After five months of revenue drops, Plainridge Park Casino, which opened last summer, saw revenues head back up in January and February. Most experts believe this will be but a temporary blip because it is based on a marketing program built around promotional giveaways and millions of dollars in “free play” credits being distributed.
In February the casino gave away $2.4 million in free credits, 85 percent more than it spent in December, giving away $500 to anyone who signed up for a rewards card. To put that in context, the Mohegan Sun and Foxwoods, Plainridge’s biggest competitors, each spend half that amount.
However such a strategy is subject to the law of diminishing returns. “Heavy spending on free play can only do so much,” Stephen M. Simon, a veteran slot operations specialist from Albuquerque told the Boston Globe. “Pretty quickly the impact of free play diminishes. And then they’ll need a new strategy.”
The idea of free play is to motivate players to spend more. Some will spend the casino’s money and then quit. Others will be motivated to continue playing and the casino will make more money. This happened in January when the slots parlor’s revenues increased 11 percent, a two to one return on investment.
However, the following month the return was 30 cents for every dollar spent on free play.
Despite naysayers, Penn National, owner of the casino, insists, “our strategy is working,” adding, “These are common industry practices that are imperative in a competitive market.” It said it plans other marketing efforts to enroll more patrons in loyalty programs and keep money in the state.
It concluded, “Just as a typical retail outlet offers coupons to attract new and repeat business, we utilize promotional credits to compete with gaming facilities in Rhode Island and Connecticut that are years ahead of us in developing patron loyalty.”
Free play can be an effective tool, the Boston Globe quoted Steven M. Gallaway, a partner in Nevada-based Global Marketing Advisors, but too much is counterproductive. “Too much free play risks customers playing without taking out cash of his own,” he said. Additionally, players can get so used to free play that when it stops, they will leave in disappointment.
Plainridge opened in June amidst much celebration as the Bay State’s first casino. It’s first few months were productive, then five months of down revenues followed. It’s revenues feel almost $7 million a month from July to the end of the year.
Elaine Driscoll spokesman for the Massachusetts Gaming Commission, said the casino has the commission’s confidence. “Like any new business, it is highly likely that they are adjusting their marketing strategy as they acclimate to a new marketplace and clientele,” she said.
For a while, the commission’s monthly release of financial data showed how much Plainridge spent on free play and how effective that was. Last month that stopped at the request of Penn National, which felt it gave away too much to competitors.
The Globe’s reporter did some independent figuring and was able to get the commission to confirm the results.
Most commercial casinos keep this information a guarded secret. Connecticut’s Indian casinos, Foxwoods and the Mohegan Sun, are required to release that information.
MGM Springfield
One of the casinos expecting to be operating by 2018 is the MGM Springfield, where construction crews have begun to demolish old buildings, like a YMCA building, and to move an old church to make way for the casino complex.
MGM Springfield is seeking to replace Comcast as manager of the state-owned MassMutual Center, which is a block from the casino complex in the downtown. MGM would partner with Spectra, a subsidiary of Comcast, to run the center.
Under the bid announced by MGM a week ago, MGM would manage the center with Spectra providing food and beverage services. The new arrangement could take place beginning as soon as July.
MGM Springfield President CEO Michael Mathis said last week, “We are proud to participate in this unique opportunity to further our engagement and contributions to the Springfield community.” He added, “This market has unique offerings for convention goers and local residents alike, and the MassMutual Center should continue to be an integral part of what attracts visitors to downtown. With two world-class industry leaders joining forces on a bid proposal, the Massachusetts Convention Center Authority (MCCA) has a prime opportunity to select the best of the best to operate this great facility.”
Glen Brandeburg, president and chief operating officer of Spectra Venue Management and Food Services & Hospitality, told the Republican, “Spectra and MGM combining its efforts at the MassMutual Center will provide tremendous unique advantages to the MCCA. This combined proposal will more effectively coordinate benefits to the Center with MGM’s long-term goals and operational commitments for its resort casino complex.”
The new partners said they would be able to save money long-term and short-term, which would allow the savings to be invested in capital improvements for the center. The partnership would also enable cross marketing, more effective purchasing, better training and customer service and more coordination of bringing in conventions and trade shows.
The casino developer previously signed agreements to book shows for the MassMutuel Center, as well as Symphony Hall and CityStage.
Tina D’Agostino, who manages both Symphony Hall and CityStage, told the Republican, “I think it is exciting. It’s good news for Springfield. Clearly MGM is an entertainment giant who can bring in the big acts. A vibrant MassMutual Center means more people downtown and increased business for its neighbors. As they say, ‘The rising tide lifts all boats.’ ”
Wynn Boston Harbor
Steve Wynn, whose interest in buying the land in Everett for his Wynn Boston Harbor led three former owners of the land to try to hide the ownership of a mob figure, Charles Lightbody, may be called to testify in federal case against the three.
Wynn originally offered to buy the land for $75 million until Lightbody’s involvement because known. He ultimately paid $35 million so that the three owners were not able to realize a profit from the purchase. State law forbids a convicted felon from receiving a financial advantage from the operating of a casino.
Wynn and the Massachusetts Gaming Commission are considered victims in the case.
Jury selection began this week in the case.
Second Slots Parlor
Proponents of a second slots parlor in Massachusetts are gathering signatures to put a measure on the ballot that would allow such a casino, but only near a racehorse track, functioning or not. The only location that fits the bill is Suffolk Downs in Boston.
The legislature’s Joint Committee on Economic Development and Emerging Technologies is holding hearings on the petition. It could put the measure on the ballot without further action by the proponents, or it could say that they need to gather more signatures.
Diversity goals
The Massachusetts Gaming Commission (MGC) announced last week its release of the Diversity Goal and Business Technical Assistance Grant Opportunities, whose goal is to encourage diversity in hiring and contracting. It has about $120,000 available for the grants.
It is posting a Request for Response (RFR) to apply for the grants.
These goals, aimed at minorities, women and veteran owned businesses were spelled out in the 2011 Expanded Gaming Law, which authorized casino gaming in the state and created the MGC.
MGC Director of Workforce, Supplier and Diversity Development Jill Griffin said last week, “The commission works collaboratively with multiple stakeholders to ensure the gaming industry in Massachusetts is inclusive and provides opportunities that reflect the diversity of the commonwealth. MGC will continue to identify strategies that will maximize the economic benefits from a casino for all Massachusetts residents.”
The commission has created an “Access and Opportunity Committee” to accomplish the goals by reaching out to minorities, women and veterans and making it easier for them to do business with the state’s casinos.
Besides that the commission will also make grants to non-profits and organizations that serve local businesses owned by the target groups.
It will help such businesses market goods and serves, provide technical assistance and help these businesses with strategic planning and financial analysis, among other forms of assistance.
