Moody’s Investors Services has the right news for the American gaming market. Sort of.
Us casino revenues are up slightly, but Moody’s warns that operators haven’t any more room to cut costs.
The US land-based casino industry is showing indications of improvement, but only a bit, according to Moody’s, which this week upgraded its assessment of the market from negative to stable.
In May, gambling revenue rose in every one of the 18 states which can be tracked by Moody’s, except for Connecticut and nj-new jersey, the company stated, with an typical development, year-on-year, of 4.1 percent across those states.
Moody’s cited a positive trend of revenue growth, cost-cutting, and reduced market ‘cannibalization,’ whereby organizations poach business from the other person, as contributing facets.
The company believes there is space for modest growth, and that revenue will increase between zero and 2 percent each month, year-over-year, for the following 12 to eighteen months, which could result in an increase in revenue of 3 to 4 percent, excluding taxes and other items.
Despite this good note, Kevin Foley, the organization’s video gaming analyst, was far from effusive.
‘While not just a performance that is stellar we give consideration to this broader improvement a tangible indication of sector income stability,’ he told the Associated Press. ‘we are not saying they’re getting better… At least, it’s some respiration space. It’s better than if it went the other means.’
Its, nevertheless, a rosier outlook than this time year that is last whenever gaming revenues, aided by the exception of Nevada, remained flat, despite economic improvement and development in other sectors. In June 2014, Moody’s appraisal was that revenues had been weaker than anticipated, and the outlook that is economic Las Vegas seemed bleak and was graded as ‘negative.’
Now, says Moody’s, operators are profiting from years of less expensive framework. The downturn that is economic of hit the casino industry hard, and forced it to tighten up budgets. Several casino companies which had started expensive expansion plans at that point were caught quick, as income plummeted plus it became extremely difficult to refinance debt.
Running Out of Room
Caesars Entertainment, formerly Harrahs, was the most casualty that is high-profile. The company was acquired by Apollo Global Management and TPG Capital in a $30.1 billion leveraged takeover after years of expansion.
Caesars acquired an industry-high debt in the process, and struggled into the ensuing years, failing to turn a profit until this year, when, inspite of the complex bankruptcy proceedings of its main running unit, it announced that its margins had returned to ‘pre-crisis’ levels
Foley cautioned that casino operators ‘may be running out of space to cut costs much further,’ adding that ‘too much cost-cutting could lose quality and service, which operators cannot afford at time once they are battling for market share amid supply increases.’
In addition, he warned that casinos must contend with a absence of development in customer spending, as disposable income levels remain reasonably low.
MGM Vows to Block Connecticut Casino Plan
An artist’s rendering of the MGM Springfield, that has triggered a border war to erupt between Connecticut and Massachusetts. (Image: masslive.com)
MGM declared war on Connecticut this week, vowing that it would fight the state’s efforts to build a casino along Interstate 91 on its northern border with Massachusetts.
The proposed property could be positioned near Hartford, CT, and just miles from Springfield, MA, where MGM has just broken ground on an $800 million casino resort project, expected to open in 2018.
Connecticut wants to have in there first, with a ‘satellite casino’ that could be erected in much less time than MGM’s ambitious project that is vegas-style. Connecticut lawmakers recently passed a bill allowing the constitutional adjustments needed to achieve this.
Bring it On!
‘We’re perhaps not going to go peacefully,’ declared William Hornbuckle, President of MGM Resorts International, in an interview because of the Associated Press this week.
Hornbuckle, who, incidentally, was born and bred in Connecticut, did not care to elaborate on exactly what MGM decided, suffice to state that he and his peers had been ‘contemplating our choices.’
‘Bring it in, MGM,’ stated Connecticut Representative Stephen D. Dargan, bloodstream pumping. ‘We’re in direct competition!
And another plain thing: ‘We’re seriously interested in protecting our market share,’ he added. ‘with their tactics, they are not. if they think they will frighten us’
Thousands of work
Connecticut has sanctioned two casinos on tribal lands in its southeast since the nineties that are early in return for a percentage associated with the earnings.
Just the Mohegan tribe, which operates the Mohegan Sun, plus the Mashantucket Pequot tribe, which runs Foxwoods, are permitted to operate casinos.
Both, however, were hit hard by the global economic downturn of 2008 and are also each over $1 billion in financial obligation.
MGM has made no secret of its aspire to attract customers from Connecticut, and estimates that some 40 per cent of footfall shall originate from their state.
Connecticut lawmakers are worried about the prospective loss in thousands of casino-worker jobs into the state being a consequence of increased competition from Massachusetts; Foxwoods and Mohegan Sun have let go hundreds of workers to spend less in recent years.
‘Merely, that is about siphoning revenues from Connecticut to benefit a vegas company while at the same time frame moving tens of thousands of existing jobs from Connecticut to Massachusetts,’ tribal leaders said last week. ‘That’s why the tribes, the legislature, and also the governor have committed to developing a solution that protects Connecticut.’
‘Box of Slots’
Jim Murren, CEO of MGM, and, strangely sufficient, also a Connecticut native, has been scathing about the project calling it, witheringly, ‘a package of slots.’
‘we do give a damn about Connecticut because i am from here,’ he claimed early last year. ‘I just want their money to come here!’
While MGM’s threat to Connecticut’s plans is unspecified, it’s possible that the company has some recourse for the challenge that is legal.
Connecticut attorney general George Jepsen has warned that the third party might claim that exclusive gambling rights towards the tribes, in areas outside their sovereign lands, violates the Equal Protection Clause of the usa Constitution.
It might be in breach associated with Commerce Clause because it would give rights to conduct gambling ‘for the purpose of protecting in-state interests that are economic interstate commerce.’
Deadwood Brings Roulette, Craps, and Keno to Historic Gold Rush Town
Deadwood is betting on its rejuvenated gambling industry that now includes roulette and craps to revamp its tourism numbers that have flatlined throughout the last years that are several. (Image: rapidcityjournal.com)
Deadwood, South Dakota, is less than four square miles in size, but with 24 gambling venues the town has more casinos than that on most states.
The settlement that is historic an important role within the expansion for the American west, as miners and silver rushers journeyed into the Dakota Black Hills in search of treasure during the late 1800s.
The storied history of Deadwood is a read that is fascinating but its recent history isn’t much to write on.
The bustling town of the century that is 19th no more, house to less than 1,300 residents in 2015.
Its economy that heavily relies on tourism is struggling to attract site visitors, however that could change thanks to a new resolution put into place July 1st that now permits Deadwood gambling enterprises to offer roulette, craps and keno.
Only poker, blackjack, and slots were previously allowed.
‘It’s going to change the image of Deadwood,’ Mike Rodman, executive director associated with Deadwood Gaming Association stated. ‘Deadwood now could be a really full-fledged gaming location.’
Boom to Bust, Bust to Boom
The mining that is once-lawless didn’t formally legalize gambling until 1989. That provided a spark in tourism that led to a economic boom.
Tax proceeds from gambling revenues were allotted towards the conservation of historic buildings, with the Adams Museum & House, the previous home of W.E. Adams being restored in 2000.
When HBO launched ‘Deadwood’ in 2004, a tv series that would continue to get acclaim that is critical run for three years, viewers flocked to the remote Southern Dakota location for a first-hand trip into the past.
Life was good, until it wasn’t.
The Adams Museum & House went all-in on their income that is growing down to create the Homestake Adams Research and Cultural Center (HARCC), a public housing of Black Hills archival materials from the most legendary events and citizens.
The museum sought to raise $3.6 million, aided by the town guaranteeing $1.5 million paid by the Historic Preservation Fund.
Then in 2006, ‘Deadwood’ was canceled by HBO, and soon after the swarm of fans soon migrated elsewhere. Couple of years later, the country as a entire suffered an economic collapse, and Deadwood ended up being hit hard and left almost, well, dead.
Today the downtown resort hotels, bed and breakfasts, cabins, restaurants, and gambling enterprises remain dedicated to revitalizing Deadwood, but they realize that is a challenge considering its remoteness.
The closest commercial airport is an hours drive away in Rapid City, and a local airport at that.
Gambling on Gambling
Unfortunately for Deadwood, it generally does not have the fortune to be located near big metropolises of people or international airports, but it is located just minutes down Interstate 90, the longest highway in the us that stretches from Boston to Seattle.
Moreover, it’s history from Civil War Calvary commander George Custer to western legend Wild Bill Hickok, frontierswoman Calamity Jane, and Dr. Valentine McGillycuddy, physician to famed war leader Crazy Horse.
For gamblers, the so-called ‘Dead Man’s Hand’ took place in downtown Deadwood, the aces and eights two-pair hand famously held by Hickok as he was shot from behind in the mind.
It appears only right that Deadwood should provide not merely poker and blackjack, but also roulette and craps, as all four were played back in the 1800s. The additions are expected to bring $2 million in additional video gaming revenue to the town that is small.