Thursday, July 08, 2010

Let the (table) games begin

And we're off.   Table games have come to Pittsburgh. Will they save the day for local casino revenues? Revenues which have remained far below projections and as at least some of us think: well below a sustainable level for the current business model. 

Time will tell what the initial and steady state business is for table games locally. Remember the tax on table games is less than on slots so what will be interesting to watch as well is whether table games bring in more slots business, or displace some of it.  The former would be good for tax revenues, the latter, bad.

I should start an over/under on when we get our first noticable card counting media mention.   Just kidding. Are they going to use those card shuffling machines? 

I missed this, but did anyone notice that they changed the law recently to allow Pennsylvania casinos to make loans via "almost instant" credit based on no more than a personal check?  I am a little curious what the 'almost' part is all about. 

I was tracking average daily revenues per machine, but the machine counts have been fluctuating.  The Rivers Casino a couple weeks ago was operating 2,600 slots machines, well below the 3,000 they were licensed for. So the average per machine is not really giving a meaningful benchmark. 

So a better metric is just tracking total wagers per week.  Below is what that looks like for the two local casinos.  The question will be what the trend is going forward with table games up and running. 

There was a time a few months ago the Rivers Casino folks were talking the talk that they were going to become the top casino in the region. It's worth noting just how locked the performance of the two casinos has become. Competition for sure, but it seems like they are splitting the market no matter.I wonder if they need to be marketing at all. Maybe they will split the pie no matter?  I've noticed less commercials than a few months ago, but that is a very unscientific observation. 

Splitting the market so evenly does not bode well for when a new casino opens in either Lawrence county, or Ohio. The thing is that if the two casinos split revenue evenly, Rivers is the loser in a sense. Not only did Rivers cost something like $800 million in mostly leveraged investment, but the Meadows' investment was reportedly under $500 million. So their capital costs are probably widely different.  That and Meadows is not encumbered by some of the same fixed costs Rivers is obligated for including payments for the SEA arena bonds, a guaranteed minimum $10mil annually to the City and I am pretty sure higher property tax bills. What was that movie? Harvard Beats Yale 29-29. Sort of like that.


Anonymous BrianTH said...

I gather the theory is that table games typically attract a somewhat different demographic (younger and more male). Among the hoped-for implications of this proposition are that table game revenues will be at least partially additive, and not just substitutive, with slots revenues. I also understand that some people think Rivers will benefit more from this effect than Meadows, and so will leap ahead in total revenues. We shall see.

Personally, I'm already thinking about what happens if (when?) Rivers has to default on its construction financing. I strongly suspect that even at the current revenue levels, the casino is actually operating at a substantial profit. So I am fairly confident that a bankruptcy would amount to a reorganization, and the question then becomes what sort of haircut the local authorities would have to take.

Thursday, July 08, 2010 9:37:00 AM  
Anonymous MH said...

The tables games may draw a new demographic. I'm not a very big gambler, but if someone else suggests it or I'm nearby, I would be willing to play blackjack. I wouldn't cross the street for a slot machine.

Thursday, July 08, 2010 11:23:00 AM  
Anonymous BrianTH said...

Looks like Day One lived up to expectations, including Rivers getting more of a boost than The Meadows:

Of course the real question will be how things shake out once the honeymoon period is over.

Friday, July 09, 2010 10:32:00 AM  

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