August 2018
T he Stars were in Alignment in June
June was a good month for gaming; nationally, revenues rose 5.45 percent to $3.449 billion. June nicely caps off the first half off the year: for the first six months of 2018, the combined VLT and casino revenues were $21.03 billion, up 3.24 percent over the same period in 2017.
The stars were all in alignment in June: there were five Saturdays, one more than in 2017, resulting in a 2.55 percentage advantage. The national economy in June was running at record level: jobless claims were the lowest they have been in 45 years; wages rose at an annual rate of 2.8%; inflation leveled off; the consumer confidence index rose to 127.4, close to an 18-year high; homeownership rose to a four-year high; and the GDP increased by 4.1 percent (annual rate). Still, there were some less positive numbers: crude oil prices rose 1%, settling above $74 for first time since Nov 2014; interest rates and home prices went up; and new home sales were down.

On balance, the economy and the gaming industry were very strong in June and for the first half of 2018.
June 2018 Casino and VLT Revenue:

Atlantic City gaming revenue rose 1.8 % to $233.6 million.  Gaming Commission, 7-18
Colorado casino revenue rose 5.8% to $71.0 million.  Gaming Commission, 7-18
Delaware gaming revenue rose 25% to $32.5 million.  Gaming Commission, 7-18
Detroit casino revenue rose 5.3% to $119.1 million . Gaming Commission, 7-18
Florida VLT revenue rose 6.3% to $46.6 million. Gaming Commission, 7-18
Illinois casino revenue rose 9.0% to $238.2 million. Gaming Commission, 7-18
Indiana gaming revenue rose 4.5% to $186.8 million.  Gaming Commission, 7-18
Iowa gaming revenue rose 4.0% to $122.1 million. Gaming Commission, 7-18
Kansas gaming revenue rose 5.5% to $32.6 million. Gaming Commission, 7-18
Louisiana gaming revenue rose 3.0% to $273.7 million.  Gaming Commission, 7-18
Maine gaming revenue rose 9.5% to $12.6 million. Gaming Commission, 7-18
Maryland gaming revenue rose 14.1% to $148.9 million. Baltimore Sun, 7-6-18
Massachusetts gaming revenue rose 6.4% to $14.8 million.  Gaming Commission, 7-18
Mississippi gaming revenue rose 0.29% to $172.6 million.  Gaming Commission, 7-18
Missouri gaming revenue rose 6% to $147.8 million.  Gaming Commission, 7-18
Nevada gaming revenue rose 4.17% to $933.0 million.  Gaming Commission, 7-18
New York gaming revenue rose 11.4% to $216.0 million. Gaming Commission, 7-18
Ohio gaming revenue rose 8.8% to $154.5 million. Gaming/Lottery Commission, 7-18
Pennsylvania gaming revenue rose 4.7% to $271.2 million.  Gaming Commission, 7-18
Rhode Island VLT revenue rose 2.9% to $41.3 million.  Gaming Commission, 7-18
South Dakota gaming revenue rose 4.1% to $27.3 million. Gaming/Lottery Commission, 7-18
Total national gaming revenue for June rose 5.45% to $3.449 billion.  David Rohn, 8-18
Total year-to-date national gaming revenue rose 3.24% to $21.030 billion. David Rohn, 8-18
The Other categories:
Macau gaming revenue rose 12.5% to $2.78 billion. Reuters, 7-1-18
Connecticut slot win rose 4.6% to $89.5 million.  New London Day, 7-18-18
Racing handle in the 2 nd quarter rose 5.02% to $3.2 billion. Blood-Horse News, 7-5-18
Adams Index fell 9.7% to 540.95.
The Dow fell 0.59% to 24, 271.40.

The Revenue Narrative by Jurisdiction

Atlantic City got a reset: beginning in June the totals will include sports wagering in casinos and at the race tracks as well as casino win and online gaming win. Additionally, two new casinos opened in Atlantic City: Hard Rock and Ocean Resort, though not until the 27 th . Hard Rock reported $4.1 million for those four days in June; Ocean Resorts reported $3.0 million. Sports wagering at the Borgata, Ocean Resort, and Monmouth Park totaled $3.5 million for the last 16 days of June, when it became legal. Casino win for June was $207.7 million, up 5 percent and online gaming was up 12.1 percent to 22.7 million. All the casinos reported an increase in revenue, except Bally’s and Harrah’s; Bally’s was down 3.5 percent to $17.5 million and Harrah’s was down 6.1 percent to $29.7 million. Unless Hard Rock and Ocean Resorts grow the market significantly, someone else will have to pay for their presence in a challenged market - probably the casinos that have reinvested the least in the last couple of years.
The casino industry in Maryland continues to grow: MGM National Harbor was up 18.3 percent to $59.3 million, Live! Was up 15.1 percent to $48.1 million, and Horseshoe Baltimore was up 3.3 percent to $22.8 million. For the smaller venues, Hollywood Perryville had a $6.6 million win, up 4.5 percent; Ocean Downs, which added table games since last June, reported a combined table game and slot revenue of $7.2 million, up 29.8 percent; and Rocky Gap generated $4.7 million, an increase of 5.2 percent.
New York , like Maryland, is still riding the high generated by a new casino. Last year three casinos generated $26.8 million in June and the state’s VLTs had a win of 167 million. In 2018, four casinos generated $44.3 million and 18,139 VLTs had a $171.7 million win. But Resorts World Catskill is still underperforming by most standards: it cost about the same as MGM National Harbor and does about 20 percent of the revenue. That ratio is not likely to change because, after 18 months, MGM’s revenues are still growing at double-digit rates. Still, Resorts is outperforming the other casinos in New York. Overall, New York and Maryland are growing more consistently than just about any other jurisdiction in the country.
The one exception to that claim by New York and Maryland’s is the state of Illinois , but the Land of Lincoln is unique. Its growth is driven by VLT expansion and the attendant increase in VLT revenue. In June, VLTs generated $121.7 million in revenue, up 17 percent from June 2017, with the number of VLTs having increased by 8.9 percent to 29,283 units. For June, casino win was also up 1.7 percent, but the number of people entering casinos dropped by 3.4 percent to 937,196. The trend, every month, is for more VLTs and fewer people going to casinos, not a healthy direction for the casinos to be going.
In Mississippi , casinos reported marginally improved gaming revenues, attributable to a rare increase in casino win from the river counties. The revenue for river casinos was up 7.5 percent to 75.4 million; the coastal casinos were down 4.7 percent to $97.1 million. A year ago, the situation was the reverse, when the coastal casinos were up 6 percent and the river county casinos were down 11.6 percent; that up/down pattern is the norm for the last few years. Mississippi will be the next state with sports betting, with the first casinos taking bets in August and the remaining casinos expected to open their sports books by the end of September.
Louisiana separates its gambling into four categories: VLTs, riverboat casino, land-based casinos, and slots at the tracks. In June all categories posted increases: VLTs were up 4.7 percent to $49.2 million, riverboat casinos were up 7.4 percent to $168.9 million, Harrah’s New Orleans’ win was up 6.3 percent to $23.7 million, and the slot machines at horse racing tracks generated 9.3 percent more in revenue; total revenue was $31.7 million. Admissions were also up overall by 0.8 percent to 2,617,956, but the riverboats had a 0.9 percent decrease to 1,920,833. It’s probably a year away, but the newly authorized transition from floating on water to being firmly on land will eventually happen, which should help the casinos now on riverboats.
In Ohio , both casinos and racinos reported an increase in win. The four casinos’ win was $67.1 million, an increase of 4.7 percent; the racinos had $87.4 million in win, up 11.9 percent. The casino market in Ohio appears to be stabilizing, with the only ongoing increase in competitive pressure coming from the VLTs in Illinois. But that could change as states begin to add sports betting. In the long-term, sports betting will even out across all markets, but in the beginning the first states to add sports betting will have an advantage and will take market share from their sports-less neighbors.
Nevada reported a 4.2 percent increase to $933 million, the fifth straight month of year-over-year improvement. But it is difficult to call anything in Nevada a trend, because there are too many markets and too many variables. In June, Nevada had a couple of anomalies: slot revenue was down 3.3 percent and Reno-area casinos had a 20 percent increase in win to $59.4 million. At the same time, many of the same old cast of characters performed as expected: the Strip was up 5.4 percent to $523.9 million, blackjack was up to $92.3 million, and baccarat was up 10.3 percent to $73.2 million. So many different factors affect Nevada that it best to limit causal claims to just saying that if the Strip, table games, and baccarat are doing well, it is probably a good month for Nevada’s casino industry.
Overall, the number of visitors to Las Vegas f ell 1.1 percent to 3.56 million. Downtown Las Vegas marches to a completely separate drummer from the Strip. In June, the casinos in downtown Las Vegas reported a 4.4 percent decline in revenue to $44 million, with hotel occupancy in the downtown at 81 percent and an average room rate of $63.84. By contrast, hotel occupancy on the Strip was down 2 percent to 90.6 percent and the average room rate was also down to $116.41 a night. But even without the Electric Daisy Carnival in June of this year, convention attendance was up 3 percent.
In some other states there were other unusual circumstance. In Detroit, the casinos had one more month without competition from Caesars Windsor; Delaware might have gotten a boost from sports betting; and Plainride Racino in Massachusetts is inexplicably outperforming most of the country. But that racino has only has until the 24 th of August to be alone in Massachusetts; the opening of MGM Springfield is bound to negatively affect it, as well as impact the two Indian casinos in Connecticut. For the rest of the U.S. jurisdictions, the bustling economy and an extra Saturday account for the exceptionally good month.
Looking back at the first six months of 2018, compared to 2017, the calendar wasn’t a factor, since one extra Saturday and one fewer Sunday, spread across six months, is immaterial. Instead we have to look at the increase in capacity in Massachusetts, New York, and Illinois as a major factor of revenue increases. Add the good economy to that and you have 2018 (so far) in a nutshell.
Looking forward , a new casino in Massachusetts, and sports betting in Mississippi, Delaware, and New Jersey, will have impacts on the second half of the year. Will the strong economy continue? Will the November elections change the mood of the country? Stay tuned for future reports!
This report is written by Ken Adams