Analyst: Philly doesn’t need another casino

Pennsylvania gaming regulators this month drove another nail into the coffin containing Atlantic City’s gaming market.

At the same time, they unwittingly damaged their own state’s casino industry.

Stadium Casino, a joint venture of the Cordish Cos. of Baltimore and Greenwood Gaming, was awarded the rights to build the $425 million Live! Casino &Hotel in South Philadelphia.

Analysts, however, don’t believe a fifth Philadelphia-area casino can thrive in what’s becoming an over-saturated market.

As for Atlantic City, which has seen four casinos cease operations this year and a fifth scheduled to close in December, more competition in Philadelphia means fewer customers on the Boardwalk. Atlantic City draws 25 percent of its business from the Philadelphia area.

“One more property in Philly is incrementally bad for Atlantic City casinos, which still derive a significant amount of business from Pennsylvania,” Macquarie Securities gaming analyst Chad Beynon told investors.

He said the mid-Atlantic gaming region, which includes Maryland, Delaware, Pennsylvania, Atlantic City and New York, generates almost $10 billion a year in gaming revenue.

But the market is crowded. Atlantic City gaming revenue has declined more than 60 percent since 2008 because of competition.

Pennsylvania has 12 casinos that generate more than $3 billion in annual gaming revenue. Philadelphia’s four casinos contribute more than $1 billion to the state’s total.

Both Philadelphia’s SugarHouse Casino and Harrah’s Philadelphia asked the Pennsylvania Gaming Control Board to shelve the idea of awarding the state’s last gaming license — designated for the greater Philadelphia area — even after 18 months of debate.

The words fell on deaf ears.

The casino project will be in the South Philadelphia stadium complex that houses the ballparks and sports arena for the city’s professional sports franchises. The casino is just a short walk from Citizens Bank Park, home of Major League Baseball’s Philadelphia Phillies.

The Live! site has direct access to and from busy Interstate 76, which connects Philadelphia with southern New Jersey via the Walt Whitman Bridge.

Live!’s initial plans call for 2,000 slot machines, 125 table games and a 240-room hotel with an opening in about 24 months. The license allows Live! to increase to 5,000 slot machines and 250 table games.

Deutsche Bank gaming analyst Andrew Zarnett often has commented on the problems with building casinos in saturated markets. After the latest license was awarded, he titled his research note, “This Town Ain’t Big Enough for the Five of Us.”

Zarnett told investors Philadelphia would welcome another cheesesteak shop. But the city can’t handle a fifth casino.

“The addition of another casino in the greater Philadelphia market will be a significant negative for the current operators,” Zarnett said.

The state’s most lucrative gaming facility is the Parx Casino and Racetrack, 22 miles north of the Philadelphia stadium complex. The facility produced a state-high $487.7 million in gaming revenue in 2013. It has the most slot machines — 3,387 — of any Pennsylvania casino.

It is also owned by Live! partner Greenwood Gaming.

SugarHouse opened in Philadelphia’s Fishtown district in 2012 and is adding amenities and increasing the size of its gaming floor by 70 percent through a $164 million expansion. It is 8 miles from the Live! site.

Caesars Entertainment-owned Harrah’s Philadelphia in suburban Chester is also home to a 5/8-mile harness racing track. It’s 13 miles from Live!

“We anticipate that gaming revenues at SugarHouse and Harrah’s will be hurt the most,” Zarnett said.

Longer term, Zarnett expects New York, which is looking to add four casinos to its upstate region, will hurt Philadelphia. Also, the city generates lower gaming revenue per adult compared with other major cities that house casinos or have them nearby, such as Chicago, St. Louis and Detroit.

“In our view, the addition of the Live! casino will have more of a deleterious impact on the market,” Zarnett said.

The Live! folks might differ.

Cordish operates Maryland Live! near the Arundel Mills Mall about 10 miles outside Baltimore, which is the state’s dominant casino. In 2013, Maryland Live! accounted for 78 percent of the state’s $746.9 million in gaming revenue.

“Our strategy was to build the best in the market,” Cordish President Joe Weinberg told the Las Vegas Review-Journal during a tour of Maryland Live! in May.

There is no reason to believe the company won’t accomplish the same task in Philadelphia.

Cordish already operates the XFinity Live! entertainment complex on the other side of the baseball stadium and will incorporate the casino into the complex. He said the area — between the stadiums and XFinity Live! — already attracts 8.5 million annual visitors.

Bart Blatstein, a Philadelphia businessman, doesn’t believe the stadium complex was a good location for the casino.

Blatstein and Isle of Capri Casinos had one of the three losing bids. He proposed the $700 million Provence in the city’s downtown area. He said the integrated resort was designed to draw visitors to increase tourism to the Philadelphia region.

“I think the board is very shortsighted,” Blatstein told the Philadelphia Inquirer after the vote. He was critical of Greenwood.

“All they’ve done is created a monopoly for Parx, with one in Bucks County and one in South Philly, which will squeeze out SugarHouse,” Blatstein said. “It’ll kill Harrah’s. It’s just unbelievable. It’s shocking that they would choose another crappy slots-in-a-box project.”

Howard Stutz’s Inside Gaming column appears Wednesdays and Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.

ad-high_impact_4
Business
UNLV Tech Park innovation building breaks ground
Construction on the first innovation building at the UNLV Tech Park is underway. (Bailey Schulz/Las Vegas Review-Journal)
Caesars Forum Meeting Center
Caesars broke ground Monday on its $375 million Caesars Forum Meeting Center (convention center) just east of the High Roller observation wheel. (Caesars Entertainment)
Technology reshapes the pawn shop industry
Devin Battersby attaches a black-colored device to the back of her iPhone and snaps several of the inside and outside of a Louis Vuitton wallet. The device, installed with artificial intelligence capabilities, analyzes the images using a patented microscopic technology. Within a few minutes, Battersby receives an answer on her app. The designer item is authentic.
Recreational marijuana has been legal in Nevada for one year
Exhale Nevada CEO Pete Findley talks about the one year anniversary of the legalization of recreational marijuana in Nevada. (K.M. Cannon/Las Vegas Review-Journal)
Young adults aren't saving for retirement
Financial advisors talk about saving trends among young adults. (Bailey Schulz/Las Vegas Review-Journal)
President Trump’s tariffs could raise costs for real estate developers, analysts say
President Donald Trump made his fortune in real estate, but by slapping tariffs on imports from close allies, developers in Las Vegas and other cities could get hit hard.
Las Vegas business and tariffs
Barry Yost, co-owner of Precision Tube Laser, LLC, places a metal pipe into the TruLaser Tube 5000 laser cutting machine on Wednesday, June 20, 2018, in Las Vegas. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Nevada Film Office Connects Businesses To Producers
The director of the Nevada Film Office discusses its revamped locations database and how it will affect local businesses. (Bailey Schulz/Las Vegas Review-Journal)
Opendoor isn't the typical house flipping company
Unlike most house flippers, the company aims to make money from transaction costs rather than from selling homes for more than their purchase price.
The Venetian gondoliers sing Italian songs
Gondolier Marciano sings a the classic Italian song "Volare" as he leads guests through the canals of The Venetian in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal)
Building In Logandale
Texas homebuilder D.R. Horton bought 43 lots in rural Logandale. (Eli Segall/Las Vegas Review-Journal)
Indoor farming in Southern Nevada
Experts discuss Nevada's indoor farming industry. (Bailey Schulz/Las Vegas Review-Journal)
Former Fontainebleau could have become a Waldorf Astoria
Months after developer Steve Witkoff bought the Fontainebleau last summer, he unveiled plans to turn the mothballed hotel into a Marriott-managed resort called The Drew. But if Richard “Boz” Bosworth’s plans didn’t fall through, the north Las Vegas Strip tower could have become a Waldorf Astoria with several floors of timeshare units. (Eli Segall/Las Vegas Review-Journal)
LVCVA CEO Rossi Ralenkotter announces plans to retire
Rossi Ralenkotter, CEO of the LVCVA, on Tuesday confirmed a Las Vegas Review-Journal report that he is preparing to retire. Richard N. Velotta/ Las Vegas Review-Journal
Cousins Maine Lobster to open inside 2 Las Vegas Smith’s stores
Cousins Maine Lobster food truck company will open inside Las Vegas’ two newest Smith’s at Skye Canyon Park Drive and U.S. Highway 95, and at Warm Springs Road and Durango Drive. Cousins currently sells outside some Las Vegas Smith’s stores and at Fremont Street and Las Vegas Boulevard. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas home prices to continue to rise, expert says
Lawrence Yun, chief economist at the National Association of Realtors, gives homebuyers a pulse on the Las Vegas housing market. (Eli Segall/Las Vegas Review-Journal)
NV Energy announces clean energy investment
The company is planning to add six solar projects in Nevada, along with the state's first major battery energy storage capacity. Bailey Schulz/Las Vegas Review-Journal
3 Mario Batali restaurants on Las Vegas Strip to close
Days after new sexual misconduct allegations were made against celebrity chef Mario Batali, his company announced Friday that it will close its three Las Vegas restaurants July 27. Employees of Carnevino Italian Steakhouse, B&B Ristorante and Otto Enoteca e Pizzeria, all located in The Venetian and Palazzo resorts, were informed of the decision Friday morning. Bastianich is scheduled to visit the restaurants Friday to speak to employees about the next two months of operation as well as how the company plans to help them transition to new positions.
Nevada has its first cybersecurity apprenticeship program
The Learning Center education company in Las Vegas has launched the first apprenticeship program for cybersecurity in Nevada. It was approved by the State Apprenticeship Council on May 15. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas union members voting to authorize the right to strike
Thousands of Las Vegas union members voting Tuesday morning to authorize the right to strike. A “yes” vote would give the union negotiating committee the power to call a strike anytime after June 1 at the resorts that fail to reach an agreement. (Todd Prince/Las Vegas Review-Journal)
Small businesses struggle to find qualified candidates
A 2018 survey found that over two-thirds of small businesses in Nevada find it somewhat to very difficult to recruit qualified candidates. Bailey Schulz/Las Vegas Review-Journal
Nevada secretary of state website offers little protection against fraudulent business filings
Property developer Andy Pham tells how control of his business was easily seized by another person using the secretary of state website.
Caesars may be going solo in its marijuana policy
Several Southern Nevada casino companies aren’t following Caesars Entertainment’s lead on marijuana testing.
How much is the Lucky Dragon worth?
Less than a year-and-a-half after it opened, the Lucky Dragon was in bankruptcy.
Gyms and discount stores take over empty retail spaces
Grocery stores used to draw people to shopping centers. But many large retail spaces have been vacant since 2008. Discount stores like goodwill and gyms like EOS Fitness are filling those empty spaces, and helping to draw shoppers back in. K.M. Cannon/Las Vegas Review-Journal
Funding source of Las Vegas stadium for the Raiders is sound, expert says
The stadium is funded in part by $750 million of room taxes, the biggest such tax subsidy ever for a professional sports stadium. Robert Lang, executive director of Brookings Mountain West and The Lincy Institute at UNLV, says that is a good use of public funds. (Richard Velotta/Las Vegas Review-Journal)
Las Vegas needs light rail, expert says
Robert Lang, executive director of Brookings Mountain West and the Lincy Institute said he is afraid of a "congestion mobility crisis." Las Vegas needs a light rail system, he said, to accommodate the city's growing number of attractions. (Richard Velotta/Las Vegas Review-Journal)
Three takeaways from Wynn Resorts' Earnings Call
Matt Maddox came out swinging in his first earnings conference call as Wynn Resorts chief executive officer, boasting of record Las Vegas quarterly revenues and applicants lining up for work.
Star Wars VR Comes to Las Vegas
Sneak peak at the new "Star Wars: Secrets of the Empire" VR experience at the Grand Canal Shoppes.
Elaine Wynn continues her fight to change Wynn Resorts board
Elaine Wynn, the largest shareholder of Wynn Resorts Ltd., is seeking to kick a friend of her ex-husband Steve Wynn off the company’s board of directors. (Todd Prince/Las Vegas Review-Journal)
TOP NEWS
News Headlines
Add Event
Home Front Page Footer Listing
Circular
You May Like

You May Like