Market saturation noted
Several analysts released investor reports last week including comments on the Pennsylvania Gaming Control Board’s decision to award the consortium of Cordish Companies and Greenwood Racing the license to build a second casino in Philadelphia.
None of the comments on the prospects of the planned Live! Casino and Hotel were positive.
The chorus of analyst opinion agreed with the position taken by Philadelphia’s current casino, SugarHouse, and Caesars Entertainment, which owns Harrah’s Philadelphia in nearby Chester: The regional market is oversaturated, and another casino will hurt current operators and the state revenue picture in general.
“The addition of another casino in the greater Philadelphia market will be a significant negative for current operators,” wrote Deutsche Bank gaming analyst Andrew Zarnett. “We anticipate that gaming revenues at SugarHouse and Harrah’s will be hurt the most… In our view, the addition of the Live! casino will have more of a deleterious impact on the market.”
The title of Zarnett’s investor report was “This Town Ain’t Big Enough for the Five of Us,” referring to the new project combined with current Philadelphia-area casinos SugarHouse, Harrah’s Philadelphia, Parx in Bensalem and Valley Forge Casino Resort. Not far from those are Delaware Park to the south, Mount Airy and Mohegan Sun to the north in the Poconos, and the Sands in Bethlehem.
Even the head of Philadelphia’s Econsult Solutions, the consultant hired by the state legislature that issued a report last May saying the Philadelphia gaming market was not near saturation, concedes the market is now saturated.
“I think we missed the boat on this one,” said Econsult President Stephen Mullin in an interview with the Philadelphia Business Journal. “We managed to simultaneously maximize cannibalization, clobber (Harrah’s Philadelphia), minimize pay revenue impact and minimize the economic development spinoff all in one decision here for Philadelphia.”
As for expanding the market, Mullin predicts the opposite for the Live! project. “It will be negative; it will not expand the market enough to get away from the impact they’re going to have. There are not enough gamblers out there that will be developed (to) replace what they take away from other casinos.”
The Live! casino in Philadelphia is just as much bad news for the struggling Atlantic City market. “One more property in Philly is incrementally bad for Atlantic City casinos, which still derive a significant amount of business from Pennsylvania,” Macquarie Securities gaming analyst Chad Beynon told investors.
Stadium Casino, a joint venture of the Cordish Cos. of Baltimore and Greenwood Gaming, was awarded the rights to build the $425 million Live! Casino &Hotel in South Philadelphia.
The $425 million Live! Casino & Hotel will be adjacent to the South Philadelphia stadium complex that houses the facilities of baseball’s Phillies, the NFL’s Eagles and the NHL’s Flyers. The casino is just a short walk from Citizens Bank Park, home of the Phillies. Initial plans call for 2,000 slot machines, 125 table games and a 240-room hotel repurposed from an existing Holiday Inn. The license allows Live! to increase to 5,000 slot machines and 250 table games.
The Live! site has direct access to and from busy Interstate 76, which connects Philadelphia with southern New Jersey via the Walt Whitman Bridge.
