Some casino executives shy away from using the word “saturated” to describe the gaming environment in the nation’s Northeast corner, even as they scramble to try to compete in it.
In New England, for example, there are seven casinos.
Foxwoods and the Mohegan Sun are the largest, but their days of unalloyed dominance began fading several years ago. Chasing after them hungrily is the Twin River Casino in Lincoln, Rhode Island, followed by the Hollywood Casino & Raceway in Bangor, Maine and the Oxford Casino in Oxford.
All of the aforementioned casinos are Las Vegas style gaming establishments, with both slots and table games. Further down the pecking order, but still competitive, are the Newport Grand in Newport, Rhode Island and the recently opened Plainridge Park Casino in Plainville, Massachusetts, both slots parlors. Plainridge is also a racetrack, so that technically makes it a “racino.”
If the voters agree with a proposal to open a slots parlor in Tiverton, next to the state border with Massachusetts, the Newport will be closed and its operation relocated.
Then there’s the mega casino that Steve Wynn has broken ground on in Everett, Massachusetts and the MGM Springfield that is expected to open in 2018.
All told, that would be a total of ten casinos in the Northeast. But wait, there’s more!
New York is preparing to open casinos in Schenectady and Thompson in 2017, to join existing racinos near New York City.
Further afield there is a voter’s initiative to expand New Jersey’s casino from the Atlantic City strip where they are confined currently.
Clyde Barrow, one of the most respected and quoted experts on New England gaming— interviewed last week by the Day—said that the market is growing, “But there will be a saturation point.”
Barrow was hired last year by the Mashantucket Pequot and Mohegan tribes, owners of the Connecticut casinos, to do a market report on the possible impact that will be made by the casinos that are in the development pipeline. The bill prompted the legislature to authorize the tribe’s to begin the process of locating site for a casino that would be jointly operated, and whose main purpose would be to keep casinos such as the $950 MGM Springfield from draining customers, money and jobs from the state.
One the Wynn and MGM Springfield open, speculates Barrow, the point of saturation may be reached. And that doesn’t even take into consideration the Mashpee Wampanoag tribe’s First Light Casino that was recently halted, perhaps just temporarily by a federal court ruling that called the tribe’s ability to put land into trust into question. They are appealing.
Barrow told the Day, “I could easily envision that if things go well with MGM Springfield and Wynn, and Taunton’s not happening, they could make the decision to expand Plainridge by simply allowing table games there.” The “they” he refers to is the Massachusetts Gaming Commission, which previously denied a commercial bid for a casino in Brockton, largely because the Taunton casino was pending.
When you add a facility, you get some overall growth (in the market), but some cannibalization of existing facilities occurs,” he said. “Of course, if 50 percent of Massachusetts’ revenue comes from Connecticut and Rhode Island, it (Massachusetts) doesn’t care because it’s all new to Massachusetts.”
MGM has thrown all of its considerable resources into trying to prevent the Pequots and Mohegans from opening their third “satellite” casino near the border. It has challenged the law in federal court (and seen the case dismissed) lobbied Congress and engaged in a public relations war with the Connecticut Airport Authority over its largely secret proposal for a casino at the Bradley International Airport in Windsor Locks, Connecticut.
Barrow observed, “The magnitude and aggressiveness of their response is beyond anything I’ve seen — but it’s understandable. I thought from the start that they were overbuilding in Springfield. Based on the gross gaming revenue they can expect there, I thought a $300 million to $400 million project made more sense. Maybe $500 million.”
Mohegan Tribal Authority CEO Bobby Soper agrees. “With two new properties coming in Massachusetts, we’re certainly reaching the point where there’s risk of over-investment. In western Massachusetts, based on our understanding of the market, it’s hard to see how a reasonable return can be generated by the kind of investment MGM says it’s making.”
Soper does not fear as much the possible competition from Taunton or New York. Existing competition is already closer in Rhode Island and other New York casinos.
Foxwoods plans to respond to growing competition by improving its own facilities and diversification into non-gaming amenities. Its theory is that no matter how the competition builds that it offers far more in terms of Las Vegas style amenities than they ever will, from high end hotels to top of the line dining and shows.
Foxwoods is able to tap a 6.5 million database of patrons whenever it begins a new enterprise, including enterprises out of state.
The Mohegan Sun is following suit, opening a second hotel this year and renovating all of the amenities on its existing property. It also operates the Wilkes-Barre casino in Pennsylvania as well as a profitable casino in Atlantic City. It is also helping a tribe in Washington state to build a casino in La Center.
Soper told the Day: “We’re a company, so it’s not just about growing the destination in Connecticut. It’s about generating other streams of cash flow. When one market’s impacted, we have the diversification to offset it.”
