Compute market saturation metrics for U.S. Casino markets widely acknowledged as being saturated Employ market saturation metrics for these saturated markets as benchmarks for evaluating saturation in other markets 3 Goals of Our Research. Nov 21, 2019 The casino market in the northeast might already be saturated. This opinion that the number of existing casinos is enough was highlighted in a Rutgers University report presented to the State Assembly on Thurs., Nov. The report states that the casino market in the northeastern sector of the US is already saturated.
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More states in the Northeast are looking to solve their budget deficits by raking in licensing fees and tax revenue from casinos. Currently there are plenty of brick and mortar gaming options in the region, with eight new venues expected to be added over the next three years. However, a new report from Moody suggests that there are already too many casinos competing for gambling dollars in the Northeast, with the report also examining how the over saturated market may affect the online gambling industry.
About the Moody Report
Entitled ‘Northeast Casinos Face Rising Tide of Competition‘, the news report from Moody examines the possible impact that the eight new casinos slated to open in the Northeast in the coming years will have on the gaming industry. The new casinos are expected to launch by 2018 at a combined cost of $5 billion, with the report warning that the casinos will only increase competition at a time when demand is already dwindling. Therefore, existing Northeast casinos will feel the impact of having an estimated 20,000 new slot machines added to the market, and as Moody’s Investors Service explains:
“Moody’s also notes that market conditions will be difficult for existing casinos such as Sugarhouse Casino and Harrah’s Philadelphia in Pennsylvania, Maryland Live casino in Maryland, Twin River casino in Rhode Island, and the Native American casinos in New York, which have already been struggling to adapt to flat revenue growth amid new entrants.”
Nevertheless, the new properties will also likely struggle to compete, as the casinos already in operation have been preparing for their opening by scaling back costs and paying off debt.
One piece of positive news anticipated by Moody’s is the increase in business likely to be experienced by slot machine and table games manufacturers. Most of the benefit, however, is likely to be enjoyed by only the biggest suppliers, including such companies as International Game Technology (IGT), Scientific Games, and Aristocrat Leisure.
How Online Gambling Can Help
There may still be some hope for Northeast casinos to remain viable in the over-crowded marketplace, though, by focusing on online gambling. Online gambling can benefit land-base casinos in the following ways:
– Providing a stream of revenue that doesn’t require any new gamblers to walk through the door. New Jersey casinos have enjoyed an increase in revenue from overall online gambling since it was legalized in the state two years ago.
– Cross-promoting casinos to online gamblers. Many casinos are finding ways to tie events at their land-based casinos with their online offerings. This can attract gamblers to the casino for special events and encourage visitors to check out their online sites and gamble from home when they’re unable to make it to the casino.
– Increasing customer retention. Online gambling can help to keep casinos fresh in customers’ minds, making them more likely to visit their brick and mortar locations when they do get the urge to gamble offline.
Current State of iGambling in the Northeast States
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The Moody report points out that Atlantic City casinos will be among those hit hardest by the opening of eight additional casinos in the Northeast. Commenting on the predicted influx of competition expected over the next three years, an extract from the report states:
“The new supply will hit Atlantic City particularly hard. Increasing competition from casinos in Pennsylvania, Maryland, Delaware and New York has led to the closure of four casinos in 2014, and the new entrants in these states will likely cause the number of casinos in Atlantic City to continue to shrink.”
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While online gambling may not be able to help individual casinos to grow in the new crowded Northeast marketplace, they could help to keep them sustainable and their doors open. Pennsylvania may be one of the states where online gambling will be of most benefit to casinos. Legislation is currently being considered to legalize iGaming and regulate the online gaming industry. The land-based casinos are almost unanimously in favor of legalization, as they recognize the potential benefits of expanding into online gaming. The one exception is the Sands Bethlehem, which is owned by Sheldon Adelson, one of the most outspoken opponents of online gaming.
New York is another state where competition among casinos is of concern. So far, there have been no serious discussions about legalizing and regulating online gambling there, but this could change. The final state mentioned in the report is Maryland, where there hasn’t been any consideration of online gaming.
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According to the Boston Globe, casino revenues are failing to meet expectations due to market saturation. How might this affect online gambling regulation?
It´s no secret casino revenues are failing to meet expectations. The failure of New York´s commercial casinos to generate tax dollars is one of the reasons behind the Empire State [geolink href=”https://www.usafriendlypokersites.com/poor-casino-revenues-threaten-online-poker-new-york/”]failing to regulate online poker[/geolink], and now that [geolink href=”https://www.usafriendlypokersites.com/dual-online-gambling-bills-introduced-in-michigan/”]Michigan´s revised online gambling bill[/geolink] places a larger tax burden on commercial casinos, Detroit´s brick-and-mortar venues are not supporting the bill so enthusiastically as before.
The problem is not necessarily the tax burden – although soon-to-open online casinos in Pennsylvania might disagree with that – but that there are too many gambling operations chasing a limited amount of money. According to an article in the Boston Globe, the crowded market and lower-than-projected revenues should serve as a red light warning against further expanding gambling in the Northeast.
Catskills Resort is a Cautionary Tale
The article “Is the Northeast´s Casino Market Saturated?” focuses on the Resorts World Catskills Casino in Monticello, New York. The casino – which opened in February 2018 – reported a $138 million loss last year, generating nothing for the state and raising concerns about its long-term viability. A second New York casino – the Del Lago Casino in Waterloo – has also warned it may not be able to support its debt.
Casinos in neighboring Connecticut are currently generating lower revenues than last year, while the impending opening of the Encore Boston Harbor is undoubtedly going to cannibalize some of Connecticut´s business as well as casinos further west in Massachusetts. And it´s much the same story throughout the Northeast, as a growth in casinos has resulted in each getting a smaller share of the pot.
Where the Math Has Gone Wrong
The math started going wrong in 2011 when there was a huge explosion in casino-related legislation. At the time the Northeastern states based their projected revenues on Atlantic City and along the lines of we have a population 50% bigger than New Jersey, so we should generate 50% more revenue
– ignoring the fact Atlantic City revenues would be diluted once the neighboring states opened their brick-and-mortar facilities.
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Nonetheless, Massachusetts, Rhode Island, New York, Maine, and Pennsylvania all expanded brick-and-mortar casino gambling in one form or another (Pennsylvania already had casinos, but started allowing table games in 2010). All are failing to meet their expected revenue targets, while the decline in New Jersey´s tax revenues from brick-and-mortar casinos is well-chronicled.
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How Might this Affect Online Gambling?
Despite evidence proving the cannibalization of casino revenues [geolink href=”https://www.usafriendlypokersites.com/how-real-is-market-cannibalization-in-the-gambling-industry/”]does not affect online gambling[/geolink], many legislators are apprehensive about expanding gambling operations. They may talk about converting an existing unregulated market into a tax-generating regulated market, but having invested so much time and effort into regulating brick-and-mortar casinos, they are acting cautiously with regard to online.
Furthermore, a [geolink href=”https://www.usafriendlypokersites.com/study-warns-gambling-taxes-are-unreliable-income-sources/”]study published by Pew Charitable Trusts[/geolink] has warned taxes on gambling are an unreliable source of state income. Although suitable for short term cash injections, income from gambling has historically been volatile and can result in structural deficits in state budgets. This might further dissuade legislators from moving ahead with online gambling legislation.
A Light at the End of the Tunnel?
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There may be some hope for proponents of [geolink href=”https://www.usafriendlypokersites.com/legislation/”]online gambling regulation[/geolink] in the form of a survey conducted by the National Council on Problem Gambling. The survey investigated gambling habits nationwide and on a state-by-state basis and found that gamblers in many Northeastern states are more likely to bet online than the national average.
Markets That Are Not Saturated
This could help strengthen the argument in favor of converting an existing unregulated market into a tax-generating regulated market – but unfortunately not in New York; where a constitutional requirement would be required for casinos to offer their games online, while Governor Andrew Cuomo has expressed opposition to any form of online gambling. It looks like New York´s brick-and-mortar casino industry will continue to struggle for the foreseeable future.