As I am penning this column, the first set of revenue numbers have been released for the recently opened $2.6 billion Encore Boston Harbor and they are, in a word, encouraging.
According to the Massachusetts Gaming Commission (MGC), Encore generated $16.8 million in gaming revenue during its first week of business in June. Surprisingly, a high percentage of this income—$7.7 million or about 45 percent—derived from table game play as opposed to slot machines. Although it is still extremely early—and first week revenue results for casinos are notoriously hard to maintain—industry observers were nonetheless impressed with the casino’s performance, especially the table games play.
“They really are getting the high rollers,” Richard McGowan, a gambling expert who teaches at Boston College, told the Boston Globe. “It shows you what a different type of customer they’re getting, compared to MGM.”
Indeed, if anything, these early returns from Encore have unfortunately cast the performance of the $950 million MGM Springfield, which opened in the western part of the state a year ago this August, in a less than flattering light. For the month of June, MGM Springfield generated $20 million in gaming revenue, just $2 million more than what Encore produced in one week. After a strong revenue start ($9.5 million in its first week), MGM Springfield has gone on to generate a total of $232 million in 10 months, and is unlikely to meet its yearly estimated gross gaming revenue of $418 million.
Of course, projecting potential revenue is an imperfect science in most every business, especially one that has seen a rapid escalation in competition over the past 10 years. That aside, I would argue that MGM Springfield’s inability to meet revenue projection has less to do with operations and management than with the old real estate saw “location… location… location.” Until fairly recently, casino demand was such a new resort could be built almost anywhere and people would flock to it. Now, with the proliferation of multiple forms of gaming throughout every corner of the U.S., the “build it and they will come” casino development mentality is questionable at best, especially for in-fill markets for states that already have casinos. New York is a good example of this—few of its recently opened casinos are making anything near their projected revenue numbers.
There is an exception to this observation however—new casino development in major urban core areas still seems to be a winning strategy. Encore Boston Harbor bears this out, as does the success of the recently opened MGM National Harbor in Washington D.C. The ongoing good fortune of Queens-based Resorts World and Yonkers-based Empire City Casino, both situated within the greater New York City metroplex, are also evidence of the winning nature of this approach.
And the good news for casino developers is that there are still plum, population- and tourist-dense urban markets to target, especially for integrated resort projects—cities such as Miami, Atlanta, Dallas, Houston and Manhattan, just to name a few. On a less positive note, none of these jurisdictions are currently close to allowing integratedresort-style, land-based casino gaming, so development planning in these markets will be far from easy.
But since when has creating something with a huge potential economic payout ever been easy?
It’s my sad duty to report the passing of Dave Palermo, a former BNP employee who wrote and edited for a number of former company publications, most notably International Gaming & Wagering Business and Indian Gaming Business. Dave was an institution within the tribal gaming community, and he will be missed.