In the first two weeks after the .4 billion MGM National Harbor casino and resort opened on December 8 near Washington, D.C., video lottery revenue at Hollywood Casino at Charles Town, West Virginia declined 0,000, or 19.5 percent, and table games revenue dropped 4,000 or 22 percent. West Virginia Lottery Acting Director John Myers said, “We’ve been watching it closely, and of course, there’s some impact.”
Hollywood Casino Senior Vice President of Public Affairs Eric Schippers said, “We prepared well in advance by reinvesting in our business to remain competitive. Over the last few years we have built a new hotel, completely refreshed our slot machine offerings, added a new entertainment venue featuring top performers and built new restaurants and added new amenities for our Asian guests.”
James Karmel, a Maryland-based casino industry analyst with Gaming Atlantic, said, MGM National Harbor’s full impact won’t be clear for a few months. “There’s always an initial novelty effect where people go to a new casino,” he said.
Karmel noted Hollywood Casino, the largest of West Virginia’s four racetrack casinos, already has been impacted by casinos opening in Arundel Mills, Baltimore and Cumberland, Maryland. “Charles Town has seen huge hits already with Maryland Live!, Horseshoe and Rocky Gap,” Karmel said. “I think MGM National Harbor will probably have an additional impact on Charles Town, but I think most of the impacts have probably already been absorbed. Most of the business Charles Town has lost from Maryland and from the D.C. area was already lost.”
Karmel stated Hollywood Casino at Charles Town and Mardi Gras Casino & Resort in Cross Lanes also are being affected by a trend away from destination ambling. He said, increasingly “people just want to stay home and gamble where they live.”
New casinos opening in Pennsylvania, Ohio and Maryland have caused West Virginia lottery revenue to drop to $1.13 billion, a decline of about 18 percent, in fiscal 2015-2016, since hitting a peak of $1.56 billion in fiscal 2006-2007. Competition has cut revenue at Hollywood Casino by 40 percent and MGM National Harbor probably will cut the casino’s revenue by another 10 percent, Karmel said. That’s less than the 15-25 percent drop that Myers said West Virginia Lottery officials are projecting.
For the first five months of the current budget year, the lottery has grossed $451 million. State officials are concerned further declines at Hollywood Casino could result in revenue dipping below $1 billion for the first time since 2002. However, Myers said the drop in revenue also could be related to wintry weather cancelling two racing days at Charles Town, during the second weekend National Harbor was open.
Still, Karmel said, “My sense is Charles Town is just muddling along at this point,” noting owners Penn National spent $41 million unsuccessfully opposing the 2012 referendum authorizing National Harbor.
He said one option may be to play up thoroughbred horse racing at Charles Town, which is not offered at any competitive casinos. “I think a creative marketing department could come up with a lot of ways to bring some excitement into their casino by tying the racing into the casino,” he said. Karmel added, “One of the important niches that Charles Town should focus on is the young people. Young people haven’t been interested in horseracing. The 20- to 30-year-olds are a very important demographic for the gaming industry. They are looking for exciting thrills. What is popular in the casino is skilled-based games. We are seeing the video gamification of the slot machines. Is there a way to make racing interesting and exciting through a gaming connection?”
Another option, Karmel said, may be to scale down operations at Hollywood Casino and cater to less-affluent gamblers rather than attempting to compete with the upscale MGM National Harbor.
Schippers said Hollywood Casino at Charles Town does not have plans for staffing changes, although it expects about a 20 percent decline in 2017 revenues in Charles Town. He said casino officials believe the property will “remain competitive,” explaining, “The benefits of coming to Charles Town include not only all the other area amenities, including white water rafting, nearby skiing, a stay at the historic Bavarian Inn and a visit to Harpers Ferry and the quaint shopping and dining in Shepherdstown, but we also offer free parking, unlike the $25 that MGM will charge for valet. We continue to offer smoking and non-smoking sections, exciting racing and more importantly we offer an escape from the constant D.C. and Maryland Beltway traffic.”
