Detroit: Hitching Wagon to Declining Gambling Revenues

Lower casino revenues could mean dwindling jackpot for Detroit

December 21, 2013

By JC Reindl

Detroit Free Press Business Writer

 

The City of Detroit’s financial lifeline for its bankruptcy restructuring — tens of millions in annual taxes from casino gambling — has been faltering as downtown gaming revenue is on pace for its largest annual decline since the first casinos opened in 1999.

Continued creep downward and loss of the tax revenue could mean less money for restructuring Detroit’s city services. Bill Nowling, spokesman for emergency manager Kevyn Orr, said the EM’s office is closely monitoring Detroit’s casino situation.

“If we need to make an adjustment in our (financial) assumptions as a result, we will.”

The fall in business could indicate a shrinking of the casino business market in Detroit and herald fiercer battles for market share of what’s left among the Detroit three — MGM Grand Detroit, MotorCity Casino Hotel and Greektown Casino-Hotel.

■Brian Dickerson:Detroit has gone from being the Motor City to being the Casino City

Gambling revenue this year through November is down 4.3% to $1.2 billion. The state and city split up taxes from the three casinos. Roughly speaking, the state takes about 8% and the city from 10% to 12%, depending on the year and adjusted gross gaming revenue for each casino. The lower the revenue, the lower the tax receipts.

Orr this week called Detroit’s cut — $171 million in 2012 — one of the city’s most important revenue streams, representing about 14% of the total money coming in each year. But it has been sliding, down from $177 million in 2011.

“Without it, the city couldn’t operate,” Orr said Wednesday in bankruptcy court testimony.

Non-gaming revenue from hotel rooms, food sales and other sources at the three casino sites are not part of the equation.

Detroit’s lawyers are hoping to set aside a large portion of the taxes for improving dismal city services, if a federal bankruptcy judge allows a deal to go through that would release the casino tax revenue back to the city. The tax stream was pledged as collateral in 2009 for a massive city debt that came due.

To be sure, with $1.4 billion in total gambling revenues last year, the three casinos are still serious cash-generators and in no danger of closing. Still, their significant drop in revenue could have direct effects on the quality of Detroit’s amenities and resident services as the city aims to emerge from bankruptcy with sustainable finances.

Gambling industry experts and casino operators blame most of the decrease on the four new Ohio casinos, particularly Hollywood Casino Toledo, which let northwest Ohio residents gamble closer to home.

Another factor was the January expiration of the Social Security payroll tax cut, which was worth about $1,000 to a worker making $50,000 a year. The growing proliferation of casino gambling nationwide has also cut into gaming revenues for many regional-draw casinos nationwide such as Detroit’s.

Greater competition

It has been a down year for all three casinos.

Gambling revenues through November were 5.3% lower at MGM Grand than a year ago and 6.7% lower at Greektown, according to the Michigan Gaming Control Board.

MotorCity Casino had the smallest decline at about one-half of 1%. But it also paid for promotions and giveaways: Overall net revenues, which include food and beverage and hotel stays, were down 8% as of June 30, while the casino’s promotional expenses grew, according to figures compiled by BofA Merrill Lynch Global Research.

MotorCity also spent money this year on hundreds of new slot machines and to update the design of its gaming floors to draw in more gaming dollars.

“It’s definitely become more expensive to operate in the Detroit market, which happens whenever competition heats up, as it did with Toledo,” said Jenny Holaday, MotorCity’s senior vice president of operations.

Industry experts say revenues are down in regional-draw casino markets across the country, and especially so in areas such as Michigan and Indiana, where local properties have new competitors.

More casinos on way

There are now nearly 1,000 casinos within 41 states (including tribal lands) with more soon to open when Massachusetts becomes the 42nd state. The Kentucky state Legislature is debating whether to put legalized casinos on the ballot next fall.

Michigan has 22 tribal casinos within its boundaries, with FireKeepers Casino near Battle Creek the closest to Detroit.

New casinos lead to more new casinos. Just as the Windsor casino spurred efforts for Detroit’s casinos, officials often contend that their city or state must build its own casinos in response to neighboring casinos to recapture the gambling dollars (and potential tax revenues) that are flowing across their borders.

But each new property means less potential business for the others.

From an economics standpoint, communities hosting casinos want visitors from as far away as possible so that gambling proceeds are “new” money and not local dollars that would otherwise be spent elsewhere in the community.

“There are many markets where saturation has been reached or is close to being reached,” said Joseph Weinert, executive vice president of New Jersey-based Spectrum Gaming Group. “All things being equal, customers will chose to gamble at the casino closest to their home.”

The shine may already be wearing off Toledo’s new casino, which opened in spring 2012.

The casino’s third-quarter revenue was down 15% from a year earlier to $48.9 million, according to corporate filings by its owner, Penn National Gaming.

Caesars Entertainment does not give financials for Caesars Windsor in its filings, although the gaming company itself reported a $761-million third-quarter loss.

Hotels hurt profits

Insiders say Detroit’s casinos were most profitable in their early years when they operated in temporary facilities and before they took on debt to build large and expensive permanent digs.

Politics played a role in the grandeur and size of the properties, as each one was mandated to have conference space and no fewer than 400 hotel rooms to provide amenities thought to be lacking in the city at the time.

A deal negotiated by former Mayor Kwame Kilpatrick got the casinos out of an 800-room requirement in exchange for, among other things, $102 million cash to help balance Detroit’s budget.
“All of them were making a big profit before the permanent facilities, and all of them were in trouble when they went to the large, fancy facilities,” said Jacob Miklojcik, a Lansing-based gaming consultant.

Although none of the casinos discloses hotel occupancy rates, Miklojcik suspects that the 400-room hotel mandate was still too big and wouldn’t have happened if the casinos had a choice. “Some of those are pretty massive costs per key,” he said.

Both MGM Grand and MotorCity opened their temporary locations in 1999 and full properties in 2007 — just in time for the recession.

“The bottom fell out right when everyone’s permanent facilities came online,” said Holaday, the MotorCity executive.

Greektown was the last casino to open, in 2000, and did not transition to its full facility until 2009. It is the smallest property of the three.

Despite shedding $500 million in debt during bankruptcy, Greektown’s finances are still somewhat precarious, and the casino hasn’t reported an operating profit since emerging from Chapter 11 in 2010.

Quicken Loans founder Dan Gilbert bought Greektown this spring through his casino business, Rock Gaming, which has made management changes and plans “significant” renovations next year to the casino property. Rock Gaming owns two of the four Ohio casinos, in Cleveland and Cincinnati.

In an interview, Rock Gaming CEO Matt Cullen said he doesn’t believe Detroit’s casino market will continue shrinking.

“I don’t think we agree that the size of the pie has gotten smaller and will stay smaller,” Cullen said.

“There are a lot of people still that are rediscovering the city of Detroit and who are coming down here that haven’t come down here for a long time. And there’s still people that don’t come down here.”

http://www.freep.com/article/20131220/NEWS01/312200116

 

Lots of People Already Quitting Their Jobs at Cleveland Casino

Could it be the LOW WAGES?

Lots of People Already Quitting Their Jobs at Cleveland Casino

Posted by Vince Grzegorek                                     

The Horseshoe Casino’s first days in business were bound to include a few kinks here and there.

Would Mike Trivisonno’s poker table require delivery of fried chicken? Would he fetch his own?

But word inside Dan Gilbert’s palace is that the house is dealing with more than a few hiccups in its opening weeks — most notably that a ton of employees have already quit.

“People can’t handle it,” says one Horseshoe employee who asked not to be ratted out for talking to people of our dubious stock. “It’s the stress. It’s a lot of culture shock. A lot of people from all departments have already quit. It’s visibly noticeable and something we talk about.”

Many of the problems stem from the casino’s hiring philosophy, says the staffer. “The process was kind of like American Idol, which was cool. But even if you were experienced, you might have been turned down because they wanted to hire based on having an upbeat and positive attitude. There are people working here who had never even frequented a casino as a guest before.”

A second casino employee who also declined to be named confirms that workers are fleeing like Browns fans at halftime. Consensus is it’s the relatively inexperienced older folks who are cashing out early, and that plenty of workers are thoroughly enjoying themselves. But management isn’t exactly giving them reason to stay.

“Cage cashiers have had a serious problem with quitting because they’re keeping them way too long — 11-hour days,” says the employee. Even worse: Slot attendants work for $6 an hour plus tips, which have been all but nonexistent.

“I saw four people crying after they looked at their paychecks. Some people are really flipping their shit.
“A lot of people quit when they didn’t get the shifts they wanted, acting like it’s the first day of sixth grade and you’re picking your homeroom. It’s every department: dealers, cashiers, attendants, security.”

Dealers, in particular, have been flagged for not being polite enough, fast enough — even correct enough. “They just brought in 14 experienced dealers to deal with that.”





EXPERIENCED DEALERS FROM OUT-OF-TOWN?

Rock Gaming says it’s casino business as usual.

“We intentionally staffed up,” says spokeswoman Jennifer Kulczycki. “Caesar’s has opened casinos before, and they know when you bring a new industry to a new market and people aren’t familiar with a 24/7 operation, you anticipate some attrition. Sixteen hundred is normal operating conditions, and we hired over 1,600.”

But even more troubling are emerging rumors that Horseshoe guests can’t get a timely beverage.
“The waitresses have been awful,” one worker says. “It takes over 20 minutes to get a drink. I’ve got customers asking me about their drink nonstop.”

So the place sucks?

“I love it. I’d be bored if I wasn’t doing this.”

http://www.clevescene.com/scene-and-heard/archives/2012/05/31/lots-of-people-already-quitting-their-jobs-at-cleveland-casino

 

Ohio: Spectrum Grossly Overstates Projections...Again

Ohio's gambling jackpot lower than predicted

Alexander Coolidge, The Cincinnati Enquirer 2:40 p.m. EDT June 5, 2013

 

It's early, but casinos are seeing less betting, racinos plan fewer slot machines and governments get less revenue.

 

CINCINNATI — One year after it started, expanded gambling in Ohio is off to a slower start than expected, leading to potentially smaller payouts for the state's cities, counties and schools.

 

The state could fall $260 million to $360 million short on annual gambling revenue, an Enquirer analysis of results from all 11 Ohio gambling venues shows.

Why the shortfall? In large part it's because racinos, racetracks with associated casinos, were projected to install more video slot machines — and that overestimated demand for gambling in the Columbus market.

It's too soon to say whether the Horseshoe Cincinnati Casino, the last of four to open in the state, will add to or stem the statewide shortfall. The Enquirer analysis shows the casino to be outperforming original expectations here if its initial performance is projected through a full year. But revenues have dropped from the venue's inaugural month in March.

Together, the four casinos in Cincinnati, Cleveland, Columbus and Toledo are on pace to generate $950 million in gambling revenue a year, the analysis shows. That's compared with $1.1 billion forecast in a study commissioned by Ohio Gov. John Kasich's office in 2011.

If the pace continues, the casinos will deliver $315 million in taxes rather than the $375 million originally projected.

Meanwhile, racinos are setting Ohio up for further disappointment: The governor's study projected the state's seven racetracks would generate $1.2 billion in annual gambling revenue — with the state keeping $391 million — from play at 2,500 video slot machines each.

But most of the tracks are opening with 1,000 to 1,600 video lottery terminals. Gambling experts say fewer slots likely will mean less gambling revenue, which would produce less money for Ohio schools, the sole beneficiary of racino gambling because the Ohio Lottery administers it. Analysts see those plans as a sign that developers expect fewer slot players.

"Racinos are either playing it safe or they don't think Ohio's as large a market as initially thought," said Mark Nichols, an economist at the University of Nevada, Reno. "That means fewer tax dollars."

People flood the gaming floor of the Horseshoe Casino Cincinnati on opening night, March 4, 2013.(Photo: Amanda Davidson, The Cincinnati Enquirer)
 

Under those calculations, Ohio would receive $450 million to $550 million total from gambling based on effective tax rates of 33% to 33.5%, which are about in the middle among states with gambling.

Last year neighboring Pennsylvania, which has about 1.2 million more residents than Ohio, received almost $1.5 billion from gambling on $3.2 billion in revenue, according to the American Gaming Association's annual report, State of the States. Pennsylvania opened its first casinos in 2007 and now has 11 total freestanding and racetrack casinos. It taxes slot machines at 55%, among the highest rates across the USA, and 16% for table games.

Ohio, with four land-based and racetrack casinos at the end of 2012, received $138.2 million on $429.8 million in gross gambling revenue, the report said.

In part because of the effects of Hurricane Sandy on New Jersey tourism, Pennsylvania casinos became the second highest grossing behind Nevada, according to the report. Pennsylvania's gambling operations also generated the most revenue for the state, besting even Nevada because of its higher tax rates.

Ohio now has four freestanding casinos, two racinos and two on the way this year. Three more racinos are expected to open in 2014.

Columbus casino underperforms

Three casinos are doing less business than projected in 2011 with Hollywood Casino Columbus as the biggest underperformer. In 2011, Spectrum Gaming Group of Atlantic City, N.J., forecast for the governor that the Columbus casino would be the largest in the state, generating $381.7 million in gambling revenue a year.

Since opening in October, Hollywood Casino Columbus has generated $132 million and is on track to bring in $236.6 million after one year. Officials with Penn National Gaming, which owns all Hollywood casinos, said they're satisfied with both of their casinos in Columbus and Toledo.

Toledo was forecast for $235 million in revenue; it likely will pull in $197 million.

"We're very happy with the performance of both our properties," spokesman Bob Tenenbaum said.

He declined to discuss Spectrum's study.

Horseshoe Casino Cleveland also looks as if it will fall short of first-year gambling revenue projections of $279.6 million.

Officials with Caesars Entertainment, which runs both Horseshoes, said they are not alarmed. Instead, they are focused on longer-range goals of growing the casinos into destinations that each will generate $300 million in revenue a year.

"City casinos take longer to ramp up than suburban casinos," said John Payne, president of Caesars' central U.S. markets that includes 20 casinos.

Racetrack casinos put in fewer slots

Meanwhile, racino developers are pulling their punches on installing one-armed bandits, installing a third fewer video lottery terminals than envisioned in the state's forecast.

All were authorized and forecast to install 2,500 machines each, but none has indicated it will do so.
ThistleDown in suburban Cleveland opened in April with fewer than 1,100 slot machines. Scioto Downs in Columbus, which opened in June 2012, has 2,100. Most racino developers are saying they want to open with 1,600 or fewer slots.

The Spectrum study envisioned 29,120 gaming positions — chairs in front of slot machines or at gambling tables at casinos and racinos — but operators are on track to create 20,000.

Steve Gallaway, principal of Denver-based Gaming Market Advisors, said racino developers are hedging their bets. They don't think the market can absorb all the slot machines allowed, so they're putting fewer in.

"For Ohio, that means less tax revenue until the economy improves," he said. "The market is still just as viable, just not today. Once the economy strengthens, making the demand there, Ohio will see those machines" after a three- or four-year delay.

Governments cautious on revenue

The effect of gambling tax revenue will be felt throughout Ohio, especially once the casinos have had a few years experience and all seven racinos are up and running.

Municipal, county and school officials say they have been cautious about projections.
Cincinnati now is counting on about $10 million in casino tax revenues annually, compared to estimates that anticipated $20 million a year.

The city's casino money is not assigned to cover any specific expense although the city manager's office has identified it as a potential source of up to $3 million in annual money for a streetcar project starting in fiscal year 2015-16.


For the next fiscal year, the city is counting on $9.1 million to flow into the general fund, including $1.6 million the city is carrying over from this year that it hasn't spent.

"The city's been conservative about casino projections," city spokeswoman Meg Olberding said. "We need to give it a full year before we know precisely how much revenue we can count on."

Hamilton County Commissioner Greg Hartmann said the county wants to use $6 million to $8 million in anticipated casino tax revenues to help it shore up its $38.6 million stadium fund. Those numbers are based on low-ball estimates.

Cincinnati-area school officials say they're not sure what implications less gambling money might have. The Ohio Lottery Commission keeps 33.5% of all gambling revenue from racetrack video lottery terminals, and the money goes to the Ohio Department of Education.

Jenni Logan, treasurer for the Lakota School District, said lottery money is part of the state financing that makes up 40% of her $150 million budget.

"It's part of the money the state gives to school districts," she said.

Competing ideas, then flood of options

Ohio's flood of gambling options started four years ago with different groups that never envisioned competing with one another.

After nearly two decades of courtship by gambling companies, Ohio voters legalized casino gambling in 2009 through a constitutional amendment. Developers Rock Gaming and Penn National Gaming won the vote with promises to create thousands of jobs and generate $650 millionin tax money for 88 counties, more than 600 school districts and four host cities.

The numbers behind the casino plan were based on generating $2 billion in gambling revenue and did not anticipate racino gambling.
 

^“Racinos are either playing it safe or they don't think Ohio's as large a market as initially thought.^”

— Mark Nichols, University of Nevada, Reno

 

But Ohio lawmakers' own bid to generate gambling tax dollars from the state's seven racetracks were threatening casino developers' promises even before the ballot initiative passed.

The same year as the amendment plan, legislators hatched a plan to raise $933 million in taxes and fees over two years by legalizing what they predicted would be a $1 billion-a-year business of installing video slots at racetracks. Like the casino plan, racino legislation didn't envision competition from casinos.

Matt Schuller, now executive director of the Ohio Casino Control Commission, said conventional wisdom in the legislature in summer 2009 was the casino amendment would fail. At the time, Schuller was chief of staff to Ohio Senate President Tom Niehaus.

"The conventional wisdom was that people in Ohio hated gambling," he said.

Then-Gov. Ted Strickland signed the budget plan that authorized slots at racetracks. The plan immediately became mired in litigation, and opponents won the right to put a repeal initiative on the Ohio ballot.

The racino plan laid unresolved but dormant as Strickland campaigned against Kasich and the court battles dragged on.

Meanwhile, Rock Gaming that tapped operating partner Caesars Entertainment Corp. and quietly tweaked its gambling revenue projections, forecasting each would generate $300 million in gambling revenue. Penn National Gaming later also updated the revenue forecast for Toledo: $195 million.
Then in mid 2011, Kasich announced his plan to authorize video slots at racetracks. His study envisioned a $1.2 billion racino industry controlled by seven racetracks operating 2,500 slots apiece that would co-exist with a scaled-down $1.1 billion casino industry.


http://www.usatoday.com/story/money/business/2013/06/05/ohio-gambling-revenues/2392697/

 

 

Caesars Staggering Debt

Ohio casino gets gaming license despite debt issue

February 13, 2013

The Herald-Dispatch / 2013

Herald-Dispatch.com

 

CINCINNATI (AP) — The Ohio Casino Control Commission on Wednesday issued a gambling license to Ohio’s fourth and final voter-approved casino despite the $20 billion in debt of one of its developers.

The commission decided to issue the license to Horseshoe Casino Cincinnati, set to open March 4, at its meeting in Columbus after discussing concerns about the $20 billion in debt of one of its developers, Caesars Entertainment Corporation.

“The interest payments on that debt consume virtually 100 percent of the company’s current cash flow,” according to an investigative report conducted for the commission by Linwood, N.J.-based Spectrum Gaming Group.

The report, which was presented at the meeting, called Caesars’ debt “extraordinarily high” but said the company was meeting all of its debt obligations.

“However, should the economy fail to recover sufficiently or if another downtown occurs, it could cause a present difficulty for Caesars to meet its debt service and covenant requirements,” the report said.

Caesars spokesman Gary Thompson said from Las Vegas that the company “acknowledges we have a high debt load” but that it has more than $2 billion in liquidity and has expanded the vast majority of its debt to 2017 and beyond.

“We had a higher debt load in 2008 when the economy crashed,” Thompson said. “We had a lot of predictions that we might not be able to meet our liabilities, and we have persevered and met every one. Never been late, never missed a payment.

“I think we’ve demonstrated our ability to overcome some very severe economic challenges,” he added.

The commission agreed to issue Horseshoe Casino Cincinnati’s license on the condition that Caesars undergo an annual review of its financial stability and provide updates to the commission if there are any major changes to the company’s debt, good or bad.

“We would be looking to see what the risk was for the state of Ohio if they should get into serious financial trouble,” said the commission’s executive director, Matt Schuler. “We are monitoring this on a daily basis.”

Schuler said the risk is minimized by the fact that Caesars has about a 20 percent investment in the venture, while Detroit-based Rock Gaming LLC has the rest.

The financial status of Rock Gaming, led by Dan Gilbert, owner of the NBA’s Cleveland Cavaliers, was not mentioned in the investigative report, but company spokeswoman Jennifer Kulczycki said that its equity contribution already has been made.

Rock Gaming and Caesars also developed Cleveland’s casino together. That casino’s license also requires Caesars to undergo a yearly review of its financial stability.

The scheduled March 4 opening of Cincinnati’s casino is contingent on a dry run of the facility set for Feb. 27.

The invite-only event is for family, friends and business partners of the casino’s staff, and is closed to members of the media and general public. All proceeds will be given to charity.

The casino will have to fix any problems identified during the dry run before being allowed to open. If any major problems are identified, the opening could be delayed.

Cincinnati’s casino will be the last of four voter-approved casinos to open in the state all in less than 12 months if everything goes as planned. Casinos Cleveland, Toledo and Columbus opened starting in May; voters approved of them in 2009.

The state collects 33 percent in gross revenue taxes from the casinos, money that goes to the state’s counties, school districts, the four casino cities, the casino commission and programs for problem gamblers.

Horseshoe Casino Cincinnati projects that it will generate $100 million in gambling tax revenue every year. 

 

http://www.herald-dispatch.com/news/briefs/x49586285/Ohio-casino-gets-gaming-license-despite-debt-issue

 

 

Detroit Faces Takeover

Stop Predatory Gambling

Detroit promised its 3 casinos would stabilize its finances; city now faces takeover for spiraling deficits.

http://buswk.co/WVyjEC via @BW

A file photo shows the entrance to the Horseshoe Casino near Chicago in Hammond, Indiana during September 2003. Photographer: John Zich/Bloomberg

Bloomberg News

Casinos Saturating U.S. Midwest Cannibalize State Revenue

By Mark Niquette and Chris Christoff on February 07, 2013

 

Mike Thomas, a retired salesman for a truck manufacturer, says odds are that he’ll stop driving 45 minutes five days a week from Ohio to play slot machines at Hollywood Casino in Lawrenceburg, Indiana .

Instead, he and his wife, Sandy, expect to do their betting at the Horseshoe Casino in downtown Cincinnati, set to open next month about 15 miles (24 kilometers) from their suburban home. He doesn’t think he’ll be alone, noting that most cars in the Indiana casino’s garage bore Ohio plates.

“They’re going to lose a lot of customers,” said Thomas, a 75-year-old in an Ohio State Buckeyes sweatshirt and cap. “I’m not going to drive 40 miles if I can do as well there.”

 

VIDEO:

Ohio Casinos Siphoning Off Indiana Gaming Revenue

 

The Cincinnati casino will be the fourth to open in Ohio since voters approved them in 2009, and as many as seven horse tracks with slots also are planned. Yet even as revenue at the Ohio casinos has missed projections, they’re siphoning money from Indiana and Michigan (STOMI1). With most major Midwest markets now served, states that rely on gambling taxes for schools and other services are fighting for a piece of the action.

“It’s close to the saturation point,” Alex Bumazhny, director in Fitch Rating’s Gaming, Lodging & Leisure group, said in a telephone interview from New York. “It’s almost a zero-sum game whenever a new casino opens.”

Ben’s Bets

Atlantic City, the New Jersey resort that ruled the East Coast market for three decades after the first casino opened in 1978, is floundering after six years of declining revenue as a result of losing business to casinos in neighboring states. Pennsylvania, which opened its first gambling house in 2006 and now has 11, passed New Jersey in 2012 to become the second- largest U.S. betting market after Nevada.

VIDEO:

Hasselhoff: 'The Hoff' Brand Dominates My Life

Gambling has a long history as a pillar of U.S. public finance. A half-dozen lotteries sponsored by the likes of Benjamin Franklin and George Washington operated in the 13 colonies to pay for building projects, according to the American Gaming Association. Nevada in 1931 became the first state to legalize casinos, and now people can bet in every state except Utah and Hawaii. Commercial casinos operate in 23 states and tribal ones in 29, according to the association.

The market is especially crowded around the new $400 million Cincinnati casino developed by Rock Ohio Caesars LLC, a venture of Caesars Entertainment Corp. and Rock Gaming LLC.

Falling Revenue

Within about 50 miles, there are three places to gamble in Indiana -- the Hollywood Casino Lawrenceburg run by Penn National Gaming Inc, Pinnacle Entertainment Inc. (PNK)’s Belterra Casino Resort & Spa in Florence and the Rising Star Casino Resort owned by Full House Resorts Inc. in Rising Sun. Pinnacle also plans a new track with slots -- a “racino” -- at Cincinnati’s River Downs horse track.

Tax revenue from Indiana’s 13 betting sites has declined every year since 2009, according to the state Gaming Commission. Projections for the next two fiscal years assume about $120 million less because of Ohio competition, Chris Atkins, director of the Indiana Office of Management and Budget, said in a telephone interview from Indianapolis. A forecast by the state’s Revenue Forecast Technical Committee in December pointed to “continuing casino market saturation.”
Meanwhile, the Hollywood Casino Toledo near the Michigan- Ohio border, which Penn National opened on May 29, may be siphoning business from Detroit’s three casinos.

Border Jumpers

In the first seven months that the Hollywood was open, Detroit casinos’ combined gross receipts fell 2.5 percent to $796.5 million compared with the same 2011 period, according to the Michigan Gaming Control Board.

“We see large amounts of people coming from Michigan,” said John McNamara, spokesman for the Hollywood.

Michigan also has 22 casinos run by autonomous Indian tribes, and a casino operates in Windsor, Ontario, across the Detroit River in Canada. It all adds up to bad news for Detroit (984FMF), which faces a possible state takeover because of spiraling deficits. The city anticipates a $10.4 million drop in casino- tax revenue for the fiscal year that ends June 30. The 5.7 percent decrease would be the largest since the casinos opened in 1999 and 2000.

The gambling parlors had been “a godsend,” providing steady revenue while other sources dried up, said Bettie Buss, senior research associate for the nonprofit Citizens Research Council of Michigan, which analyzes state and local government.
Yet the casinos making Detroit suffer are no panacea for their states.

Slow Going

Revenue at the casinos that opened last year in Cleveland, Toledo and Columbus  has been short of projections by the Ohio Department of Taxation in 2009, according to Mike Sobul, a former employee who helped calculate them and now is a Columbus financial consultant to local governments and schools.

Timothy J. Wilmott, president of Penn National, said in a Jan. 31 conference call that while the company is “seeing a slower ramp-up” in slots revenue than expected in Toledo and Columbus, he thinks the market needs time to develop.

Indiana lawmakers are considering ways bolster the industry. A bill by state Senator Phil Boots, a Crawfordsville Republican, would allow casinos to keep more revenue and gambling riverboats to move inland. It may be just a holding action.

“You lose your ability to out-entice somebody because everybody is pretty much the same, and everybody is on the same playing field,” Mark Nichols, a professor of economics at the University of Nevada, Reno, and its Institute for the Study of Gambling & Commercial Gaming, said in a telephone interview. “Then it just comes down to location.”

http://www.businessweek.com/news/2013-02-07/casinos-saturating-u-dot-s-dot-midwest-cannibalize-state-revenue#p2

Ohio: Cannibalization and Market Saturation

Pretending Gambling Dollars would magically fall from the sky, Gambling Developers saturated the Ohio market.

The solution bears watching! Will they whine for a tax break?

Horseshoe Casino Cincinnati to enter crowded gambling market

Business Courier

Date: Thursday, December 20, 2012

 

When Horseshoe Casino Cincinnati opens early next year, it will join what has already become a crowded casino and gambling industry in Ohio, the Columbus Business First reported.

 

The state’s gaming industry is growing to the point where it’s able to meet all of the state’s gambling demand, according to an industry outlook report from Fitch Ratings.

 

Revenue will continue to climb with the opening of the Cincinnati casino, as well as more racinos in the state, but they will all see “considerable cannibalization from existing Ohio gaming facilities and gaming facilities in neighboring states” Alex Bumazhny, associate director for gaming, lodging and leisure at Fitch, said in an email.

 

 

Ohio’s gaming industry has state nearly saturated, Fitch finds

Business First by Evan Weese, Web coordinator

Date: Wednesday, December 19, 2012

Evan Weese

Web coordinator- Business First

Janet Adams | Business First

Hollywood Casino Columbus averaged $137 in revenue per slot during each day of November, indicating market saturation.

Ohio’s ultra-competitive casino and gaming industry is growing to a point where it’s able to meet all of the state’s gambling demand, according to an industry outlook report from Fitch Ratings.

Revenue will continue to grow as Horseshoe Casino Cincinnati opens in March, and more racinos join the fray across the state, but they’ll all see “considerable cannibalization from existing Ohio gaming facilities and gaming facilities in neighboring states,” Alex Bumazhny, associate director for Gaming, Lodging & Leisure at Fitch, said in an email.

That effect has already been prevalent in Columbus where Scioto Downs’ video lottery terminal business fell nearly 23 percent in October, the first month of business for Hollywood Casino Columbus.

And gamblers are ditching Indiana casinos to test their luck at Ohio’s three new casinos, at Penn National Gaming’s (NYSE:PENN) Hollywood Casinos in Columbus and Toledo, and at Rock Gaming LLC’s Horseshoe Casino Cleveland.

“New openings in areas seemingly devoid of gaming supply, like Columbus, still manage to meaningfully cannibalize from casinos located up to 130 miles away,” the report said.

Hollywood Casino Columbus pulled in $137 of revenue per slot per day in November, indicative of a competitive market, Bumazhny said. Anything below $200 per slot shows saturation, he said, with less-competitive markets notching daily revenue numbers north of $300 per machine.

Representatives from Hollywood Casino Columbus and the Ohio Casino Control Commission were not immediately available for comment.

Fitch’s 2013 report calls for a “mostly stable” U.S. outlook for gaming as competition increases and operators continue to focus on growth and maintain financial flexibility.

Evan Weese is web coordinator for Business First.

http://www.bizjournals.com/columbus/news/2012/12/19/ohios-gaming-industry-has-state.html

Caesars salivating to invade Massachusetts continues loss

Dear Mr. Loveman,

You may be a mathematical genius, but how long has it been since Caesars made a profit?
Why should Massachusetts taxpayers bail out Caesars when you can't?

Just wondering!



Caesars suffers $220.6 million quarterly loss, sees positive signs from Las Vegas
LAS VEGAS REVIEW-JOURNAL

Posted: Oct. 31, 2012

 

Caesars Entertainment Corp. suffered a net loss of $220.6 million in the third quarter, blaming noncash charges of $419 million for the decline compared to a year ago.

During a conference call with investors and analysts Wednesday, Caesars Chairman Gary Loveman said the company's four casinos in Atlantic City that were closed by Hurricane Sandy, could reopen by the weekend.

Company spokesman Gary Thompson told Reuters there was moderate to heavy damage to roofs and upper floors at some of the casinos. He said work crews could repair facilities in time to open when New Jersey lifts its emergency declaration.

Atlantic City is a concern among gaming analysts. The market has suffered considerably since 2008 and any additional business disruption could continue to depress the market.

KDP Investment Advisors gaming analyst Barbara Cappaert said she be adjusting fourth quarter and 2013 estimates as the impact of Hurricane Sandy on Atlantic City emerges.

"Our concern in the near-term is that the economic devastation will have a drag on Atlantic City results by at least 10 percent," Cappaert said. "This will certainly not help gain Caesars the momentum it needs to improve its credit metrics."

During the quarter, Caesars' Atlantic City casinos saw revenues decline $20.2 million or 4.1 percent during the quarter due to lower casino spending from declining visits by customers.

The company, which operates 10 casinos on or near the Strip, said Wednesday net revenues for the quarter than ended Sept. 30, increased less than 1 percent to $2.198 billion. The company credited revenues from its interactive operations, which include social gaming operator Playtika Ltd.

"Generally speaking Caesars' results were in line with our expectations," Cappaert said.
Caesars also said higher revenues from its management contract for the Horseshoe Cleveland helped offset by lower casino revenues in all the company's markets, except for Las Vegas and the Illinois-Indiana region.

"Thanks primarily to growth in our interactive operations and a continued emphasis on expense reductions, we achieved about the same net revenues despite more competitive markets and the challenges posed by the continuing weakness of the U.S. economy," Caesars Entertainment Chairman
Gary Loveman said in a statement.

The company said "sluggish economic conditions" caused customer visitation and spending to decline in several regions. However, Las Vegas saw a nearly 8 percent increase in customer spending per trip.

Caesars expects to close the $610 million sale of its Harrah's St. Louis casino to Penn National Gaming early this month. The proceeds will be used to reinvest into the company's core properties, including the remodeling of the Imperial Palace, which will be renamed The Quad, which is adjacent to the $550 million Linq development on the Strip.

Linq is scheduled to open in phases in the second half of 2013.

Caesars continues to expand into new markets. The company will open the $450 million Horseshoe Cincinnati next spring and is planning to open a casino Baltimore. Both projects are being developed in conjunction with Rock Gaming of Detroit.

"We moved forward with the expansion of our distribution network into growth markets while we continued to invest in our hub markets of Las Vegas and Atlantic City," Loveman said.
Shares of Caesars Entertainment on Wednesday closed down 6 cents, or 1.03 percent, at $5.79 on the Nasdaq Global Select.

http://www.lvrj.com/business/caesars-suffers-220-6-million-quarterly-loss-sees-positive-signs-from-las-vegas-176665091.html

Casinos spend $26.7M on gaming referendum

Casinos spend $26.7M on gaming referendum

rachael pacella capital news service

The Cumberland Times-News
Sat Sep 29, 2012

ANNAPOLIS — The debate over expanding gaming in Maryland will ultimately be decided by the people, but to help them pick, casino companies on both sides have now contributed more than $26.7 million to campaigns for and against Question 7.

Question 7, the gaming referendum, would expand gambling in Maryland by extending casino hours, adding tables games and allowing an additional casino to be built at National Harbor in Prince George’s County. The gaming referendum fight has been prominently featured in television ads.

A total of $14.1 million has been contributed to the pro-expansion committee For Maryland Jobs and Schools Inc., most coming from MGM Resorts International, the potential operator of a casino at National Harbor.

A casino at National Harbor could take business away from surrounding casinos, including those owned by Penn National Gaming Inc. So far Penn National has spent has spent $13 million to campaign against expansion.

Penn National owns the Hollywood Casino Perryville in Maryland, but gaming analyst James Karmel said the company is really concerned about the effect gaming expansion in Maryland could have on its Hollywood Casino at Charles Town Races in West Virginia.

“The millions they spend on ads could potentially be offset if they win,” Karmel said.

The most recent campaign finance statement from the pro-expansion committee For Maryland Jobs and Schools Inc., released Wednesday, shows MGM has contributed an additional $3 million since a report issued last week. That puts MGM’s total contributions to the pro-gaming expansion campaign since August at $11.4 million.


Some of MGM’s contributions were in-kind, meaning they provided services and then reported the monetary value of those services as contributions.

For Maryland Jobs and Schools Inc. has also received $2.3 million from CBAC Gaming LLC, a group led by Caesars and Rock Gaming that was granted a license to operate video lottery terminals at a location in Baltimore this summer. Peterson Development Companies, the developers of National Harbor, have also contributed $400,000. They’ve spent $13.6 million.

Penn National has contributed $13 million to the committee against expansion, Get the Facts-Vote No on 7. They’ve spent $10.9 million.



 Through its own committee Penn National Gaming Inc. has spent $36,401.

Jared DeMarinis, the director of Candidacy and Campaign Finance for the Maryland State Board of Elections, said both committees have been consistent and accurate in reporting their expenditures. He said they are required to report everything in Maryland.

He said a more detailed report will come out Oct. 12, showing how the money has been spent.

Some observers have noted the irony in seeing casinos spend money on both sides of a gambling debate.

“There’s a touch of hypocrisy quite often in the kind of marketing that’s been done,” said Bill Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno.


http://times-news.com/local/x325754345/Casinos-spend-26-7M-on-gaming-referendum

Baltimore Gets Slot Barn, but Don't Call It That!

Harrah's [now Caesars, the Gambling Company with $20 BILLION debt], determined that 90% of their profits originated from 10% of their patrons - most of that from slot machines, most of that from Slot Barns around the nation as they suck discretionary income from the local economies.

Although they generously fund studies, polls and focus groups to determine elegant, euphemistic terms, like calling Gambling gaming to pretend it's something it isn't, a Slot Barn is a Slot Barn, just as they're proposing in East Boston.

Caesars' exec: Don't call Baltimore casino 'slots parlor'

Baltimore Business Journal by James Briggs, Reporter

Date: Friday, September 14, 2012

 

James Briggs

Reporter- Baltimore Business Journal

File photo

A rendering of the planned Harrah's Baltimore casino.

Baltimore City will not be getting a slots parlor.

That’s the view of city leaders, as well as CBAC Gaming LLC, a partnership that includes Caesars Entertainment and Rock Gaming.

Sure, CBAC still plans to build and operate the $310 million Harrah’s Baltimore, a 3,750-slot casino off Russell Street, just south of M&T Bank Stadium. But the term slots parlor has been banished from CBAC’s vocabulary.

“We unabashedly call it a casino,” said Greg Miller, the senior vice president of development for Caesars.

It remains to be seen whether Harrah’s guests will be able to play games beyond slots machines.

Voters Nov. 6 will decide whether to allow a new casino in Prince George’s County, as well as whether to allow table games across the state, including Harrah’s.

Regardless of the outcome of that referendum, Kim Clark, the acting Baltimore Development Corp. president, said city leaders consider Harrah’s a casino.

“I call it a casino because that’s a heck of a lot easier to say than video lottery facility,” Clark said, referring to the official term used by the state for a slots-only venue. “And it sounds much, much better than a slots parlor.”


http://www.bizjournals.com/baltimore/blog/real-estate/2012/09/caesars-exec-dont-call-baltimore.html

Promises! Promises!

From Neighbors of Suffolk Downs --

The Gambling Industry spent buckets of $$$ convincing Ohio voters that Predatory Gambling would pave their streets with gold. The legislation written of, for and by the Gambling Industry benefitted the Gambling Industry - creating LOW WAGE JOBS. 

Please don't expect the Gambling Industry to perform differently in Massachusetts.



Lots of People Already Quitting Their Jobs at Cleveland Casino

Posted by Vince Grzegorek on Thu, May 31, 2012

The Horseshoe Casino’s first days in business were bound to include a few kinks here and there.

Would Mike Trivisonno’s poker table require delivery of fried chicken? Would he fetch his own?

But word inside Dan Gilbert’s palace is that the house is dealing with more than a few hiccups in its opening weeks — most notably that a ton of employees have already quit.

“People can’t handle it,” says one Horseshoe employee who asked not to be ratted out for talking to people of our dubious stock. “It’s the stress. It’s a lot of culture shock. A lot of people from all departments have already quit. It’s visibly noticeable and something we talk about.”

Many of the problems stem from the casino’s hiring philosophy, says the staffer. “The process was kind of like American Idol, which was cool. But even if you were experienced, you might have been turned down because they wanted to hire based on having an upbeat and positive attitude. There are people working here who had never even frequented a casino as a guest before.”

A second casino employee who also declined to be named confirms that workers are fleeing like Browns fans at halftime. Consensus is it’s the relatively inexperienced older folks who are cashing out early, and that plenty of workers are thoroughly enjoying themselves. But management isn’t exactly giving them reason to stay.

“Cage cashiers have had a serious problem with quitting because they’re keeping them way too long — 11-hour days,” says the employee. Even worse: Slot attendants work for $6 an hour plus tips, which have been all but nonexistent.

“I saw four people crying after they looked at their paychecks. Some people are really flipping their shit.

“A lot of people quit when they didn’t get the shifts they wanted, acting like it’s the first day of sixth grade and you’re picking your homeroom. It’s every department: dealers, cashiers, attendants, security.”

Dealers, in particular, have been flagged for not being polite enough, fast enough — even correct enough. “They just brought in 14 experienced dealers to deal with that.”

Rock Gaming says it’s casino business as usual.

“We intentionally staffed up,” says spokeswoman Jennifer Kulczycki. “Caesar’s has opened casinos before, and they know when you bring a new industry to a new market and people aren’t familiar with a 24/7 operation, you anticipate some attrition. Sixteen hundred is normal operating conditions, and we hired over 1,600.”

But even more troubling are emerging rumors that Horseshoe guests can’t get a timely beverage.
“The waitresses have been awful,” one worker says. “It takes over 20 minutes to get a drink. I’ve got customers asking me about their drink nonstop.”

So the place sucks?

“I love it. I’d be bored if I wasn’t doing this.”

http://www.clevescene.com/scene-and-heard/archives/2012/05/31/lots-of-people-already-quitting-their-jobs-at-cleveland-casino

Ohio: Phony Revenue Projections Revised Downward

The Gambling Industry crafted a referendum that Ohio voters passed [after numerous attempts] filled with overstated jobs and inflated revenue projections. Now the truth!

Just as in Massachusetts where Spectrum did the same!

Ohio casino tax-revenue projections on decline
Jun. 1, 2012

Written by Alexander Coolidge

Ohio’s new casinos are starting to open as revised projections show a 40 to 50 percent drop in gambling tax revenues – potentially affecting cities, counties and public schools across the state.The Enquirer compared latest tax projections by casino developers with projections they supplied in 2009, when voters approved full-fledged casinos in Cincinnati, Cleveland, Columbus and Toledo.

Tax revenues have been revised down for three of the four casinos. The latest revision was made this week: A 36 percent drop in projected revenues at just-opened Hollywood Casino Toledo, where crowds now are placing bets at 2,000 slot machines, 20 poker tables and 60 other games from roulette to black jack.

The revised figures suggest – at least initially – a smaller tax windfall than originally expected for Ohio’s 88 counties, 600 school districts and four casino cities. All are entitled to a percentage of tax dollars generated by gambling revenue – projected as high as $650 million a year in 2009.
Casino officials say their projections have changed as Ohio’s gambling market has become more crowded and competitive. In 2009, only the four casinos were allowed to offer expanded gambling beyond the state lottery.

Construction continues on the Horseshoe Casino Cincinnati. In the background is The Hamilton County Justice Center. / The Enquirer/ Liz Dufour

Now, in 2012, the possibility also exists for play at up to 2,500 slot machines at each of the state’s seven racetracks. The tracks are expected to poach players from the casinos.

Just this week, a judge dismissed a lawsuit challenging slots at the tracks, paving the way for “racinos” to do an estimated $1.3 billion in business each year. The first racino, at Scioto Downs harness-racetrack outside Columbus, opened Friday.

“The gaming landscape in Ohio has changed significantly,” said Bob Tenenbaum, a spokesman for Penn National Gaming Inc. It’s the developer of Hollywood Casinos in Toledo and Columbus. The Columbus casino is set to open sometime this fall.

Officials with Rock Gaming, developers of Horseshoe Casinos in Cleveland and Cincinnati, declined to comment, saying their lower projections were listed on company fact sheets last year.

The Cleveland casino opened May 14; Cincinnati’s is expected to open next spring at Broadway Commons, Downtown.

Under terms of the 2009 vote, casino operators are obligated to pay state taxes equal to 33 percent of gambling revenue taken in. Besides the shares to cities, counties and schools, tax dollars also are to be distributed to the Ohio Casino Control Commission, the Ohio State Racing Commission and state programs to train law enforcement and combat gambling addiction.

Ohio taxpayers also will benefit from new racino money – projected at $435 million once all seven racetracks are up and running with slots. That’s based on Ohio receiving a 33.5 percent cut of racino gambling revenue.



Sprinkle some Fairy Dust!

The difference is that racino money will go to the Ohio Lottery Commission and not be funneled directly to counties and local school districts. The Ohio Lottery Commission puts profits in a fund administered by the Ohio Department of Education.

Tax revenues and gambling receipts have yet to be reported by any state entity or the casinos. Some local and school officials are still using state projections generated in 2009 to forecast their potential cut from casino tax revenues.

“That’s the best available tax information out there,” said John Leutz, senior policy analyst with the County Commissioners Association of Ohio, referring to an October 2009 report generated by state officials to estimate tax revenues for schools and governments. That report cited the casino developers’ studies and other research.

Leutz said the association has advised members to wait for more concrete information before making plans to spend casino tax revenues.

Whether racinos would figure into Ohio’s gambling picture has been a guessing game of the industry and policymakers for at least three years.

What business would make a significant investment without honest projections? NONE!


In 2009, then-Gov. Ted Strickland signed a budget into law that included a provision to authorize video slots at racetracks. Strickland’s push was immediately challenged and delayed by litigation. A group won the right to put Strickland’s racino issue on the November ballot in 2010, but that ballot was abandoned before it came to a vote.

The racino issue languished until Gov. John Kasich unveiled his plan to install the slots in mid-2011. The Lottery Commission granted the first racino license last month to Scioto Downs.

Other racetracks held off as a lawsuit brought by conservative anti-gambling group the Ohio Roundtable made its way through the courts. A judge dismissed the case this week, clearing the way for racinos to proceed.

http://news.cincinnati.com/article/20120601/BIZ/305300141/Ohio-casino-tax-revenue-projections-decline

 

This is how it starts

The groundwork is being laid for taxpayer bailouts. When revenues diminish, the Gambling Investors will seek reduced taxes and other give me's, before seeking bankruptcy protection because of the market saturation they've caused.

In their wake, they'll leave crime-ridden communities destroyed by Gambling Addiction. The Race to the Bottom!


Racinos in neighboring states brace for competition when Cleveland casino opens
Published: Friday, April 06, 2012
By Thomas Ott, The Plain Dealer

CLEVELAND, Ohio -- A company that owns two border-state racetrack casinos is girding to take a big hit after Cleveland and Ohio get into the gambling business next month.


Documents that MTR Gaming filed recently with the federal Securities and Exchange Commission warn that Ohio's move to allow casino gambling and let horse tracks install video slot machines could "negatively impact" Presque Isle Downs and Casino near Erie, Pa., and Mountaineer Casino, Racetrack and Resort in Chester, W.Va.

Ultimately, MTR says, the lost business could hinder attempts to obtain financing and make improvements at the company's Columbus race track, Scioto Downs. A "racino," the industry term for racetracks with slot machines, is to open there next month.

The company reported that Ohio bettors plunked down nearly half the money wagered on slot machines at Presque Isle in the second half of 2011.

Gamblers from Cuyahoga County spent 20 percent of the money spent on slots in the third quarter, a breakdown shows.

And, Ohio gamblers bet three-fourths of the money wagered on slot machines at Mountaineer in the second half of 2011, MTR reported. The third-quarter breakdown shows that 8 percent of the money came from Cuyahoga County but does not give an accounting for other Northeast Ohio counties. [They track their customers!]

"We're poised and ready to compete," Fred Buro, MTR vice president and chief marketing officer, said in an interview. "We're also very realistic. We know there's going to be some adjustment in the market."

Horseshoe Casino Cleveland presents a direct threat, along with two, and possibly three, potential Northeast Ohio racinos. In all, slots could be installed at all seven of the state's race tracks.

The Horseshoe is to open May 14 in downtown Cleveland, making it the first of four Ohio casinos to welcome visitors. The others are being built in Cincinnati, Columbus and Toledo.

On Monday afternoon in Erie, Presque Isle drew a modest crowd, with a license-plates in the parking lot indicating that Ohio customers did their share to make the turnout respectable.

Bill and Diane Tucker of Middleburg Heights visit Presque Isle about once a week, driving more than 200 miles round trip, and play the slots for five or six hours. That will stop when the Horseshoe opens.

"We're going to go to Cleveland," said 54-year-old Bill Tucker, a third-shift mechanic at a trucking company. "It's closer to home."

Newburgh Heights residents Joan Kuchta, 51, and Annmarie Lee, 71, go three times a week. They might return occasionally after the Horseshoe opens but look forward to gambling in Cleveland and saving on gas money.

Joanne Bortner, a Presque Isle customer from nearby Meadville, Pa., has cousins who travel to Presque Isle regularly from their home in Cleveland's east suburbs. She may have to soon head to Ohio if she wants to gamble with them.

"They won't be making the trip if they can have it in their own state," she said.

Hotels clustered near the racino at the State Street interchange of Interstate 90 depend on Ohio residents for up to half their traffic, employees say. The employees hear buzz about the Horseshoe as gamblers wait for hotel shuttles.

"I've even had people come out and say, 'You're going to lose business," said Cindy Szymanski, a "guest care coordinator" at a Days Inn.

MTR, which advertises Presque Isle with outdoor signs in and near downtown Cleveland, is not throwing in the towel, Buro said. He said the company has a marketing strategy planned for after the Horseshoe opens, but he would not disclose details.

MTR could capitalize on gamblers' preferences. For example, Presque Isle allows smoking in half of the casino; Ohio law bans smoking at the Horseshoe and the state's other casinos.

Caesars Entertainment, which is a minority partner in the Horseshoe with Dan Gilbert's Rock Gaming LLC and will operate the casino. Horseshoe General Manager Marcus Glover said casino officials think distance from the competition could diminish smoking's sway.

Gamblers also will have a choice between Presque Isle's rural location and sea of parking and Horseshoe's site on Public Square in the heart of the city. Cleveland Police Chief Michael McGrath has outlined a comprehensive plan for dealing with crime and traffic, but perception can be powerful.

"Some people say, yeah, they're going to try it," said Judy Powell, general manager of a Super 8 hotel near Presque Isle. "Some say they'll never go to downtown Cleveland."

Casino construction resumes Wed.

Casino construction resumes Wed.
Written by
Alexander Coolidge

DOWNTOWN —

Messer Construction Co. announced it will resume construction of the future Horseshoe Casino Cincinnati on Wednesday – just five days after an accident injured more than a dozen workers and halted work.

Messer, the project’s construction manager, said it is beefing up safety proceedures to prevent further incidents. It also vowed to continue aiding inspectors in ongoing investigations into Friday’s collapse of a part of the second floor.

“Worker safety remains the priority of all parties involved as we resume work on this important project,” Messer president Tom Keckeis, said in a statement. “We are confident that our augmented protocols for supervising, inspecting and verifying all work performed in the construction schedule can be performed safely, or it will not go forward.”

Friday’s accident occurred when concrete workers poured cement for a floor onto sheet metal that was resting on a steel beam that broke away.

The accident has spurred two investigations. The federal Occupational Safety & Health Administration is investigating the cause to ensure the safety of workers, while third-party structural engineers employed by the casino developer are looking into the cause, damage and remedies required, which the city will review.

Messer declined to discuss details of the incident, but investigators have approved work to resume. The company said its “project design and safety teams have reviewed all aspects of the construction, safety and inspection protocols, and we are implementing additional procedures to prevent this from happening again.”

The announcement comes hours after Cincinnati’s top building official said partial construction activity could resume as early as this week.

Amit Ghosh, chief building officer, said the emerging casino complex is a large site, and work could resume away from the section where the floor collapsed. He indicated work could resume first on the 2,500-car parking garage, which is a separate building.

“The site will hopefully be mobilized later this week,” Ghosh told city council members during a briefing on the investigations after the accident.

(Page 2 of 2)

He declined to discuss potential causes of the accident, but disclosed it is a common practice that steel beams are not always permanently affixed to the framework when they are first installed. He said it’s possible the beam that failed last week may not have had all the bolts installed or fully tightened to permanently secure it before it failed.

“Some were temporarily connected because other beams were not in place yet,” he said, adding afterward he didn’t know how many bolts were installed in the failed beam or how many would ultimately hold it in place.

Bob May, owner of RJM Consulting in Monfort Heights, said it is a common construction practice to erect steel without fully tightening all bolts to allow for some adjustments, but those bolts should be tightened and inspected before any load – such as a concrete floor – is placed on those beams. May’s firm manages construction projects for commercial clients, and he teaches classes in constrcution methods at the University of Cincinnati.

“Before you pour concrete, a special inspection should have taken place,” he said.
Ghosh said Messer Construction Co., the project’s construction manager, has promised the city it will ensure steel beams will be permanently installed before future concrete pouring is conducted.

“We have said, and they have agreed, that all connections they make from now on will be completely connected and we will get a structural engineer’s report before every pour that’s made,” he said.



Steel probed in casino collapse
Written by Alexander Coolidge and Lisa Bernard-Kuhn

DOWNTOWN — Steel beams fabricated by a Jackson, Miss., firm and installed by J&B Steel Erectors Inc. of West Chester will be examined as part of dual investigations into the collapse last Friday of the future Horseshoe Casino Cincinnati.

Probes by the U.S. Occupational Safety & Health Administration (OSHA) and the city of Cincinnati are ongoing to determine why a steel beam supporting a section of the second floor collapsed while cement workers poured concrete on sheet metal on top of it.

Scott Allen, OSHA spokesman, said investigators will be talking to key contractors on the job: J&B, which began installing the steel frame last September; Jostin Constuction, which was pouring the cement during the collapse; Woolpert, the civil engineer that crafted the building specifications; and Messer Construction Co., the construction manager that oversees the project.

“We’ll look at all aspects to determine the cause,” said Scott Allen, an OSHA spokesman.

Construction of the future Horseshoe Casino Cincinnati remained halted on Monday as investigators continued to examine potential causes. At least 13 unidentified workers were hospitalized; one remained in serious condition at Bethesda North on Monday.

OSHA and city officials declined to speculate how long their separate reviews will take or how soon they will clear the site to resume construction. Both have to give the okay for work to continue. A specific cause does not have to be determined, just that building design and work conditions are deemed safe, they said.

Experts said construction work might resume in a few days or in several weeks, depending on the complexity of the investigation.

The city is investigating after building officials evaluated the site on Friday. The city is awaiting findings by structural engineers working for the casino, which the developer will forward to city officials.

Amit Ghosh, the city’s chief building officer, is scheduled to brief the city council’s Major Transportation and Infrastructure Projects Subcommittee today on the accident, the investigation and the impact.

(Page 2 of 2)

Allen said OSHA had inspectors examining the site with some contractors over the weekend. He said once investigators have assessed the site, they will likely supervise the cleanup, which could yield additional clues.

Ihab Saad, chairman of the Department of Construction Management at Northern Kentucky University, said the more complicated the investigation, the longer it takes to restart work and ultimately conclude the inquiry. Work could resume in a few days or a few weeks.

“The construction site is quite large – they could resume work in areas not deemed to be dangerous,” he said.

Saad is not involved with the project and declined to speculate on the cause of the accident.

However, he noted that steel beams are routinely inspected with ultrasound for small cracks and breaks before they’re used in a construction job. He was also skeptical of a design flaw, since plans have been reviewed by engineers, inspectors and contractors.

Saad said the bolts holding the beam that gave way may have too tight or not tight enough.

A final cause of the accident may not determined for as long as six months. OSHA is still investigating a similar incident that befell Horseshoe casino construction six weeks earlier in Cleveland, but workers resumed development after one week.

Toya Estes, president of J&B Steel, expressed concern for injured workers and vowed to help investigators.

“Our prayers are with the injured workers and their families and we stand ready to provide any assistance to them that we can,” said Estes in a written statement. “We, along with all other contractors on the project, are cooperating with OSHA and other investigators to identify the causes of this accident and to see that the potential for any future problems are corrected immediately.”

Estes’ firm is a subcontractor to Jackson, Mississippi-based Steel Service, which fabricated the steel for the job.

Messer and Jostin issued similar statements of concern along with pledges of full cooperation over the weekend. Woolpert deferred to developer Rock Gaming and Messer for comment. Rock Gaming officials said it’s too early to know why the accident occurred.


Casino site after collapse


Casino Collapse Is Second In Two Months For Developer Rock Gaming LLC, At Least 20 Injured (VIDEO)

Casino collapse to delay building's construction

Casino collapse to delay building's construction
OSHA is investigating Horseshoe Casino site that was to open in 2013
By John Nolan, Staff Writer

CINCINNATI — Construction of a new casino will be indefinitely delayed following the building’s partial collapse Friday.

More than a dozen construction workers were injured Friday morning, with four remaining hospitalized Friday night, in the collapse at the $400 million casino in downtown Cincinnati, city fire Chief Richard Braun said.

There were no life-threatening
injuries in the Horseshoe Casino accident, which came just weeks after a similar accident at a Cleveland casino with the same developer.

Workers were taken to area hospitals after the 7:45 a.m. collapse at the site.

A male worker was in serious condition is at Bethesda North on Friday night, and the only worker from the collapse at the hospital, said Joe Kelley of at TriHealth System. The system’s Good Samaritan Hospital treated and released two workers.

Ten workers were treated at University Hospital, said spokesman Matt Kramer, with seven released and three that stayed overnight for monitoring of non-life-threatening injuries.

OSHA was called in to begin investigating the incident.

Steve Rosenthal, principal in Rock Gaming LLC, a partner in the casino project said the construction will not resume at the site until Occupational Safety and Health Administration officials and construction managers determine it is safe to do so.

The workers were pouring concrete in a 60-foot by 60-foot section on the third floor, described as a “bay,” when a beam gave way, the fire chief said.

“It went down in a ‘V.’ The workers on top rode it down,” Braun said.

Shouts could be heard on a 911 call right after the collapse as the caller told the dispatcher “we’ve got one guy that’s in desperate position.”

“There’s about 20 guys just fell through the floor pour. You’ve got to get down here as quick as possible. ...They fell about 15, 20 foot. Hurry,” he said.

“We’ve got men under a beam as well. We got to get this beam off of them.”

The collapse caused nearby
roadways to close for a short time.

Jessie Folmar, a spokeswoman for Cincinnati-based Messer Construction Co., said the company was trying to learn what happened.

“Our top priority is to ensure everyone at our jobsites can return home safely to their families at the end of each day,” Messer’s president and chief executive Tom Keckeis said in a statement. “We have stringent safety processes and protocols in place to ensure our jobsites remain safe and our structures secure.”

Messer has a clean safety record with the Occupational Safety and Health Administration since 2006, according to information from the agency’s database. Its last Ohio incident was that year, when it was penalized for four serious violations and paid a penalty of $3,125. One involved a lack of adequate fall protection for workers.

OSHA inspectors, as well as investigators from the state, were looking into the accident. The developers said work won’t resume until the construction team and authorities say it is safe.

Horseshoe Casino Cincinnati is a $400 million development under construction in the northeast corner of the city’s center and was expected to open in spring 2013, an official with the company told an Ohio House panel at a hearing this week.

The casino is being developed by Rock Gaming in partnership with Caesar’s Entertainment. The same team is behind a casino project in downtown Cleveland where a garage partially collapsed Dec. 16. A second-level section of the parking deck gave way while concrete was being poured. No one was injured.

Casino development was touted during a statewide legalization campaign in 2009 for the immediate boost it would give to Ohio’s economy, particularly through the temporary construction jobs needed to build the four new facilities in Cleveland, Cincinnati, Columbus and Toledo. According to a recent report from the Associated General Contractors of America, construction jobs rose in Ohio this past year — from 163,400 in December 2010 to 168,600 last month. According to a recent report from the Associated General Contractors of America, construction jobs rose in Ohio this past year — from 163,400 in December 2010 to 168,600 last month.

Nationwide, OSHA statistics show there were nearly 196,000 job-related injuries in 2010 in the construction industry, almost four injuries for every 100 fulltime workers. In Ohio, there were 21 fatal injuries in the construction industry in 2010, the agency said

The Cincinnati casino is expected to attract nearly 6 million visitors and create 1,700 jobs, said Lee Dillard, vice president of finance for the Horseshoe Casino Cleveland. It will feature three restaurants, about 2,000 slot machines, 85 table games and a 31-table World Series of Poker room.

The Associated Press contributed to this report.