Boffo May in Vegas; The power of convenience

Wall Street was pleasantly surprised by May’s gambling numbers from Nevada and especially the Las Vegas Strip, which was up 17%. Statewide, revenues rose 8%, reflecting the dilutive effect of an 8% decline in locals gaming revenue. A 3% dip in Strip slot play was far more than offset by heavy baccarat action (up 26%). There’s a day of slot revenue that will be counted as part of June’s revenue, but the numbers are still in line with the year to date. Casinos played very lucky at the tables, as players losses rose 38% from May 2013, on a 15% increase in play. Non-baccarat win for the casinos was up 9%. Baccarat players really lost their shirts, with casinos raking in an astronomical 89%, year over year. Laughlin was down 5% and locals jurisdictions had an even tougher time of it, with Downtown -8%, North Las Vegas -10% and the Boulder Strip -11%.

* To get into Ohio, both Caesars Entertainment and Penn National Gaming made a Faustian pact that allowed racinos in, too. (One can look at this as a progressive move by Gov. John Kasich [R], breaking up a Caesars/Penn-only oligopoly.) Both companies hedged their bet by buying or building racinos of their own. Now their brick-and-mortar casinos look almost superfluous as racino revenue is on pace to outgross the two Hollywood- and Horseshoe-branded facilities.

The cash cow, slot revenue, is highest at Hard Rock Rocksino (a racino), while the two Horseshoes languish second and third from the bottom. Newcomer Miami Valley Gaming is already squarely in the middle of the pack. “The advantage the racinos have is that the majority of them are in the suburbs and a lot of people don’t want to drive into the main cities,” explains Ohio University‘s Alan Silver. “If you add tables games into the equation it’ll be a runaway situation, where the racinos are just going to really out-perform the four casinos.”

* Social-service and nonprofit grants in Elgin are becoming imperiled as revenue from Grand Victoria continues to go down, down, down. “Come 2015, it may be time to consider whether these types of subsidies can continue, given the new order of revenue streams of the riverboat,” said Assistant City Manager Rick Kozal. This is what Illinois can look forward to if it piles additional casinos atop slot routes, further dissipating revenues.

The slot-route beast, for one, is well and truly out of its cage — although some blame casinos for not vigorously imposing its legalization. “Every month, we’re seeing about 850 new slot machines come into existence. That’s nearly a new casino every month. There is no doubt the casino industry simply underestimated the impact these machines would have on our industry” complained Illinois Casino Gaming Association Executive Director Tom Swoik.

Illinois Gaming Board Chairman Aaron Jaffe was unsympathetic: “I have to say that your organization did not take the lead in stopping anything in video gaming, as a matter of fact your position was ‘Well, it won’t hurt us.’ That was contrary to the belief of a lot of people. Now you come to us and say, ‘We’re hurting.’ Well, we knew that in advance. And you knew that in advance, but you refused to acknowledge that.”

Reported the Chicago Tribune, “While proponents said the legislation would limit video machines to bars, restaurants, truck stops and fraternal organizations, Swoik pointed to instances where a flower shop in Oak Lawn and a scuba shop near Rockford have secured licenses to pour liquor, which allowed them to apply for up to five gambling machines.” That’s not the only discrepancy in enforcement that’s vexing Swoik, who wants new rules drawn up requiring casinos and slot routes to abide by the same regulatory framework. (Unlike casinos, slot routes aren’t barred from marketing to self-excluded gamblers, for instance.) That seems only right and fair but it’s unclear whether Swoik, having been spanked, will get what his association wants.

* Mohegan Sun is feeling slapped in the face after Boston Mayor Martin Walsh demanded the casino-selection process be frozen until November, after the repeal vote. “If the voters choose to repeal the law in November, all parties involved will risk losing precious time and millions of dollars for nothing,” Walsh reasoned. “We have been fully cooperative with Mayor Walsh’s administration and negotiating in good faith with the City to agree on a surrounding community agreement,” replied a shocked and extremely disappointed” Mohegan Sun. The two parties were five days away from having to go to arbitration on a surrounding-community agreement. One casino supporter — Republican gubernatorial candidate Charlie Baker — was in Walsh’s corner, at least.

Although he wouldn’t want a casino in his home town, Massachusetts Gov. Deval Patrick (D) has come out against repeal of the 2011 Expanded Gaming Act, which he called “a thoughtful bill and I think it ought to stand.” Expanding on his theme, he said, “I’m going to vote to keep a system, the one we have, which enables individuals in their communities to decide whether it’s right in their communities and doesn’t prevent people in individual communities to say what ought to happen in someone else’s community.” (I think Patrick’s line of reasoning got a little garbled there. He seems to mean “prevents” rather than “doesn’t prevent.”) MGM Springfield President Michael Mathis tried to make light of the repeal campaign (“Theodore Roosevelt once said that anything in life worth having or doing requires pain, effort and difficulty. So, I think he was thinking about the Massachusetts gaming act when he gave us that quote.”), though this hardly seems the moment for levity.