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They burned the Monte Carlo ... and may get away with it
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Posted At : February 10, 2009 03:56 PM | Posted By : D McKee
Related Categories: Harrah's,Regulation,Penn National,Illinois,Tropicana Entertainment,Isle of Capri,Don Barden,Ameristar,Iowa,Economy,Boyd Gaming,Indiana
When it comes to Upper Midwest casinos, there's Illinois and then there's Everyone Else. Except that, in this case, you want to be "Everyone Else." Being Illinois sucks.
January numbers for Missouri aren't out yet but Iowa is up 3%, Indiana is seeing a 12% surge ... and Illinois is -9%. That's on top of the -18% hammering the Land of Lincoln took a year ago, when smoking in casinos became a no-no. Whatever impact the recession is having on neighboring states' casinos, refugee players from Illinois riverboats are more than compensating.
The news isn't quite as good as it could be for Indiana, where the gain is more than offset on a same-store basis by the dilutive effect of two new-ish racinos and Harrah's Entertainment's Horseshoe Hammond behemoth. These ill-timed (for their competitors, that is) expansions have left everybody else slicing the ham thinner, in Fred Harvey's dying words. (The restaurant mogul's last utterance was alleged to be, "Slice the ham thinner." And, no, he wasn't an F&B executive at Station Casinos.)
Some salient Indiana facts ...
• Expansion of Horseshoe Hammond is not only a positive (+16%) in itself, it's more than making up for softening at Horseshoe Southern Indiana (-3%). Was taking the Caesars brand off the latter a good idea? Just asking.
• French Lick is licked (-14%). Somebody has to be in last place and Indiana's only land-based casino is "It."
• Ameristar East Chicago is feeling the Hammond Effect (-4%) but surpasssed analyst expectations nonetheless.
• Grand Victoria is in freefall -- eight straight months of double-digit declines, including last month's -26%. Will it hit bottom before it passes French Lick on the way down? Speaking of the bottom ...
• Congratulations to Boyd Gaming's Blue Chip (-2%), which is finally pulling out of a protracted skid. If Boyd can live with 65-70% of Blue Chip's pre-2008 performance, the future -- thanks to a newly augmented casino-hotel -- inspires hope.
• Majestic Star II needs to be moved (an idea that's getting kicked around by various governmental bodies). While its sister ship is hanging in moderately well, Majestic II's year/year comparisons are almost as dreadful as Grand Victoria's.
• The turnaround of Casino Aztar (off but three-tenths of a point) remains 2008's #1 success story in the industry.
Racinos were less of a factor in Iowa, were they were flat while riverboats nudged their revenue up 4%. The three tracks, though, do generate roughly a third of the state's casino revenue, while 14 riverboats divvy up the rest, not counting tribal casinos (which don't report revenue).
• Harrah's Council Bluffs (+4%) stole market share from Ameristar's rival facility (-6%), but the latter still does nearly double the business ($13.4 million to $7.7 million).
• Positive comparisons at two of Isle of Capri's four Iowa casinos were more than offset by declines at the other two, for an aggregate of -2%.
• Two smallish riverboats, Diamond Jo and Mississippi Belle, enjoyed spectacular improvements in January, +104% and +51%, respectively.
All generalizations about Illinois are false in the sense that there are exceptions that prove the rule. For instance, while the smoking ban has quantifiably been death for Illinois casinos, the first one to open as a non-smoking casino -- Casino Rock Island's new facility -- has been up 118% and 112% in the last two months. Is there something about not being able to smoke in a casino that still smells of cigarettes that's worse for business than not being able to smoke in a nice, fresh facility?
Another paradox is that the casino one would think most likely to feel the brunt of St. Louis-area competition, East St. Louis-berthed Casino Queen, was the last to experience the downturn that was sweeping the rest of Illinois and is now almost back (-3%) to year-ago figures, which themselves were only -2% from January '07.
With Boyd's Par-A-Dice (-5%), Harrah's Metropolis (-9%) and Penn National's Hollywood Aurora (-7%) decelerating from last year's precipitous declivity -- when they were -10%, -19% and -16%, respectively -- one would like to believe that the bottom is near for Illinois, but the Penn boat is the only bright spot in Chicagoland and the same company's Alton Belle (-15%) is still taking it on the chin from Missouri.