EDITOR'S LETTER: A Postcard from the Heartland
by James Rutherford
March 1, 2010
As home to some of the U.S. commercial casino industry’s largest markets, the contiguous states of Illinois, Indiana, Iowa, Michigan and Missouri are important indicators of how Main Street is adjusting to the effects of the recession.
We know from a 2009 survey sponsored by the American Gaming Association that something like 60 percent of U.S. casino customers have cut back “a great deal” or “somewhat” on their spending in response to the downturn.
How is this playing out in the Midwest and upper Midwest, a region that accounts for a sizable portion of those visitors (about 25 percent, second only to the West)?
The 54 casinos in the five states just mentioned won a combined $8.45 billion at the slots and tables in 2009, representing about 25 percent of the commercial industry’s total win for the year. This was down year-over-year by 2.3 percent. That’s not bad considering that more than half a million people lost their jobs in these states between 2008 and 2009.
The unemployment rate in Michigan jumped 3.8 percent from 2008 to 2009. But gross gaming revenue at Detroit’s three casinos declined only 1.5 percent over the same period; and one of the three, Greektown, which was laboring through a Chapter 11 reorganization, enjoyed an increase of more than 9 percent.
It’s been a rough couple of years for Illinois’ casinos. Gambling revenues are off 28 percent from their 2007 peak. The state’s move into VGTs in bars, truck stops and fraternal and veterans clubs hasn’t taken hold yet, but it’s difficult to see how the casinos will benefit. The state’s jobless rate stood at 10.8 percent at the end of 2009, up 3.4 percent over the previous year. Casino gross win statewide fell 9 percent over the same period. Hampered by a smoking ban and the highest tax on GGR in the region, and battling tough competition from the St. Louis area and from northern Indiana (Illinois’ portion of the Chicagoland market took a 14 percent hit over the year), only one casino did better in 2009 and that was Jumer’s Casino & Hotel in the Quad Cities area in the west of the state. Players responded enthusiastically to the all-new Jumer’s that opened at the end of 2008 — a new single-story casino, new hotel, new restaurants, a nightclub, an events center. Admissions soared 88 percent, topping 1.2 million. GGR more than doubled to $70.4 million.
On the plus side, Illinois’ revenue declines may be slowing. Win statewide was down only 3.1 percent in January, compared with January 2009 (which was down more than 9 percent versus 2008), and it was up more than 7 percent over December. Admissions were up 6 percent.
In Indiana the happy news is there doesn’t appear to be a lot of political support in neighboring Kentucky for VLTs at racetracks, at least not at this time, and lawmakers there don’t seem to be in any hurry to drum it up. Seven metropolitan areas in Indiana saw unemployment climb into double digits in 2009. Despite this, casino admissions were up about 4 percent. However, this didn’t translate into greater revenues; they were down 3.7 percent and down about the same against 2007, despite the addition of the two racinos. Clearly, gambling budgets have shrunk. No surprise there. No surprise either that the politicians are on the case. A committee of the state House of Representatives recently endorsed a bill to permit Web betting on Indiana horseracing. The bill also would loosen some regulations to make operators’ lives a little easier. If approved, it will, among other things, let the riverboats host card tournaments outside the statutory confines of their water-borne casino floors.
Gambling revenues at Missouri’s 12 casinos actually were up year-over-year, by 3 percent, energized by the repeal at the end of 2008 of the onerous $500 loss limit. Admissions in 2009 were up by about 800,000. The opening this month of Pinnacle Entertainment’s $357 million River City Casino & Hotel in Lemay in south St. Louis County bodes well for the new year.
is a New Jersey-based freelance writer.
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