November 2018
Booming Sports and Bustling New Casinos
Make a Great September

Nationally, gaming revenues in September were up 4 percent to $3.835 billion. Several factors were decisive for the increase: new casinos in Maryland, Massachusetts, New Jersey and New York; and sports betting. And the increase was even more impressive given the calendar handicap: September 2018 had one less Friday than the previous year, which in theory should have caused a revenue decrease of 2.3 percent.
Of course, the economy is still booming, with the unemployment rate was 3.7 percent, the lowest rate since December 1969. The stock market was reasonably stable. Still, there were still a few negative notes: gasoline prices have not fallen in line; interest rates are creeping up (the 10-year Treasury yield went above 3.2% for the first time since 2011 and the 30-year Long Bond hit its highest level in four years), and the housing market in a bit of a stall. But one cannot have everything.

Overall, gaming revenue changes are really being driven more by internal forces than external ones. Absent a major economic reversal, the industry is in a very strong position right now.
September 2018 Casino and VLT Revenue:

Atlantic City gaming revenues rose 19.5% to $281.7 million.  Gaming Commission, 10-18
Colorado casino revenue fell 1.7% to $72.5 million.  Gaming Commission, 10-18
Delaware gaming revenue rose 24% to $33.5 million. Gaming Commission, 10-18
Detroit casino revenues rose 1.4% to $115.2 million.  Gaming Commission, 10-18
Florida VLT revenue rose 26.9% to $44.8 million.  Gaming Commission, 10-18
Illinois VLT/casino revenue rose 1.7% to $231.2 million. Gaming Commission, 10-18
Indiana gaming revenue fell 10.0% to $169.5 million.  Gaming Commission, 10-18
Iowa casino revenues rose 0.32 to $122.5 million.  Gaming Commission, 10-18
Kansas gaming revenue rose 0.62 to $32.5 million. Gaming Commission, 10-18
Louisiana gaming revenue rose 1.26% to $250.0 million.  Gaming Commission, 10-18
Maine gaming revenue rose 3.3% to $12.4 million. Gaming Commission, 10-18
Maryland gaming revenue rose 6.9% to $143.8 million.  Gaming Commission, 10-18
Massachusetts gaming revenue rose 176.5% to $41.2 million.  Gaming Commission, 10-18
Mississippi gaming revenues rose 8.7% to $182.8 million.  Gaming Commission, 10-18
Missouri gaming revenue fell 1.1% to $144.0 million.  Gaming Commission, 10-18
Nevada gaming revenue rose 1.26% to $991.2 million. Gaming Commission, 10-18
New York VLT/casino revenue rose 9.1% to $219.0 million. Gaming Commission, 10-18
Ohio gaming revenue rose 4.0% to $152.2 million. Gaming Commission, 10-18
Pennsylvania gaming revenue fell 0.92% to $268.5 million. Gaming Commission, 10-18
Rhode Island gaming revenue rose 10.7% to $44.5 million. Gaming Commission, 10-18
South Dakota VLT/casino revenue rose 1.7% to $28.5 million. Gaming/Lottery Commission, 10-18
Total gaming revenue for September rose 4.0% to $3.581 billion.  David Rohn, 11-18

The Other categories:
Macau Gaming Revenue rose 2.8% to $2.7 billion.  Reuters, 10-1-18
Connecticut slot win fell 7.2% to $85.2 million. New London Day, 10-15-18
Kentucky historic racing machine win rose 54.3% to $10.4 million. Racing Commission, 10-18
The Dow rose 2.1% to 25,964.82. Yahoo Finance, 9-1-18
Adams Index fell 7.9% to 504.51. CDC Gaming Reports, 9-1-18
New Jersey, Maryland, Massachusetts,
New York, and Illinois

September demonstrated the importance of sports betting in New Jersey , with the combined revenue from sports betting, online gaming, and two new casinos pushing total Atlantic City and New Jersey gaming revenue up nearly 20 percent. Casino win in Atlantic City was up 7.7 percent to $232 million, online gaming was up 26.3 percent to $25.8 million, and sports betting added another $24 million. The growth in casino revenue was due to the Hard Rock, with $25.9 million in win, and Ocean Resorts, with $14.9 million. Bally’s, Borgata, Golden Nugget, Harrah’s, and Resorts all reported declines in win. Atlantic City is certain to report total revenue increases until the two new casinos and sports betting pass their first anniversary. And it is just as likely that the existing casinos will struggle to match revenues of the previous year. The only outlier in that narrative is the continued growth of online gaming.

Maryland, Massachusetts , and New York do not yet have sports betting, but they do have new casinos that are pushing revenues up. Maryland’s sixth casino, MGM National Harbor, has been open for nearly two years, but it is still reporting significant revenues increases. In September, MGM had $54.4 million in win, an increase of 10.3 percent. Live!, with a new hotel and conference center, generated $50.2 million, an increase of 7.1 percent. Horseshoe Baltimore had a 1.6 percent decline to $20.6 million; Ocean Downs was up 13.9 percent, driven by the addition of table games; Hollywood was up; and Rocky Gap had a 1.3 percent decrease to $4.6 million.
Massachusetts has the newest casino on the block: MGM Springfield opened in August. In September it had $26.9 million in win. Its instate competitor, Plainridge Park Casino, with only slots, reported $14.3 million, down 3 percent. The $900 million MGM is already a major player in the region, with its primary competition there, the Indian casinos in Connecticut, reporting a 7.3 percent decline in slot revenues in September.

MGM Springfield is probably going to be a major factor in expanding casino gaming in Connecticut. The Mohegan and Pequot Tribes want to build another casino in Connecticut to compete with MGM. MGM would also like to build a casino in Connecticut. The situation has been complex and contentious and is far from being resolved. In the meantime, MGM Springfield is doing just fine - not as well as MGM National Harbor, but it cost half as much to build and it sits in a much smaller market than its sister in Maryland.
New York also benefits from an additional casino, Resorts World Catskills, opened in February. This month it contributed $15.9 million to the total casino win of $48.9 million reported by the four non-Indian casinos in the state. The total casino win was up 64 percent year-on-year, driven primarily by Resorts. But the three casinos that were open last year still had a 13.8 percent increase in win. The state’s VLT revenue was down 0.46 percent to $170.1million. It is interesting that the VLT revenue has remained robust in the face of dramatically increasing casino revenue.

Illinois is also reporting significant revenue growth, not because of any new casinos, but due to the steady increase in VLTs. The Land of Lincoln now has 29,923 VLTs, up from 27,681 in September 2017, with revenue increasing by 10.7 percent to $121.7 million. Casino revenue is moving in the opposite direction: casino win was $109.5 million, down 7.9 percent, with admissions down 7.5 percent to 913,860. It seems to be a relentless process that only can be altered by new legislation to further expand gaming. We can expect several proposals next year, with pressure in particular increasing for a casino in Chicago.
Pennsylvania, Louisiana, Mississippi, and the minor states

A new addition to the list of states with growing gaming revenue is Rhode Island . Unhappy with Newport, the Newport Grand Casino moved down the road to Tiverton. The renamed Tiverton Casino reported $9.8 million in revenue, nearly three times what the Newport Grand did in September, 2017. The other casino in the state, Twin Rivers was down 5.5 percent to $34.7 million.

Pennsylvania's total gaming win fell 0.92 percent, with slot revenue rising 0.42 percent to $196.2 million and table game win falling 4.3 percent to $72.6 million. But the details matter: one casino, the Sands Bethlehem, is being impacted by cross-border competition. The casinos in New York have taken a bite of out the Sands: in September slot revenue at the property was down 2.5 percent to $24. 2 million and table game win dropped 18.8 percent to $18.4 million. In contrast, Parx, the state’s highest grossing casino, had a 4.6 percent increase in slot revenue to $33.9 million and a 1.48 percent increase in table games to $15.2 million. When sports and online gambling finally get off the ground in Pennsylvanian, the narrative will probably change, but for now it is safe to say Pennsylvania is a very mature market and highly susceptible to competition from other jurisdictions.

Ohio’s total gaming revenue, from both casinos and racinos, increased 4 percent in September. But casino revenue was down 0.9 percent to $66.5 million, while racino slot win was up 8.1 percent to $85.7 million. Two sites helped move their respective needles: Hollywood Columbus casinos had a win of $17.4 million, a decrease of 4.9 percent from 2017, while the Hard Rock racino reported $21.9 million, up 12.3 percent for the month.

Louisiana outperformed the calendar, overall, but its components had mixed results: state VLT revenue was down 1 percent to $45.2 million, riverboat casino win was up 2.4 percent to $153.8 million, Harrah’s New Orleans was down 5.2 percent to $23.4 million, and slots at the racetracks were up 8.7 percent to $28.3 million The riverboats had a 3 percent increase in admissions to 1,732,758; the racetracks had 1 percent increase to 305,909, and Harrah’s New Orleans recorded 339,635 entrances, a 1.8 percent decline.

Detroit casinos reported an increase of 1.4 percent in total revenue. MGM was up 3.5 percent to $49.6 million, Motor City was up 1 percent to $38.8 million, and Greektown win fell 1.8 percent to $26.7 million. The nearby casino strike, across the border in Canada, was over by the time September began, and still the Detroit market grew, despite the one-less-Friday handicap. Even the negative Greektown results were better than could be expected with one less Friday.
Nevada, the Gorilla

Nevada’s casino revenue in September increased by 1.3 percent, but although the state usually follows the Las Vegas Strip, that was not true this month. The Strip casinos reported a 3.7 percent drop to $546 million. Baccarat fell 27 percent to$70.4 million, blackjack was down 17.5 percent to $92.1 million, and craps dropped 10.4 percent to $32.7 million. In contrast, the downtown casinos’ win was up 11.6% to $54.9 million and Boulder Strip revenue increased 27.5% to $67.54 million. Revenue in Reno declined 1.5 percent to $78.9 million, North Shore of Lake Tahoe fell 12.6 percent to $2.6 million, the South Shore fell 15.8 percent to $17.7 million, the Carson City-Carson Valley market grew by 10.5 percent to $10.1 million, and Churchill County fell 2 percent to $1.63 million. Statewide slot machine win increased 7.0 percent to $637.2 million, with a win percentage of 6.8. The big news was sports betting: sports books in Nevada had a $56.3 million win, an increase of 26.7 percent over September 2017.

Sports betting is no longer a Nevada exclusive, having already become an important contributor to gaming revenue in four states more states. In September a total of $817.7 million was wagered on sports in Delaware, Mississippi, Nevada, New Jersey, and West Virginia. The win was $95.5 million, which was 11.6 percent. Don’t expect that win percent to become the norm, but it was a nice touch for the ongoing entrance of sports betting onto the national stage.

It has only been six months since the Supreme Court overturned federal law prohibiting sports betting in most states, and the expansion is just getting started As wagering on sports spreads it will become an increasingly important part of the national gaming narrative. Pennsylvania’s first sports book is expected to be open for business in December. Five more states - Louisiana, Arkansas, Ohio, Michigan, and California, are now considering legalizing betting on sports. So by next year this time we probably will be looking at a whole new game, sports betting-wise.

This report is written by Ken Adams