The casino gaming news these days is filled with stories of expansion. Florida, Massachusetts, Maryland, New Hampshire, New York and Pennsylvania all have expansion on their radar screens. New Hampshire is working on new regulations as a prelude to expansion and Florida is studying the issue. Massachusetts, Maryland and Pennsylvania are in the process of granting casino licenses. Maryland only has one to give and the recipient may be known by the end of the year. Massachusetts is taking its time with lots of sideshows along the way; it may be longer than a year before all of recipients of the casinos licenses in Massachusetts are known.
Pennsylvania has two potential licenses to grant, one for a racino and the other for a casino-resort in Philadelphia. At the moment, only the casino license is in play. That license may be awarded by the end of this year. As is the case in Massachusetts and Maryland, the Philadelphia license has two separate elements, the prospective casino operator and the potential casino location. Each location has different implications, as does each applicant. Currently, six applicants for the Philadelphia license are being reviewed by the gaming commission. The regulators in Maryland and Massachusetts are also listening to applicants and the surrounding community trying to determine which applicant and which location with be best for the city and for the state.
In addition to the Philadelphia license, Pennsylvania has another expansion in the works; the legislature seems to be set to approve slot machines in taverns. That could add as many as 20,000 more slot machines to the state’s existing 26,000. The final bill could be approved and signed by the governor in November. New York is getting really close to deciding if there will be five additional casinos in the state. New Yorkers will vote on November 5th on the enabling legislation. In Massachusetts voters will be asked to approve some of the local referendums on the November 5th ballot.
In every state where the issue is at play, there are varying opinions on the advisability of expanding gambling. Some people are touting gaming as the solution the state’s economic challenges, while others are warning the gambling will destroy the moral and cultural fiber of the state. In Florida, Disney and the Seminole tribe are the big opponents of expansion. In contrast, there are also some very big supporters. Las Vegas Sands, Genting and Wynn have made some gesture of interest. In New York, the battle is really heating up. The governor, some mayors and developers are strong supporters of expansion, but some of the Indian tribes with casinos and some religious and cultural groups stand in opposition. The slot machines in Pennsylvania appear to be almost without opposition and in Maryland the debate is over who, not if; there are no moral or competitive opponents at this point. Massachusetts still has the competitive, moral and cultural issues up in the air in all of the potential locations.
Regardless of how heated the rhetoric may have been in some places, there have been very few surprises. However, New York produced a major twist in the tale on Monday, October 28th. Resorts World Casino, operated by Genting, in New York City announced a labor agreement with the Hotel Trades Council. According to a story in the New York Daily News, 1400 of the 1750 employees of the racino are guaranteed annual earnings of $60,000 by 2016. The story quotes Peter Ward the president of the council: “With this contract, we have created a blueprint that will set a standard for future contracts with the gaming industry throughout the state.” The next day, a PAC backed by labor unions was formed to support the referendum.
The contract probably guaranteed the support of organized labor in New York. If the outcome of the vote had been in doubt, the contract probably tipped scales in favor of adding 5 casinos in New York. The contract does something else, it also guarantees that the cost of operating a casino in New York doubled or possibly tripled. That contract is really important and really big news, I might argue that the contract is the most significant event in the current expansion phase, except it isn’t. Caesars withdrawal from Massachusetts was huge, the spread of slot machines in Pennsylvania is also of major importance and when the Maryland casino is awarded the casino operator will have Washington, D. C. as its primary feeder market – quite a plumb. All are big news.
But to the gaming industry as a whole, none of those individual events is as important as the overall event, the expansion itself. Those five casinos in New York, one more casino in both Pennsylvania and Maryland and, when the dust settles, five brand new mega-casinos in Massachusetts are the real story. The details matter, but they matter mostly at a local level. The important fact in all of this is the increased competition for every jurisdiction. In September gaming revenues in the established markets declined as they have for most of this year. As long as there are new jurisdictions coming online, that trend can be expected to continue. The declines may not always be as drastic as they have been for the last couple of years. But until all of the new competition has been absorbed, the decreases will continue. Are we having fun yet?
