Pennsylvania and Louisiana: It’s what it is

When last seen, Caesars Entertainment CEO Gary Loveman was telling his brethren that a stale property is an endangered property. To prove his point, he need look no farther than Philadelphia, where new kid on the block Valley Forge Casino Resort (left)was up in largely “down” April, its revenues increasing 29%. At $8 million last month, Valley Forge is still small potatoes but it’s ascending at a time when SugarHouse and Parx Casino are flat, and when — ahem! — Harrah’s Philadelphia fell -6%. All these boys need to make money while the sun shines because if the Pennsylvania Gaming Commission awards that fifth license to Steve Wynn or Bart Blatstein, it’s be like dropping an A-bomb on the competition. Game over, fellas.

(True, Penn National Gaming is in contention, too, but it’s yet to prove it can deliver a knockout punch, except in an uncontested market.)

The rest of the Keystone State map was a story of down a little bit here, a little bit there, with two exceptions. Presque Isle Downs (-19%) continues to lose customers to Horseshoe Cleveland. And, with a 9% revenue increase for a near-best $38 million, is Sands Bethlehem owner Sheldon Adelson so convinced he wants to sell the place? Its only sin seems to be relatively low return on investment, but it’s withstood competition — even from Resorts World New York — and continues to grow. Trying to shed Sands Bethlehem is a knee-jerk decision that should be rethought.

Pulling another market upward was a newcomer, Pinnacle Entertainment‘s L’Auberge Baton Rouge ($12 million, left), which converted Louisiana‘s 4% year/year, same-store drop into a 3% gain. L’Auberge BR continues to demolish its competition, making more by itself than Penn’s Hollywood Baton Rouge (-33%) and Tropicana Entertainment‘s Belle of Baton Rouge (-27%) combined. Rarely have I seen a new property take a wrecking ball to its rivals in such a crushing manner. In the state’s biggest market, Lake Charles, Pinnacle’s L’Auberge du Lac (+9%) grossed $30 million, more than any casino in the state — even Harrah’s New Orleans ($26 million, -4%). Isle of Capri Casinos dipped 6% at its Lake Charles vessel, grossing $11 million.

The Fair Grounds racino (up 9%) in New Orleans was the only other property in the Pelican State to post significant gains. Caesars (-3%) and Boyd Gaming (-2%) has average months statewide and outperformed their competitors in the Shreveport area? How did they do that? By having flat months at Sam’s Town and Horseshoe when everyone else was slipping. Perhaps there are macroeconomic explanations for why revenues seem to be stuck in neutral, but Occam’s Razor suggests that the casino industry — in those regions where it exists or is accessible — has hit its saturation point and is just going to have to learn to live with these kinds of numbers, uninspiring though they may be.