If state Rep. Lou Lang (D), the economic Rasputin of the upper Midwest, and his allies in the horsey set were actually conspiring to topple Illinois‘ casino industry in favor of quick-and-dirty racinos, they’ve done it cunningly. Frontal attacks on casino gambling almost never succeed, so why not water the gaming business down to the point where it’s as unprofitable to run a gambling house in Illinois as it is in Atlantic City? That explanation at least has the benefit of suggesting logical minds are at work. Or maybe Lang’s economic nutbaggery is genuine and he really believes the horse manure he’s been spewing? His horseracing buddies are now peddling a report by Spectrum Gaming Group whose conclusions are, shall we say, highly suspect … which is a nice way of calling them laughable, preposterous, moonshine, wishful thinking or what have you. Spectrum claims that it doesn’t tailor its conclusions to what its clients want to hear, but where do you think this document would have gone if it didn’t parrot the Illinois Racinos & Ponies Revenue & Jobs Alliance‘s party line? A failed state Senate bill that would have added five casinos and six racinos “would not amount to saturation,” per a Chicago Sun-Times summary of its conclusions. Why? Because adding all that capacity would still leave Illinois with — Shazam! — fewer gaming positions per capita than Indiana, Missouri or Iowa … three states which much healthier casino economies, by the way. Gee, with dime-store logic like that, who wouldn’t want carpet-bomb the Illinois economy with 11 more gambling venues, plus slot routes? (Not!)
Backed by an unholy coalition of union and business interests, the Spectrum report claims job-creation numbers in the 20,000 range. I suspect it doesn’t address the number of jobs that would be concomitantly lost as existing casinos cut staffing in order to preserve their margins. It’s amazing that you can get ostensibly serious people to shovel this bullshit when yet another set of monthly revenue numbers has been released and shows just how far out to lunch Crazy Lou (right), Spectrum, Unite-Here et. al. really are.
The headline in today’s papers will be the top-line number: a +18% in gross Land of Lincoln revenues. Take away Rivers Casino in Des Plaines ($36 million), and all other Illinois casinos were down 11%, grossing $107 million (-16.5% in the Chicagoland market, where most of the new capacity would be bunched). Heck, perpetual bright spot Casino Rock Island had its first-ever, if memory serves, negative comparison since moving operations onshore, down 8%. If you want a good-news story, you have to head way downstate, to Harrah’s Metropolis was up 15%, the only casino to report year/year gains.
Consumers certainly haven’t gotten the Lang Memo that there’s hella more money to spend, as these grim numbers played out against an 18% increase in foot traffic (-10% on a same-store basis) but flat consumer spending. Just how badly are Neil Bluhm‘s competitors getting their butts kicked? The new Des Plaines casino outgrossed both Caesars Entertainment properties combined or all three Penn National Gaming casinos. Grand Victoria Elgin (-25.5%), once the market leader, is in serious danger of falling into third place, finishing the month just a decimal point ahead of Harrah’s Joliet (-5.3%). Penn’s two northern Illinois properties both absorbed a -16% wallop.
Leaving aside the question the worrisome sight of month after month of double-digit declivity in Chicagoland, Caesars is to be congratulated. Substantial reinvestment in the Joliet market, combined with a boffo month aboard Metropolis, kept the company’s properties flat from last year, when everyone else was losing ground. Even Boyd Gaming appears to be on a downward trend at Par-A-Dice, off 8%. And, for all the adversity in Elgin, the MGM Resorts International riverboat (above) is better managed than its rivals. For 2012 so far, Grand Victoria is outperforming all other operators in the aggregate when it comes to getting the most play (or fair share) per table and machine: almost +4%. Among individual properties, only Harrah’s Joliet (+3%) and Rivers Casino optimize their inventory comparably or better. At a soggy -7% overall, Penn could well afford to thin out its 3,400-box thicket of slot machines.
Of course, many of those existing boxes will be coming out if Gov. Pat Quinn (D) accedes to the more-more-more demands of Lang & Co., just as one city’s job gains will be another’s losses. Perhaps only game manufacturers will come out truly ahead: They’ll make a quick killing, flooding Illinois with tens of thousands of new boxes — and let operators worry about it when supply leaves demand far in the dust.
While analysts disagree over whether MGM or Sociedade de Jogos de Macau will get the year’s last land grant on the Cotai Strip, the fellas at Union Gaming are taking a neutral stance. So far, SJM boss Angela Leong‘s presence on the Macao legislative council hasn’t helped Stanley Ho‘s old company get one inch closer to a Cotai presence. Even so, SJM booked $219 million in profits last quarter. However, its revenue growth (8.5%) isn’t keeping pace with that of Macao overall, up 22% last month alone.
