Hollywood Casino at Charles Town Races in West Virginia appears to be holding its own despite predictions of doom due to the recent opening of MGM National Harbor near Washington, D.C. In a fourth quarter earnings call, Jay Snowden, chief operating officer at Charles Town owner Penn National Gaming, said, “While it is still early, we are indeed encouraged by the first 50-plus days post MGM’s opening of National Harbor on December 8th. In the month of January, our slot volumes exceeded prior year on 20 of 31 days.” Penn National Chief Executive Officer Tim Wilmott added, “Seeing those results, it’s given us a level of encouragement that we were within the guidance we thought, within the ranges that we’ve previously provided on the impact of National Harbor on Charles Town.”
Before MGM National Harbor opened, analysts had predicted it could cannibalize up to 25 percent of EBITDA at Hollywood Casino, a 90-minute drive from D.C. Now, Chad Beynon of Macquarie Securities said, “Concerns over National Harbor cannibalization of Charles Town seem overdone, in our view, as the impact to date has been less than management initially expected. In particular, Charles Town’s core customers in Northern Virginia have proven to be resilient, as seen by GGR declining only 8-8.5 percent year-over-year since MGM’s National Harbor opening.”
Cameron McKnight of Wells Fargo Securities said, “We now have six weeks of weekly data since National Harbor opened and collectively Charles Town is tracking down 17 percent.” He said Wells Fargo Securities now predicts a 20 percent year-over-year drop in EBITDA for the full year. And John Decree of Union Gaming now forecasts just a 15 percent drop in EBITDA for 2017.
Snowden said Charles Town has proved to be resilient due to fewer regulatory restrictions, less traffic and increased customer relations activities. “In West Virginia, we have comp drinks as an option for our better players, and really you hear a lot of customers just talking about ease of access to ease of parking, whether valet or self-park, at Charles Town versus National Harbor. We obviously also benefit by virtue of smoking, which is something that we can offer on our gaming floor,” he said.
He noted Charles Town is especially appealing to customers age 60-65, who prefer to avoid the challenges of Washington, D.C.-area traffic. “They just really value the convenience factor and the service levels. We’ve got long standing relationships with these customers–nearly 20 years–and we feel good about that,” Snowden said.
Still, he noted, “We remain cautiously optimistic, but want to stress again that it is still in the very early innings in West Virginia. MGM is building their database. Maryland Live! is focused very much right now on non-gaming development and we are focused on continuing to enhance the relationships with our best players.”
At Gaming and Leisure Properties, the REIT spinoff that owns most of Penn National real estate, Chief Financial Officer Bill Clifford noted, “It takes about six months after the event before you can get enough data to really start to say, ‘Okay, I can see where this is going.’” GLPI Chief Executive Officer Peter Carlino stated, “What Penn highlighted on their call was predictable. I mean National Harbor is in a terrible location” in terms of traffic and access.
