What’s The Trouble With Massachusetts Casino Revenue? The lofty revenue predictions from the two industry giants awarded casino licenses in Everett and Springfield are yet to materialize. Both Encore Boston Harbor and MGM Springfield have underachieved the expected monthly revenue.
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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 Actof 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 are two reasons for the 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 – The Trouble With Massachusetts Casino Revenue
The “industrial chic” downtown casino MGM built in Springfield, MA., is now over two years old.
Near check-in. Filled with historic Springfield.
Since its opening in late August 2018, MGM Springfield has 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 regional casino market is saturated now. The MGC believes that, too. They denied the Brockton license again 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 made by the industry giant. Toto, they’re not in Vegas anymore! The “city of firsts” is a small city with quaint museums and surrounded by a sprawling landscape of colorful New England history. MGM has done a wonderful job of representing Springfield’s history and culture. But it’s time they see that the same casino management model in Vegas isn’t a one property fits all.
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.
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Inside MGM casino
Inside MGM casino
A Change of Leadership
Mike Mathis worked on the MGM Springfield project for this past year and a half. Now, he’s been reassigned to serve as MGM Resorts’ senior vice president of business development. The new president and COO in Springfield are now Chris Kelley. Mr. Kelley has held high-level jobs at casinos in San Diego, Detroit, and Northfield Park outside Cleveland.
Connecticut’s Casino Loyalty – The Trouble With Massachusetts Casino Revenue
MGM admitted another mistake a few months ago. 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.”
Mohegan Sun Sky Hotel
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.
Encore Boston Harbor Low Gaming Revenues Unexpected
Wynn Resorts’ $2.6 billion Everett casino saw its lowest gaming revenues yet in October, 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 has 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 have exceeded expectations by accounting for more than half of gross gaming revenues. Tables minimums have been higher than any other casino in New England. The success is partially attributed to Wynn Resorts’ reputation as an upscale casino catering to high rollers worldwide. 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
The latest changes to make Encore Boston Harbor “Greater Boston’s hometown casino” 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
However, there is still concern over slots revenue. While the inventory includes almost every new machine under the sun, table games still get the most attention. January was quite a turnaround with a tables decrease and a slot increase in revenue. Food offerings are priced higher than other New England Casino properties, more on par with Vegas Strip price points. Encore’s goal is to create changes that will provide quality at a price point that appeals to every market.
The Trouble With Massachusetts Casino Revenue – Conclusions
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, if history is correct and Profit Growth Plans are typical reactions, both industry giants will figure it out. Until then, we will be still asking, “What’s the Trouble With Massachusetts Casino Revenue?”
