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What’s The Trouble With Massachusetts Casino Revenue? In 2019, the lofty revenue predictions from the two industry giants awarded casino licenses in Everett and Springfield were yet to materialize. Both Encore Boston Harbor and MGM Springfield had underachieved the expected monthly revenue.
Since the pandemic is beginning to subside, all three Massachusetts casinos are rebounding quite well.
Related Post – Amazing Comeback by Massachusetts Casinos
But in 2019, there were many concerns towards the approach these two companies were taking. here’s that story.
The Need For Casinos in the Commonwealth
After years of watching revenue cross the border south to Connecticut and Rhode Island, Massachusetts wanted a piece of that lost financial pie. Subsequently, the Expanded Gambling Act of 2011 paved the road for casinos and casino revenue in Massachusetts. According to their reputation and expected revenue, the Massachusetts Gaming Commission chose Wynn International and MGM International for the two major casinos.
Massachusetts’s Casino Revenue – the Game Within the Game
Analysts such as Alan Woinski of Gaming USA Corp reported that “…..it’s been a long time since a new casino in the U.S. hit its expected revenue. I don’t know if it’s just reluctance to update that model or to bring it up to reality, but it’s been going on for over 10 years now.”
There were two reasons for that model not working. One is the saturation of gaming in the northeast. The second is elected officials welcoming gaming for quick state revenue. That pressure gets channeled from regulators to casino companies to the analysts making the projections.
MGM’s Underperformance – Trouble With Massachusetts Casino Revenue
The “industrial chic” downtown casino MGM built in Springfield, MA., was only two years old.
Since its opening in late August 2018, MGM Springfield had brought in less than two-thirds of the $418 million in gross gaming revenue MGM executives told the state the casino would bring in during its first year. The casino’s gross gaming revenue was $273.8 million from its opening on Aug. 24, 2018, through the end of August 2019.
MGM Springfield defended the estimate as realistic at the time. Unfortunately, the Massachusetts Gaming Commission believed then, as well as today, that, the regional casino market is saturated now. And since 2019, the MGC denied the Brockton license, the Taunton license for Region C, Wampanoag’s Tribal casino is going nowhere, and a new casino in Wareham met with little interest.
MGM’s arrogance of “if WE build it, they will come” might have been the biggest mistake they made. Springfield, the “city of firsts,” is a small city with quaint museums and surrounded by a sprawling landscape of colorful New England history. MGM did a wonderful job of representing Springfield’s history and culture. But that same casino management model mentioned previously and used by MGM in Las Vegas isn’t a “one property fits all” model.
A Change of Heart and Design
If there is one thing that is a constant in the casino business, it’s “change.” MGM Springfield started 2020, reaching out to answer their patron’s concerns. Changes on the casino floor at MGM Springfield included:
- Additional Video poker (although the paytables are less than desirable) diminishes the Royal Flush from the original 1000 credits.
- Added VIP Lounge – however, the space is small, without a bar, and limited food items. It is only open to Platinum and Noir cardholders, which has many Gold card members up in arms.
- Added bar, with VIP bartops – same paytables.
- Added multiline VP machine, some with $.05 minimums, a definite plus.
- Took out 700 slot machines, making more space and a more comfortable ambiance
- the addition of Stadium gaming and electronic table games
- The 5th floor of the hotel is being turned into suites.
- Better table games rules and minimums.
Connecticut’s Casino Loyalty Underestimated
MGM admitted another mistake in 2019. MGM Springfield president said that tough competition from Connecticut’s two venerable tribal casinos is partly to blame. “This market has some powerful competitors that have been in the market for 20-plus years,” Mike Mathis, the previous head of MGM Springfield, said. “…I think we underestimated that level of loyalty and what it would take for those customers to give us a shot.”
The $960 million MGM Springfield was immediately seen as a threat by the Mohegans, who run the Mohegan Sun, and Mashantucket Pequots, who operate Foxwoods Resort Casino. MGM Springfield is the biggest competitor the two tribal casinos have had since the early 1990s. Twin River Casino in Rhode Island added table games in 2013 and immediately put pressure on the tribal casinos.
A Change of Leadership
Mike Mathis worked on the MGM Springfield project for this past year and a half. He was reassigned to serve as MGM Resorts’ senior vice president of business development. Meanwhile, the new president and COO in Springfield is Chris Kelley, who has held high-level jobs at casinos in San Diego, Detroit, and Northfield Park outside Cleveland.
Encore Boston Harbor Low Gaming Revenues Unexpected
Wynn Resorts’ $2.6 billion Everett casino saw its lowest gaming revenues in October of 2019, only earning $45.8 million in gross gaming revenue.
According to Paul DeBole, a political science professor at Lasell University who studies the industry, since opening, Encore had seen an abnormally high ratio of table game revenue to slots revenue. Most casinos typically see 60% or 70% of their revenue come from slots. Encore’s table games exceeded expectations by accounting for more than half of gross gaming revenues. Tables minimums were higher than any other casino in New England. Wynn Resorts’ reputation as an upscale casino, catering to high rollers worldwide, caused the early partial success. But, they now agree that a Las Vegas Resort casino is wrong for Boston. Brian Gullbrants, Encore’s new president, told the Massachusetts Gaming Commission, “The last thing we want to do is be a Vegas casino in Boston. We want to be Greater Boston’s hometown casino.
Encore Boston Harbor Changes – The Trouble With Massachusetts Casino Revenue
Those changes to make Encore Boston Harbor “Greater Boston’s hometown casino” would include:
- $15 table game minimums
- free self-parking
- a tiered Rewards system offers rewards for a variety of players
- lower room rates – sales down to under $200, compared to opening rates around $600.
- a bright red food truck appeared on the gaming floor – Encore Cantina offers affordable dining, with such options as nachos at only $7 a pop
- To further provide a better guest experience, the casino announced adding self-service machines for drinks.
- Related Post – Has Encore Boston Harbor Met Expectations?
Encore’s goal continues to provide quality at a price point that appeals to every market.
Trouble With Massachusetts Casino Revenue – Summary
- The Massachusetts Gaming Commission was leaning toward getting big industry names in their state from the beginning. Having bloated numbers to present to the public is part of the procedure these days and certainly hurts their prime directive.
- Both Encore and Wynn completely misunderstood the New England landscape and its gamblers. Getting the high roller from all over the world hasn’t translated into expected revenue. MGM further misunderstood what is expected by high-rollers and Asian clientele.
Does it matter? For Encore Boston Harbor, it doesn’t. There is incredible potential, considering it owns the land surrounding the casino. But, the property has huge daily costs to keep up the Wynn name in luxurious casino resorts.
For MGM Springfield, its difficulties do matter. The city of Springfield has reaped the benefits of MGM’s presence in many ways. Real estate sales, the influx of downtown businesses, and increased police security have raised the city’s hopes. But ultimately, it is a locals casino. The connection to MGM properties worldwide was supposed to be a draw for New England’s gamblers. Unfortunately, Springfield is not the reciprocal “vacay” destination. MGM Springfield Is Not A Resort.
The long-term viability of these two properties is still too early to predict. But, both industry giants will figure it out. As of 2021, their reopening is now ramping up nicely. Let the New England casino competition continue. We’ll be there in 2022 to see how it turns out.
Binbin
