Economic Forecast: Casinos regain footing but competition looms

Fantinithumb
Frank Fantini

Delaware’s three casinos should see modest growth in 2015, as no new competitors will open in neighboring states.

However, the opening of new casinos might not hurt much anymore. An example is Horseshoe Baltimore. It opened in August, yet Delaware’s three casinos grew revenue in the following two months.

Delaware also might have benefitted slightly from the closing of four casinos in Atlantic City around that time. This reprieve, however, will likely be short-lived. MGM Resorts will open a $925 million mega resort in 2016 at National Harbor, an upscale development off I-95 in Maryland that’s within sight of both the Washington Monument and Alexandria City Hall in Virginia.

That is not good news for Delaware’s two downstate casinos, Dover Downs and Harrington. They get a large portion of their business from west of the Chesapeake Bay, including Northern Virginia and Washington, D.C.

Then, Cordish Cos. and Greenwood Racing will open a casino near the South Philadelphia stadium complex, a convenient location that’s bound to appeal to many Southeastern Pennsylvanians who now visit Delaware Park.

Still, 2015 offers Delaware’s casinos a chance to regain some ground. An improving economy should help. Casinos throughout the country have seen revenue declines in recent years, as the legacy of the Great Recession has been depressed consumer spending on discretionary items. But the accelerating improvement in the economy is finally translating to increased spending on entertainment, a fact demonstrated by growing gaming revenues throughout the country since last spring. Given that consumer confidence is at a multiyear high, that trend should strengthen in the New Year.

Of course, two- or three-percent growth in a long-stressed industry is not a bonanza for the casinos, their employees, or the state of Delaware.

Slot machines and table games are the meat-and-potatoes of Delaware’s casinos. But Delaware has two other components: parlay card betting on NFL football games and online gaming.

NFL betting has surged, both in the casinos and retail outlets throughout the state. In October, sports betting generated $1.29 million for the three casinos. But that’s just 9.7 percent of all gaming revenues, and it’s only seasonal. When the NFL season ends, so does sports betting.

Internet gaming, as everyone knows by now, has been a dud. The $146,000 collected in October was just 1.2 percent of revenue. That isn’t likely to improve a material amount, given Delaware’s small population.

The outlook for Delaware casinos in 2015 is likely to be a repeat of 2014, just somewhat better. To return to full health, the casinos need further financial relief from the state. But politicians tend to react to crises, and just enough relief was granted this year so that the casinos, while anemic, aren’t in acute crisis.

(Frank Fantini is editor and publisher of Fantini’s Gaming Report.)

Share This Post

Post Comment