Racinos: A Losing Bet?

Is this the future of gambling more losses at the track?

PEI is investing millions and losing at the Racino. It’s a trend all over but soon to be worse with NB betting

NB Casino means more losses at PEI's Racino

Gambling, betting and the horses are a losing deal for consumers and now a losing bet for the track and gambling owners. The recession, a glut of facilities and changes in consumer demographics are ruining the biz. What used to be a lucrative game for organized crime became a lucrative corporate and government game. Now it’s looking like red ink all over.

In the United States gambling is on the decline. In PEI, the Racino has never made money and soon will face a even steeper challenge unless Islanders can be convinced to lose more of their after-tax dollars.

US gambling loses

Bob Lefsetz wrote a story on this yesterday – “I read in “New York” magazine that the New York Racing Association was going to shut down today. But the state government gave it a $25 million loan, so it could keep the Belmont, Aqueduct and Saratoga tracks running. Wise move?”

“Last week, the state government authorized an emergency $25 million loan to the New York Racing Association—which operates the Belmont, Aqueduct, and Saratoga tracks—to keep it from shutting down on June 9, four days after the Belmont Stakes. How does a business with a piece of a legal-gambling monopoly almost end up at the glue factory? Blame the economy, the fall of horse racing’s popularity, and being saddled with Albany’s patronage mentality. Bookies Gone Broke How does a business with a piece of a legal gambling monopoly almost end up at the glue factory?”

“I remember the Aqueduct ads growing up. Horses running in dim light, was this fun to watch? Turns out it was about gambling. But even that’s off. OTB (Off Track Betting) went bust in December. 4.5 million people went to an NYRA track in 1987, only 1.7 million went last year. But you don’t have to bet at the track! But betting plunged from $6.53 billion in ‘87 to $2.45 billion last year. The hope is to save the NYRA by installing slot machines at the track, but is this wise?”

“Atlantic City saw its gaming revenues drop 13.4% in November 2009. “The decline in Atlantic City casino revenues returned to double digits in November, dampening hopes that the worst is over for the city’s struggling gambling industry. Revenues for the city’s 11 casinos fell by 13.4 percent in November compared to a year ago.”

“And Nevada gambling revenues dropped 6% in April. CASINO EARNINGS: “Nevada gaming revenues dip almost 6 percent in April.” I thought gambling was supposed to be recession-proof! Like the movies!”

Back on PEI

Pundits are predicting that the Red Shores Racino on PEI is going to take another hit from gambling competition in New Brunswick. Revenues will go down 17% and that only makes the money losing operating worse.

Global Gaming Business predicts more loses on PEI.

“Casino New Brunswick opened its doors in the city of Moncton in May. The new $90 million facility features 500 slot machines, 22 table games, a high-limit room and a poker room. An entertainment and convention center with a hotel and spa will open in June.

That could be bad news for two casinos on Prince Edward Island. Government officials there are already projecting a 17 percent drop in gaming revenues this year.

“We’ve been looking at this for almost a year and a half now and we’ve taken quite a few steps to try and shore up our operation here on Prince Edward Island,” Finance Minister Wes Sheridan told CBC News.

Among those steps: rebranding the old racinos as full-fledged casinos. The facilities now go by the name Red Shores Racetrack and Casino.” GGBM