Competitive vitality in Pennsylvania; The politics of casinos

Pennsylvania was late to the casino-recovery party but it’s finally arrived, up 1% in July over 2019 for a gross of $310 million, of which $223 million was won at the slots. The good news may be short-lived, in that Hollywood York opened on August 12, contributing to the saturation of casinos we are seeing in the Keystone State. Parx Casino was way out in front of everybody else, grossing $58.5 million for a 14.5% gain. Elsewhere in the Philadelphia market, Rivers Philadelphia regained the edge on Philadelphia Live, winning $23.5 million, an 8% decline from 2019 but much better than in recent months. The Cordish Gaming competitor slipped to $22 million but bested Harrah’s Philadelphia‘s $17 million (-15%) while Valley Forge Resort Casino dipped 2% to $11.5 million.

In the Pittsburgh area, Pittsburgh Live garnered $10 million while Rivers Pittsburgh gained a percentage point to $33 million but The Meadows slid 10.5% to $18 million. Elsewhere, Mohegan Sun at Pocono Downs was up 7% to $20.5 million, Wind Creek Bethlehem slipped 6% but posted an impressive $42.5 million and Mount Airy netted $20 million in a 21% leap. Presque Isle Downs gained 7% to $12 million, Hollywood Penn National dipped 4.5% to $19.5 million and luckless Lady Luck Nemacolin fell 22% to $2.5 million.

Sports betting was anemic with $304.5 million in handle engendering $20 million in revenue once promotional credits ($7.5 million) were backed out. Low hold didn’t help either. FanDuel came in first with $9.5 million, then DraftKings with $3 million and Rush Street Interactive with $2 million. Internet gambling yielded $89 million, dominated by the gaggle of skins grouped under Hollywood Penn National ($32 million), with BetMGM making up some of the ground it lost on sports betting. Rush Street was close behind with $26 million and FanDuel won $14 million, followed by FoxBet‘s $5 million. Online slots generated $63 million, i-tables won $23 million and Internet poker made 3%.

Before leaving the subject of Pennsylvania, a few words from our East Coast bureau about Philadelphia Live. The metal detectors are gone (again). Make up your mind already, Cordish. Our correspondent won $16, plus $50 in free play. A prior visit found few takers for free T-shirts and scant traffic on the slot floor. The jury’s still out on Cordish’s ‘category killer’ status but Philly Live is looking like a middle-of-the-pack contender. Meanwhile in Atlantic City, 38,000 people are said to have turned out for an al fresco Phish concert, effectively doubling the city’s population: “With an aerial view, you could not see any sand at the beach.”

Dodgy casino investors, Indiana may be the place for you. A group of Hoosier State lawmakers have formed what we call the Corruption Caucus and want to neuter the Indiana Gaming Commission‘s power to scrutinize the financial backgrounds of gaming applicants. The move seems to be taken in retaliation on behalf of politically connected Spectacle Entertainment, which was rejected for a license in Terre Haute after regulators found too much sleaze for their comfort. The threatened bill to be lodged in the Lege would prohibit the IGC from investigating the personal and financial ties of casino applicants, making the regulatory process essentially meaningless. The pro-corruption lawmakers argue that they’re protecting “the privacy rights and investment strategies of citizens” since “such requirements may unfairly discourage small investors from participating.” How very disingenuous. Meyer Lansky would have loved this ploy.

“We also ask that you reconsider the potential gain of knowing whether a minority stakeholder owns 10 shares of Apple versus the impact of delaying or prohibiting any aspect of the Gary casino project and the construction of the Terre Haute gaming facility, and the potential impact upon both economically depressed communities,” wails the smarmy, bipartisan cabal. Yes, it’s all for the good of the economy and let’s not look too closely at who we’re letting in, shall we? The baleful letter was sent five days after an Indiana judge upheld the disqualifications of Spectacle and Lucy Luck Gaming, and reaffirmed the IGC’s investigative powers. As the IGC responded, “Many of the statements made in your correspondence are similar to those made by litigants who are engaged in legal action against the Commission.” Zing! Furthermore, two former legislators have been indicted for public corruption involving Spectacle precursor Centaur Gaming. This attempted shakedown of the IGC stinks to high heaven and we hope the Legislature at large is not so susceptible to the shady blandishments of Spectacle and its minions.

Casino corruption in Japan? Perish the thought! Inside Asian Gaming has been beavering away at Oshidori Corp.’s charges that the Nagasaki selection was as crooked as a dog’s hind leg. Its conclusion? That there’s some fire to go with all the smoke: “IAG has been told by multiple sources familiar with the situation that Casinos Austria has long been Nagasaki’s preferred option, and that the prefecture engaged in numerous machinations behind the scenes to ultimately see Casinos Austria as the only candidate presented to the judges, in a kind of contrived ‘one horse race’.” IAG further hints that the Osaka and Wakayama casino processes were tainted, although this is the first we’re hearing of it. Oshidori and competitor Niki say they were told by Nagasaki authorities to cease their marketing efforts ahead of the prefecture’s decision in favor of Casinos Austria. Both say they were prodded to withdraw on the basis of “negative background checks.” Even so, in comparison to Casinos Austria’s winning score of 697, Oshidori/Mohegan Sun notched 683 and Niki 667.

IAG is admittedly biased in favor of the Oshidori/Mohegan project (above), the only one to release a concept (Niki didn’t and Casinos Austria quickly scrubbed “one uninspiring image”). Also, the Mohegan are the only competitors with megaresort experience, vying in a multi-billion-dollar race. Hiroshige Kobayashi, chairman of a Niki consortium partner, has also complained of strong-arm tactics by Nagasaki, likening officials’ conduct to that of the Yakuza. “I can’t help but wonder if some kind of ‘black force’ is acting behind the scenes. I only hope that the truth will be revealed by the power of the people.” Companies still jostling for Yokohama or Tokyo concessions have bigger worries on their mind, namely that casinos will be effectively nixed at the ballot box in forthcoming mayoral elections.

Speaking of political pressure, a coalition of 28 Nevada casino owners is turning up the heat on the Nevada Gaming Commission to nix Internet gambling in the Silver State. Their argument boils down to “Nice casinos we’ve got here. Hate to see something happen to them.” Or, as the signatories put it, “Online gaming will incentivize our customers to not visit physical gaming properties, limiting our ability to earn revenue and provide funds to reinvest in our casino resorts.” They continue, “Even worse, many online operators do not operate a single land-based facility at all, let alone in Nevada, which diverts revenue and reinvestment out of our state.” The letter points, not without merit, to a Deutsche Bank study that found ‘Net betting sapping brick-and-mortar casinos in Pennsylvania.

The argument runs that Nevada has over 2,000 gaming locations and more casinos than all other states combined, a relatively small population, compared to the large states with limited physical gaming in which i-gaming has been incepted. Online gaming, the argument runs, would lead to fewer jobs and less investment. “The resulting lower employment in Nevada would not just be related to reduced physical gaming activities such as table game dealers and slot attendants; rather, job reduction will also impact servers, cooks, housekeepers, porters, and other guest functions that are based on visitor volume at our properties. “

Ignoring their own efforts to allow mobile gambling in casino restaurants and hotel rooms (a flop), the coalition bemoans the prospect that “This effectively puts non-restricted gaming activity in every household and business that otherwise have not been subject to the regulatory scrutiny of the NGCB and the NGC.” They even raise the specter of little Johnny gaining access to an Internet casino from the comfort of his computer. Leading the charge is Station Casinos CEO Frank Fertitta III, who tried and failed to make a go of it in i-poker, so consider the source. (Boyd Gaming, which hosts Internet gambling in other states, is conspicuous by its absence.) His co-signatories are a who’s-who of second-tier casino operators like Alex Meruelo, Gary Ellis, Derek Stevens, Jonathan Jossel and many more. But, make no mistake, they represent a lot of capital and in Nevada when money talks regulators listen.

Another story in the Nevada Independent raises the prospect of trouble—or at least serious competition for a tribally backed California ballot initiative to legalize sports betting. Having been excluded from the tribal amendment, card rooms are pushing back with a petition drive of their own. The card rooms are taking an expansive approach, dealing in tribes, racetracks and 19 professional sports teams in addition to themselves. Unlike the tribes, the card rooms would permit both collegiate sports wagering as well as online betting. (Given the Biden administration’s recent and preposterous redefinition of “tribal lands” as it pertains to OSB, why not?) The small cities that depend on card room taxes for their oxygen supply are behind this too, although their expectations of revenue seem rather roseate. After all, unlike the tribes, they’re proposing a hefty tax levy (25% vs. the tribes’ 10%).

Card rooms and tribes are spitting nails at each other over this latest turn of events. “We do strongly oppose the self-serving tribal casino monopoly initiative that will only benefit wealthy tribal casino operators to achieve their goal of a gambling monopoly with no benefits for California residents,” California Gaming Association Executive Director Joe Patterson told the Independent. Responded Jacob Mejia, spokesman for the tribal consortium, “It is a deceptive ploy funded by a single card room to give Nevada-style casino games to card rooms that have been fined over $8 million for misleading state regulators and violating anti-money laundering laws.” In other words, the same old same-old.

Jottings: Stupid is as stupid does. ‘Nuff said … Covid-19 has also claimed a casino victim in the form of lovely Chinook Winds Casino in Oregon. The facility will have to remain shuttered for two weeks due to a surge in Coronavirus cases … Casino workers and guests in Philadelphia will have to comply with a mask mandate. Only Philadelphia Live and Rivers Philadelphia are impacted … Following Pennsylvania‘s lead, West Virginia could have satellite casinos, if state Sen. Eric Nelson (R) can garner support. He sees it as a way to revitalize defunct retail spaces and bring gambling to cities like Charleston that don’t have it. But Nelson’s bill faces an uphill fight in the Lege and would have to be approved by the electorate at large … Inspire, the Mohegan Sun megaresort in South Korea, is aiming for a April-June 2023 opening or one no later than July-September. Mohegan Gaming & Entertainment says it is shoring up financing and will be able to accelerate construction later this year … The NFL has decided to permit six sports-book ads per game. The telecast competitors include usual suspects DraftKings and FanDuel along with newbies BetMGM, Caesars Entertainment, FoxBet, PointsBet and Wynn Bet … 90 minutes from Dallas is newly improved Choctaw Casino & Resort (above), boasting a virgin, 1,000-room hotel tower “with a collection of new restaurants, lounges, and entertainment options, plus a collection of Choctaw art.” Oh, and 3,300 more slots, plus extra tables and a new poker room. Texas, meanwhile, continues to cut off its nose to spite its face.