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Competition Between Neighboring Casinos Worsens

Posted on October 7th, 2010

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Recently, casino players aren’t the only ones trying their luck. For the past months, several casino industries in states that allow them have also been seen taking gambles—the results of which are yet to be determined. Whether the gambles will pay off or not, several things are for sure: that each market’s move will ultimately affect the markets surrounding them, as they are apparently interconnected, and that the competition for customers is getting more intense than ever. In the state of Louisiana, only one license is currently available of the fifteen allowed by law to operate riverboat casinos, and four groups are in the race to get the license. Of the four, three have the intention of developing their casino in Lake Charles. This market attracts their clientele from communities in the eastern area of Texas. In a move that might as well be seen as a retaliation, the state of Texas is pushing for the legalization of slot machines. If this proposal is realized, it would be very bad news for the Louisiana towns of Lake Charles (which already has riverboat casinos in operation, not counting the one being planned) and Shreveport-Bossier City—both of which attract players from the huge market of large Texan cities such as Dallas, where the legalization of slot machine facilities is being discussed.

With the proposal still not cast in stone, a joint venture has already been agreed by Penn National Gaming Inc. and Sam Houston Race Park. The two will be on hand to operate and own a horse track in Houston, a greyhound track in Halingen and another horse racing track which is still in the works in Laredo. The partnership has not made any qualms in letting everyone know that their ultimate goal is to have “racinos” – casinos in race tracks. The vision of having a casino industry in the state has been sidetracked two years ago after the state’s legislature did not agree with the plans. The industry is now trying an approach that is less aggressive, with the idea of putting slot machines as an added attraction to race tracks. The selling pitch is that the racing industry will get a boost from slot machines through increased purses to be brought by revenues from the machines.

Another hot site for future racino development is the Lone Star Park near Dallas, in the northern part of the state. Facilities that would house slot machine are also planned in the town. Analysts of casinos in the area sais the if the plan of installing slots in this town would push true, there would certainly an effect on both the markets of Lake Charles and Shreveport-Bossier City, though it is still too early to say how huge the impact of Texas facilities would be. It can be seen through the current statistics that the impact may be very pronounced. For the months of September 2009 to September 2010, Shreveport-Bossier City reported $755.8 million of revenue, while Lake Charles took in$637.5 million. The impact may be foretold by what happened this year with neighboring New Jersey and Pennsylvania. New Jersey, of course, has Atlantic City, the Las Vegas of the East Coast, which unfortunately has suffered the past years. One of the factors being eyes with the weakening of business in AC is the opening of casinos in neighboring Pennsylvania, with the situation worsening because of the economic woes.

A casino analyst says, “This is the very same story you’re seeing all over the country. Any state that doesn’t do it is leaving a lot of money on the table,” Indeed, aside from New Jersey and Pennsylvania, Rhode Island and Connecticut have also seen the impact of neighboring competitive casinos, and New Jersey will experience a second storm once the race track casinos in New York will start operations. Going back to Lake Charles, the plans include Daniel Lee, former chairman of Pinnacle Entertainment, proposing a project to be worth $400 million. William Trotter II, a local businessman, is proposing a $348.8 million project. The third group opting for Lake Charles is still keeping their card close to heart, while the fourth license applicant, Penn National, has plans to put their riverboat casino in Harvey, a suburb of New Orleans.