THOMAS FARRAGHER
A casino arms race is underway
JONATHAN WIGGS/GLOBE STAFF/FILE
An electronic table game at the Plainridge Park Casino in Plainville, which opens later this month.
If you’re crawling home, locked in rush-hour traffic on the Southeast Expressway, take heart. You’ll soon hit the outdoor advertising equivalent of a trifecta, a succession of flashy billboards that, roughly speaking, urge you to smile and empty your pockets.
By
Mohegan Sun in southeastern Connecticut is having a big concert on July 10 and they would just love for you to come. Twin River Casino, in Lincoln, R.I., has some nifty games of chance at which they know you’ll excel. And then there’s the newcomer, Plainridge Park Casino, which plans to opens its doors in two weeks and then never close.
Perhaps you’ve been too distracted by the 24/7 conversation in these parts about whether the Boston bid for the 2024 Olympics is our date with destiny or simply a fool’s errand. Meantime, nothing less than a casino arms race is exploding all around us.
With the blessing of Massachusetts voters, the state’s casino era will be inaugurated on June 24 in Plainville, where a $250 million facility — with 1,222 slot machines, whiz-bang electronic blackjack tables, as well as a food court and restaurants — will open on a 90-acre site just 18 miles north of Providence.
Let the games begin.
Yes, in a market already hobbled by oversaturation, in which casino ledgers are awash in red ink, here is how the market is responding: Let’s build more casinos!
Flanks are being protected. Economic chess pieces are being moved into place. State borders are being fortified.
“If you look at most casinos, a lot of them are not making returns beyond the cost of their debt,’’ said Keith Foley, senior vice president with Moody’s Investors Service. “The pie is getting smaller, and more companies are chasing that pie. You have so many casinos chasing the declining pool of consumer dollars.’’
Moody’s revised its outlook on the US gambling industry last summer from stable to negative. In April, Foley produced a report on regional casinos that should make any casino operator blanch.
Discretionary income remains tight. An aging population portends sluggish growth, as younger gamblers pursue more sophisticated — and often online — gambling. Many casinos are leveraged to their eyeballs. In other words: gulp.
The result? Economic cannibalization.
As Springfield attends to the preliminary spade work in advance of MGM Resorts $800 million casino complex in that city’s South End, Connecticut lawmakers have approved a plan that lays the groundwork for a casino along Interstate 91 north of Hartford. That’s our market, those are our patrons, Connecticut says.
“I think that Connecticut has the right to do whatever it wants,’’ said Kevin Kennedy, Springfield’s chief development officer. “But I wonder about the economics.”
So do I. But John E. Taylor Jr., the chairman of Twin River Management Group, has no worries about his plan to build a modest new casino just about the length of a football field from the Massachusetts line in Tiverton, R.I. And, with the voters’ assent, he thinks that will happen in late 2018.
“We’re going to be very successful in a competitive market,’’ Taylor said, insisting that this is no “head fake’’ in an attempt to make Massachusetts think twice about awarding a license for a casino nearby.
Stephen P. Crosby, Massachusetts’ top gambling regulator, said the state has accounted for intra-New England competition in its business plan. “It’s not a question of concern for Massachusetts’ licensees,’’ Crosby told me Tuesday. “I’m sorry to say it’s a matter of concern for [other states]. It’s a tough problem.’’
By late 2014, four of Atlantic City’s 12 casinos had closed. Connecticut’s tribal casinos have lost nearly 40 percent of their revenue in the last eight years. Thousands have been laid off. The economists who pay attention to this stuff are doing everything but holding their noses.
All of that makes these bright-and-airy projections of prosperity seem like so much whistling past so many graveyards.
I’ll say one thing about all these casino operators, they’ve got a terrific set of poker faces.
Who will fold first? Survival of the fittest time has arrived.
Posts
No comments:
Post a Comment