Neil Bluhm reigns as the undisputed king of casino gambling in Illinois. But getting to the top may have been the easy part.
An analysis by GamblingData revealed that Rivers Casino has some of the most lucrative slots and table games in the U.S.
Stephen J. SerioMr. Bluhm's Rivers Casino in Des Plaines, which marks its second anniversary next month, raked in $417 million before taxes from its games last year, nearly double the $212 million earned by the Elgin Grand Victoria, the next-strongest performer. Growth has been sluggish so far this year at Rivers, with $174 million in receipts through May, an increase of less than half a percentage point over the first five months of 2012, according to the Illinois Gaming Board.
Nevertheless, the casino has some of the most lucrative slot machines and table games in the U.S., according to an analysis conducted for Crain's by GamblingData, a unit of London-based Gambling Compliance Ltd.
The $6,338 in adjusted gross receipts the casino makes per day from each of its table games was tops last year among a group of 18 casinos whose receipts are publicly available, including the Borgata in Atlantic City, N.J., and the MGM Grand in Detroit. So was the $802 per day Rivers culls from each of its slot machines, the analysis shows. The data doesn't include most tribal casinos, facilities in Las Vegas or casinos in states such as Mississippi that don't break out individual-property performance.
Studies have determined that each Slot Machine PERMANENTLY removes + 1 job from the local economy.
To SUCK $802 from the local economy defines the lost jobs.
To remove $6,338 EACH DAY defines lunacy!
Part of the reason Rivers is beating its competition is its gleaming new facility, which is closest of all casinos in the region to the dense POOR neighborhoods of Chicago and the affluent northern suburbs. It sits near a dense cluster of hotels close to O'Hare International Airport and is about 17 miles from the Loop.
On a recent night, customers could play the 2-cent “Invaders From the Planet Moolah” slot machine or ante up at a $300 minimum-bid blackjack table. Inside, there's a rock club, bars, a coffee shop and an upscale restaurant offering a $100 porterhouse.
Mr. Bluhm's partners are happy. Rivers' owners made one-and-a-half times their investment in the property between July 2011 and last December, one investor, Toronto-based Clairvest Group Inc., said in February.
Mr. Bluhm, chairman of the venture that owns the property, Chicago-based Midwest Gaming & Entertainment LLC, agreed to pay $125 million for the license in late 2008. Midwest was able to land financing for the $445 million project and take advantage of an improving economy when the property opened in 2011.
“It was one of the first casinos in the country to get done after the recession,” says Mr. Bluhm, also head of Chicago-based private-equity firm Walton Street Capital LLC.
The question for Rivers' owners is whether the facility can sustain its strong start. Statewide spending on casino gambling has slowed in 2013. At all 10 Illinois casinos, the house's take before taxes was $669 million through May, 4.2 percent below the $699 million they earned over the same period in 2012.
Greg Carlin, Midwest's CEO, attributes the slowed pace to several factors, including the spread of video poker terminals in the region and the expiration of the Bush payroll tax cut earlier this year. Even the weather has dampened turnout, while the nascent economic recovery hasn't helped yet, he adds.
A bigger problem looms in Springfield. In May, the Illinois Senate passed a bill that would authorize five new casinos in the state, including properties in Chicago and Lake County. Another 1,200 slots could be added to Cook County racetracks in the bill, creating so-called “racinos” at tracks not far from Rivers in Arlington Heights, Maywood and Cicero.
The spread of gambling in the Chicago area would fill government coffers—but could mean lower revenue for Mr. Bluhm and his partners.
“Des Plaines will get harmed probably the most because it's closest to Chicago,” says Ryan Gallagher, an assistant professor of economics at Northeastern Illinois University who has studied casino markets. He estimates the racinos, plus casinos in the city and in Lake County, could lop off up to 20 percent of Rivers' attendance.
Mr. Bluhm is, to a degree, resigned to an increase in gambling here. The question is the shape of the final bill.
“We'd prefer there to be no new competition and cannibalization, but if it's going to be so, it should be fair,” Mr. Bluhm says. He wants the state to lower tax rates on casino owners and allow existing facilities to add more gambling positions.
For complete coverage of Chicago-area real estate, visit ChicagoRealEstateDaily.com
Read more: http://www.chicagobusiness.com/article/20130622/ISSUE01/306229974/how-neil-bluhms-bet-on-rivers-casino-has-paid-off#ixzz2X2xVQWXA
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