MGM National Harbor has generated nearly $300 million in gross gaming revenue since its grand opening last December and just earned approval from the Maryland Lottery Commission last month for a $27 million gaming floor expansion.
It’s a pretty good start by any metric. What’s been a key driver behind this phenomenal launch? The popularity of its table games.
While slot machines have accounted for 53 percent of the National Harbor’s gross gaming revenue since opening, tables have generated 62 percent of the property’s post-tax revenue.
This shouldn’t come as a surprise to anyone who has visited the Washington, D.C. property, where the table games areas are abuzz with activity at all hours of the day.
“When you walk through MGM National Harbor and you see blackjack games at 10 am with $25 limits, you can see that there’s just a lot of excitement,” said Alex Alvarado, Vice President of Slot Operations at the property, adding that the games are succeeding in attracting a retail crowd. “There’s a lot of not really seasoned gamers but just people looking for entertainment.”
National Harbor boasts 126 banked and 39 non-banked table games, and these tables have combined to produce $136 million in gross revenues since opening. The property’s 3,237 slot machines have grossed $152 million over that same time frame.
That computes to a slot-to-table ratio of roughly 53 percent, a figure well below the state average of 61 percent and significantly below 64 percent at Maryland Live!, MGM’s primary competitor.
Other states in the region rely far more heavily on slots in their revenue mix. Pennsylvania, even despite stagnant slot play and growing table games revenues, was at 73 percent slot revenues in May. New Jersey has been in the low 70s range over the past 12 months; Ohio has trended in the high 60s.
While the top line gross gaming revenue figures are what make headlines each month, what matters for the casino operator is how that revenue is ultimately distributed. Before MGM gets a taste of its slot revenue, a 41 percent chunk is sent off to Maryland’s education fund, 9 percent goes to a variety of local programs and 7 percent goes to the horse racing industry. Once that’s all been paid out, MGM is left with just 44 percent.
This means that MGM has netted just $67 million of its $151 million total slot revenue, or about $11.1 million per month.
With table games, on the other hand, only 20 percent of the revenues are siphoned off to various causes. This has allowed MGM to keep 80 percent – $109 million, or $18.2 million per month – of the $136 million generated.
Since last December, Maryland Live! has netted $101 million in slot revenues (though it keeps 49 percent compared to MGM’s 44 percent) against $92 million from tables.
Obviously, comparing slots to tables is not exactly apples to apples, because one dollar in revenue from a slot machine has a different margin than a dollar earned from a table game, but the Maryland tax structure is clearly set up in a way that incentivizes table revenues over slot revenues – something that MGM has clearly capitalized on.
“One of the things that differentiates this market from other markets is the lack of parity from table game to slot taxation,” said Alvarado, noting that tables are also taxed a lower rate in Pennsylvania and West Virginia.
“Astute operators are going to look at that and say ‘OK, so suddenly this business, in a way, has been turned in a way on its head,” he continued. “I think part of what you’re seeing is people responding to that. Fish where the fish are and where you can make some serious money.”
MGM is hardly alone in responding to that incentive. Caesar’s Horseshoe Baltimore has taken a similar table-heavy route. It has averaged $8.6 million in net table revenues per month against $6.3 million in slot revenues.
But the new table game paradigm is admittedly difficult for long-time gaming professionals to grasp.
“When you think about it from an operator perspective, it’s tough to wrap your head around,” said Alvarado. “How can all this labor that you put into a manual game and the speed that is semi-dictated by a player outperform a machine that you just brainlessly stuff money into, hit a button and it eats your money and gives you nothing back? Everywhere else I’ve ever been it’s the inverse of that.”
Aaron Stanley
https://www.clippings.me/aaronstanley
mobile: 612-220-7492
