 2007 to $4.five billion in 2008 with decreases continuing into 2009, as the town is discovering by itself in an powerful comp-war with the Pennsylvania venues. At one time the only casinos in the Northeast have been situated in Atlantic Metropolis, exactly where it looked as if it may possibly truly even eclipse the Las Vegas Strip’s yearly gaming revenues.

Gradually nonetheless its industry share was currently being encroached on, 1st by the growth of a large Course III gaming procedure in Connecticut, and then an additional slots functions in Rhode Island, and then movie lottery terminals at New York racetracks, racinos in West Virginia and Delaware, and most lately Pennsylvania.

Now, with the planned opening of slot functions in Maryland, the impending opening of a new on line casino in Bethlehem, PA, and ultimately two functions in Philadelphia, the noose is tightening close to Atlantic City’s potential potential clients. It really is reliance on working day-trippers lulled it into a untrue perception of safety, and it now finds alone getting to redefine its mission assertion to “location vacation resort.”

The only difficulty with this technique even so is that it is unwell-outfitted to pull it off. For all intents and reasons, Atlantic Town is beneath-roomed and/or in excess of-gamed. There is merely not ample working day-tripper market to go close to, and their successful investing location is tightening, as the peripheral populations northward now/will have much more completely ready entry to a widened source 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 genuine aggressive rewards are its lodge capability and the availability of table video games, even though the latter is likely to eventuate in Pennsylvania, and potentially Delaware. In order to sufficiently contend as a destination resort the town requirements to build further guest rooms and not essentially gaming ability. By comparison, the Las Vegas Strip properties – real gaming locations, in that they do not have a lot of a working day-journey industry, apart from for the ‘locals’ – have an regular of .87 gaming positions per visitor area while Atlantic City’s common is 2.74 positions per visitor area.


It is not a coincidence that Atlantic City’s two biggest lodges, the Borgata and Harrah’s Marina, each of which added new rooms in 2008, were the the very least impacted by the latest downturn. The Borgata seasoned a gaming revenue drop of 1.six percent, although Harrah’s Marina noted a four.9 p.c improve when compared to 2007. Moreover, the most difficult hit venues, particularly 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, such as the the Trump qualities and Resorts with the hoped for sale of the Tropicana has been additional delayed, and shedding valuation.

With a steady rise in gaming revenues via 2006, the city appeared primary for further improvement, which precipitated planning for 4 new resort projects, each of which have now been indefinitely delayed. Revel Leisure Group’s $2.five billion venture continues to be an iron skeleton, Pinnacle Leisure has declared it may well seek to sell its razed Sands internet site, MGM Mirage has shelved its on line casino ideas, and Penn Nationwide seems to have stopped its pursuit of the Bader Field airport website.

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