You know the U.S. casino industry is hurting when the Bible Belt is willing to talk about online gaming.
Three attempts to open conservative, Deep South Mississippi to the Web have been tried, all three have failed. But the pending shutdown of Harrah’s Tunica, the largest casino in the north of the state, with the loss of 1,300 jobs, appears to have gotten everyone’s attention.
“There’s just too much supply in that market,” said John Payne, president of the Central Markets division of Caesars Entertainment, in explaining the company’s decision to close the property after 18 years of operation.
Tunica has seen gaming revenue shrink to $738 million last year from $1.2 billion in 2006.
“The Harrah’s has not been profitable for a while,” Payne said.
It’s a lament being heard in markets around the country. In January, Atlantic City’s Atlantic Club Casino Hotel shut its doors, a victim of intensifying competition in the Northeast, where Atlantic City flourished for years as the only game in town. Then the recession and a wave of legalizations across the Mid-Atlantic combined to gut revenues citywide by more than 40 percent since their peak in 2006.
Some 39 states have casino gambling of some kind, up from only two in 1988, and more sizable resorts are on the way in New York, Pennsylvania, Massachusetts and Maryland. Nationally, revenues were flat at $34 billion in 2013. Through February they had fallen for six straight months in the four largest Midwest markets: Indiana, Missouri, Illinois and Michigan. Even Las Vegas was down 12 percent through the early part of this year.
“The new reality of the gaming industry—or at least what has been the reality in recent years—is that more markets are becoming saturated and new competitors are increasingly cannibalizing their neighbors rather than growing the pie,” says Frank Fantini, an investment analyst and publisher of a series of widely read financial reports.
Gaming revenue in Mississippi fell 6 percent in 2013. That’s bad news for a state that relies on the industry for about 5 percent of its annual budget. The Legislature has responded by commissioning a blue ribbon panel to study the experiences of the three states—New Jersey, Nevada and Delaware—that have inaugurated online regulation.
Year on year, gaming revenue was down 1.4 percent in Pennsylvania in 2013 to $3.11 billion. Slot machine revenues fell in both January (-7%) and February (- 7.54%). Experts believe increased competition from neighboring New York, Maryland, Ohio and Delaware are taking a toll, and that has several lawmakers pushing for expansion to cover a growing state deficit. Gov. Tom Corbett wants to legalize keno and tavern gambling and expand the land-based market to fund part of his $30 billion spending plan for 2013-2014.
Discussions have resumed in Massachusetts on two bills introduced last year for expanding state lottery ticket sales to the Internet and authorize state-regulated online poker and blackjack.
Michigan has already moved in this direction and is slated to begin selling lottery tickets and offer lottery games online by the end of the year via a contract with Pollard Banknote Limited of Canada and Malta’s NeoGames. The deal is worth $23 million over the first four years, a period in which the state hopes to pocket $120 million in revenues for public education.
Michigan will join Illinois and Georgia as one of three states with an internet lottery.