N.E. casinos suffer decline in revenue

March 18, 2008 6:00 PM
by

share

Native Niche by By GT Staff | An indication that no region of the country is immune to a slowing economy, casinos in the Northeast have reported declining revenues from their slot operations.

Slot machine revenues are off by more than 6 percent at Connecticut’s casinos, Foxwoods and Mohegan Sun, in the five months ending Jan. 31, compared to a year ago. For Mohegan Sun, the downturn is its first after more than a decade of steady increases.

At Twin River in Rhode Island, the recent addition of almost 1,000 new Class II slots has improved overall revenue there, but the earnings per machine have dropped by 6 percent in the last three months, leading operators to impose new cost-cutting measures, including shutting down two restaurants for all but weekends.

Specialists told the Boston Globe the trend is partly a result of the nation’s faltering economy, affecting the casino industry nationwide, and is also an indication that the region’s casinos are exhausting the supply of new gamblers who have fueled rapidly rising profits since casinos were introduced in the 1990s. Now, they are beginning to compete more intensely for existing gamblers.

"We’re getting an indication of market saturation," said Arthur Wright, a University of Connecticut economist who has tracked the casino industry for years.

Other experts suggest the casino market is becoming saturated as new casinos open in New York and Pennsylvania and those in Atlantic City expand operations.

An important indicator will come in May, when Foxwoods opens its $700 million MGM Grand casino, with 1,400 new slot machines.

The new casino may attract customers without affecting business at Mohegan Sun and Twin River, according to William Eadington, an economist and director of gambling research at the University of Nevada at Reno. "If not, then the market is saturated," he said.

A Boston Globe review of slot revenues at all three facilities shows that, while the casinos have added 5 percent more machines to attract gamblers in the five-month period ending Jan. 31, revenue has fallen off. The revenues are posted by the Connecticut state Department of Special Revenue and the Rhode Island Lottery Commission.

Currently, there are 18,053 slot machines or video lottery terminals in the Connecticut casinos and Twin River. Combined, they are producing $287 per machine per day.

That dip in New England coincides with a national gaming decline.

Commercial casinos in the 12 states where they are legal experienced a 1.3 percent drop in revenue in the three-month period ending Jan. 31, compared to the same period a year earlier, according to the American Gaming Association, a trade group.