Moody’s Investors Services has the right news for the US gaming market. Sort of.
American casino revenues are up slightly, but Moody’s warns that operators haven’t any more room to cut costs.
The united states land-based casino industry is showing indications of improvement, but only a bit, according to Moody’s, which this week upgraded its appraisal of the market from negative to stable.
In May, gambling revenue rose in every one of the 18 states which can be tracked by Moody’s, except for Connecticut and nj-new jersey, the company stated, with an average growth, year-on-year, of 4.1 per cent across those states.
Moody’s cited a positive trend of revenue growth, cost-cutting, and reduced market ‘cannibalization,’ whereby companies poach business from one another, as contributing facets.
The firm believes there is room for modest growth, and that revenue will increase between zero and 2 percent each month, year-over-year, for the next 12 to eighteen months, which may result in a increase in profit of three to four percent, excluding taxes and other items.
The company’s gaming analyst, was far from effusive despite this positive note, Kevin Foley.
‘While not a stellar performance, we give consideration to this broader improvement a tangible sign of sector revenue stability,’ he told the Associated Press. ‘we are not saying they truly are getting better… At least, it’s some breathing space. It’s better than if it went the other means.’
It’s, nevertheless, a rosier outlook than this time year that is last when gaming revenues, because of the exception of Nevada, stayed flat, despite economic improvement and development in other sectors. In June 2014, Moody’s appraisal was that revenues were weaker than anticipated, and the outlook that is economic Las Vegas seemed bleak and was graded as ‘negative.’
Now, says Moody’s, operators are benefiting from years of less expensive structure. The downturn that is economic of hit the casino industry hard, and forced it to tighten budgets. Several casino companies which had begun expensive expansion plans at the period were caught brief, as income plummeted also it became almost impossible to refinance debt.
Running Out of Room
Caesars Entertainment, formerly Harrahs, was the most high-profile casualty. The company was acquired by Apollo Global Management and TPG Capital in a $30.1 billion leveraged takeover after years of expansion.
Caesars acquired a debt that is industry-high the method, and struggled into the ensuing years, failing to turn a profit until this year, whenever, inspite of the complex bankruptcy proceedings of its main running device, it announced that its margins had returned to ‘pre-crisis’ levels
Foley cautioned that casino operators ‘may be running out of room to cut costs much further,’ adding that ‘too much cost-cutting could sacrifice quality and service, which operators cannot afford at time when they are battling for market share amid supply increases.’
In addition, he warned that casinos must contend with a absence of development in customer spending, as disposable income levels remain fairly low.
MGM Vows to Block Connecticut Casino Plan
An artist’s rendering of the MGM Springfield, that has triggered a border war to erupt between Connecticut and Massachusetts. (Image: masslive.com)
MGM declared war on Connecticut this week, vowing that it would fight the state’s efforts to build a casino along Interstate 91 on its northern edge with Massachusetts.
The proposed home is positioned near Hartford, CT, and just miles from Springfield, MA, where MGM has just broken ground on an $800 million casino resort project, expected to start in 2018.
Connecticut wants getting in there first, with a ‘satellite casino’ that could be erected in much less time than MGM’s committed Vegas-style project. Connecticut lawmakers recently passed a bill permitting the constitutional adjustments needed to achieve this.
Bring it On!
‘we are perhaps not planning to go peacefully,’ declared William Hornbuckle, President of MGM Resorts Global, in an interview with the Associated Press this week.
Hornbuckle, who, incidentally, was born and bred in Connecticut, did not care to elaborate on exactly exactly what MGM had planned, suffice to state that he and his peers had been ‘contemplating our choices.’
‘Bring it on, MGM,’ stated Connecticut Representative Stephen D. Dargan, bloodstream pumping. ‘We’re in direct competition!
And another thing: ‘We’re serious about protecting our market share,’ he included. ‘with their tactics, they are not. if they think they’re going to frighten us’
Thousands of Jobs
Connecticut has sanctioned two casinos on tribal lands in its southeast since the early nineties, in return for a portion of this earnings.
Just the Mohegan tribe, which operates the Mohegan Sun, while free indian dreaming slot games the Mashantucket Pequot tribe, which runs Foxwoods, are permitted to work casinos.
Both, however, were hit hard by the global downturn that is economic of and they are each over $1 billion in debt.
MGM has made no secret of its want to attract customers from Connecticut, and estimates that some 40 % of footfall shall result from their state.
Connecticut lawmakers are concerned about the possible lack of thousands of casino-worker jobs into the state as being a result of increased competition from Massachusetts; Foxwoods and Mohegan Sun have laid off hundreds of employees to save money in recent years.
‘Merely, this is about siphoning profits from Connecticut to benefit A las vegas, nevada company while at the same time moving thousands of existing jobs from Connecticut to Massachusetts,’ tribal leaders said last week. ‘That’s why the tribes, the legislature, and also the governor have committed to developing a solution that protects Connecticut.’
‘Box of Slots’
Jim Murren, CEO of MGM, and, strangely enough, also a Connecticut native, has been scathing about the project calling it, witheringly, ‘a package of slots.’
‘we do give a damn about Connecticut because i am from here,’ he stated early this past year. ‘we just want their cash to come here!’
While MGM’s threat to Connecticut’s plans is unspecified, it’s possible that the business has some recourse for the challenge that is legal.
Connecticut attorney general George Jepsen has warned that a party that is third claim that exclusive gambling rights to your tribes, in areas outside their sovereign lands, violates the Equal Protection Clause of the usa Constitution.
It could also be in breach regarding the Commerce Clause because it would grant rights to conduct gambling ‘for the purpose of protecting in-state interests that are economic interstate commerce.’
Deadwood Brings Roulette, Craps, and Keno to Historic Gold Rush Town
Deadwood is betting on its rejuvenated gambling industry that now includes roulette and craps to revamp its tourism numbers that have flatlined throughout the last years that are several. (Image: rapidcityjournal.com)
Deadwood, Southern Dakota, is less than four miles that are square size, but with 24 gambling venues the town has more casinos than that of all states.
The historic settlement played an important role in the expansion for the American west, as miners and gold rushers journeyed into the Dakota Black Hills in search of treasure throughout the late 1800s.
The storied history of Deadwood is a read that is fascinating but its recent history isn’t much to write on.
The bustling town of the nineteenth century is no more, house to less than 1,300 residents in 2015.
Its economy that heavily depends on tourism is struggling to attract visitors, however that could alter thanks to a new quality put into place July 1st that now permits Deadwood gambling enterprises to offer roulette, craps and keno.
Only poker, blackjack, and slots were previously allowed.
‘It’s going to replace the image of Deadwood,’ Mike Rodman, executive director associated with Deadwood Gaming Association said. ‘Deadwood now could be a really full-fledged gaming location.’
Boom to Bust, Bust to Boom
The once-lawless mining town didn’t formally legalize gambling until 1989. That provided a spark in tourism that led to a boom that is economic.
Tax proceeds from gambling revenues were allotted towards the preservation of historic buildings, with the Adams Museum & House, the home that is former of Adams being restored in 2000.
When HBO launched ‘Deadwood’ in 2004, a tv series that would go on to get acclaim that is critical run for three years, watchers flocked to the remote Southern Dakota location for a first-hand trip into the past.
Life was good, until it wasn’t.
The Adams Museum & House went all-in on their income that is growing out to create the Homestake Adams Research and Cultural Center (HARCC), a public housing of Black Hills archival materials from its most legendary events and citizens.
The museum sought to raise $3.6 million, utilizing the city guaranteeing $1.5 million paid by the Historic Preservation Fund.
Then in 2006, ‘Deadwood’ was canceled by HBO, and soon after the swarm of fans soon migrated elsewhere. 2 yrs later, the nation as a entire suffered an economic collapse, and Deadwood was hit hard and left almost, well, dead.
Today the downtown hotels, bed and breakfasts, cabins, restaurants, and casinos remain committed to revitalizing Deadwood, but they recognize that is just a challenge considering its remoteness.
The closest commercial airport is an hours drive away in Rapid City, and a local airport at that.
Gambling on Gambling
Unfortunately for Deadwood, it generally does not have the fortune of being situated near big metropolises of men and women or worldwide airports, however it is located just minutes off Interstate 90, the longest highway in the usa that extends from Boston to Seattle.
More to the point, it offers history from Civil War Calvary commander George Custer to western legend Wild Bill Hickok, frontierswoman Calamity Jane, and Dr. Valentine McGillycuddy, physician to famed war leader Crazy Horse.
For gamblers, the alleged ‘Dead Man’s Hand’ took place in downtown Deadwood, the aces and eights two-pair hand famously held by Hickok as he had been shot from behind in the mind.
It seems only right that Deadwood should provide not just blackjack and poker, but also roulette and craps, as all four were played back the 1800s. The improvements are expected to bring $2 million in additional gaming revenue to the town that is small.