Mohegan Sun and Foxwoods report declining revenue.
How would a N.H. casino stack up against New England competition?
By ANNMARIE TIMMINS
Monitor staff
Sunday, April 7, 2013
(Published in print: Sunday, April 7, 2013)
(Published in print: Sunday, April 7, 2013)
Mention casinos around these parts and two come to mind: Foxwoods and Mohegan Sun, both 140 miles away in Connecticut. But there are four others, in Maine and Rhode Island, with three on the way in Massachusetts.
And New Hampshire might add at least one.
When the House takes up the state Senate’s bill to legalize a casino in New Hampshire later this month, the questions will be many. One of them will be this: How many casinos is too many, especially given the drop in casino revenue over the last few years?
Skeptics, such as the Granite State Coalition Against Expanded Gambling, will warn lawmakers that the entertainment market will be saturated once Massachusetts opens its three casinos in 2014 and a fourth slots-only parlor later this year. After all, casinos in New England have begun adding other entertainment to their sites – spas, restaurants, arenas and shops – to hold on to customers who are spending less on gambling.
“It’s not that there’s not going to be room for more casinos after Massachusetts builds,” said Jim Rubens, executive director of the anti-gambling group, in an email Friday. “It’s as the market radius for each new casino progressively shrinks . . . the market cannibalization problem (gets) progressively worse.”
In other words, Rubens believes a New Hampshire casino will survive against the New England competition only by pulling customers from local restaurants, hotels and other entertainment venues.
On the other side of this debate will be analysts who assess market potential by studying driving times, education and income levels, competing sites and the differences between people who want a glitzy casino and those who’d be happy with slot machines in convenience stores.
Analysts such as Matthew Landry, managing director with Strategic Market Advisors in Somersworth. He has done market analysis for Millennium Gaming, which wants to build a $425 million casino at Rockingham Park in Salem, as well as other casino developers, including some competing for a Massachusetts license.
Landry believes Rockingham Park is such a winning location that it will compete aggressively with New England’s other casinos, even one planned for nearby greater Boston. Suffolk Downs in East Boston is one site under consideration.
“It’s one of the best untapped locations on the East Coast,” Landry said of Rockingham Park. “If you are living in Reading (Mass.), on a map it looks like you are halfway between Salem and (Suffolk Downs.) But driving up I-93 is much easier. Salem is the most accessible location to the highest population base that we can get and still be inside the state’s borders.”
Millennium has emphasized that point with lawmakers, telling them it intends to draw 60 percent of its customer base from Massachusetts. And while it will have live horse racing, a hotel, restaurant and small entertainment area, spokesman Rich Killion said Millennium isn’t looking to compete with New Hampshire businesses.
He said Millennium will let its players use their reward points at other New Hampshire businesses, to pay for meals, lift tickets or clothing at the mall. The casino would then reimburse the businesses, an arrangement the company already offers at its casino in Pennsylvania.
So, what is New Hampshire up against if it enters the New England casino market? Probably fewer competitors than you think. Maybe even just one.
The best-known casinos – Foxwoods and Mohegan Sun – are not New Hampshire’s real competition, said Clyde Barrow, director of the Center for Policy Analysis at the University of Massachusetts Dartmouth. The center just released its fourth annual study of the New England gambling market, which included interviews with 3,035 New Englanders who gambled in the last year.
For starters, while Foxwoods and Mohegan Sun are close to each other (eight miles apart) they are well beyond the 30 to 90 minutes most casino goers will drive to gamble. For example, Rhode Island gamblers tend to favor Foxwoods over Mohegan Sun because it’s slightly closer.
“Rhode Islanders won’t drive the extra eight miles,” Barrow said.
That’s not uncommon. Barrow said studies have shown that gamblers will choose the closest casino to them that meets their needs.
The Connecticut casinos are also anomalies in the casino world, so much that almost no one really competes with them, Barrow said. They have nearly 6,300 slot machines each and multiple hotels, restaurants, arenas and shops between them. Almost no other casinos anywhere are as grand. [Both with declining revenuesand excessive debt.]
“Foxwoods is the equivalent of four or five Atlantic City casinos,” Barrow said.
Landry of the Somersworth firm said Foxwoods and Mohegan Sun need all the extras just to make the long drive worth it for customers in New Hampshire, even Massachusetts. “Their penetration drops off dramatically as you go north,” he said of the Connecticut casinos. “And it’s not great south (of New Hampshire), particularly north of Boston.”
Right now, there’s nothing comparable to Foxwoods or Mohegan Sun between them and New Hampshire and greater Boston. By next year, there will be in Massachusetts and possibly New Hampshire.
Rhode Island and Maine
Rhode Island offers two places to play slot machines: Twin Rivers Casino in Lincoln and Newport Grand Slots in Newport. Both began as small racetracks converted into casinos; Newport is still small, while Twin Rivers rebuilt and expanded in 2007.
Neither have spas or great shopping centers, so they are considered “convenience casinos,” capable of drawing customers from Rhode Island and Massachusetts but not much farther.
Twin Rivers Casino has begun making a play for the bigger market, however. The renovation and expansion has allowed it to have 4,700 slot machines, two restaurants and a comedy club. This summer it plans to add 64 table games.
But if driving times matter like Barrow and Landry say, Rhode Island isn’t New Hampshire’s competition, either.
To the north, Maine has two offerings, one in Oxford, about 80 miles from Concord, and the other in Bangor, nearly 180 miles away. But like the Rhode Island spots, the Maine locations offer slot machines and table games but not much else. (The Bangor Hollywood Casino does offer live harness racing part of the year.)
New Hampshire lottery officials have said the Oxford casino has cut into its sales of lottery and scratch tickets along the state border. They also said New Hampshire residents who live along the border are visiting the casino. But Maine isn’t real competition either – if New Hampshire chooses to put a resort or destination casino along its border.
With New Hampshire’s bill requiring a $425 million investment in a casino, New Hampshire and Maine are not necessarily competing for the same customers, analysts said. That’s an important distinction Barrow said states should consider while debating expanded gambling legislation.
He said it makes a difference for the casino – and the state.
“If you want to generate a lot of money for the state, you go with slots because it’s not a lot of capital investment and they run themselves,” Barrow said, meaning the slots don’t require dealers. “If you want to create jobs with revenue being secondary, you go with a destination casino.”
There is a competing gambling bill in the House that would legalize six, slot-only parlors instead of a grander single casino. It is currently tabled in the House.
The Massachusetts factor
That leaves Massachusetts and the three casinos it’s planning across the state. Two will be on the state’s edges, one in western Massachusetts, the other nearer Worcester and Cape Cod. It’s the one going in the middle of the state – in greater Boston – that would compete most directly with New Hampshire.
Massachusetts’s casino law, like New Hampshire’s casino bill, requires a resort casino with a minimum investment of $500 million. The three developers who have applied for the greater Boston license know the destination casino business well. Foxwoods is eyeing a spot in Milford; Ceasers Entertainment is looking at Suffolk Downs; and Steve Wynn, who helped revive the Las Vegas strip in the 1990s, is looking at a spot in Everett on the Mystic River.
The Massachusetts law does not limit the number of table games or slot machines, whereas New Hampshire’s bill caps slots at 5,000 and table games at 125. But Barrow doesn’t see that as a disadvantage to New Hampshire because he doubts a casino in either place would install 5,000 machines.
“There are only three facilities in the U.S. that have more than 5,000 slots: Foxwoods, Mohegan Sun and the Empire City (casino) on the edge of New York City,” he said.
Barrow and Landry said the area between southern New Hampshire and Boston has a lot of the right kind of people to support a casino.
“What you’re looking for is a high concentration of people and money,” Barrow said.
For one thing, they are open to gambling.
According to Barrow’s study released last month, 52 percent of those interviewed said they had gambled in the last year, although casino gambling rated third, after lottery and scratch tickets.
They’re also well-educated and well paid, so they have the money to gamble.
About 60 percent of the respondents from New Hampshire and Massachusetts who had gone to Foxwoods or Mohegan Sun in the last year had annual family incomes of more than $75,000.
And of that group, the gamblers from New Hampshire were the most educated: 51 percent had taken some college classes and 27 percent had a bachelor’s degree or higher. Among the Massachusetts respondents, 68 percent had taken some college classes or earned at least a bachelor’s degree.
That’s the kind of customer a casino developer wants, Barrow said.
“The average casino player tends to have some college or higher,” he said.
Three things will become important in the casino race if New Hampshire legalizes a casino, Barrow and Landry said: location, community support and being first.
Landry and Millennium Gaming believe New Hampshire wins that challenge if a casino opens at Rockingham Park in Salem. Some sites in Massachusetts have raised concerns among locals. If Rockingham Park gets the casino, the local support in Salem is solid. When voters were asked in March if they supported a casino at Rockingham Park, 81 percent said yes.
Being first is the big unknown.
Right now, Massachusetts expects to award casino licenses for greater Boston and western Massachusetts by February 2014. In New Hampshire, the casino bill is awaiting debate in the House.
The bill’s supporters, including Gov. Maggie Hassan, pushed the bill through the Senate with a sense of urgency.
But the House has long opposed expanded gambling and declined to include a potential $80 million for a license in its budget. And it’s clearly not on a fast track in that chamber. It’s not even been scheduled for a public hearing yet.
“Being first (lets) you build up a loyalty, and that tends to lock people in,” said Barrow. Once players begin earning rewards points for frequenting the same casino, it becomes harder for them to leave, he said.
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