The Need For Casinos in the Commonwealth
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.
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’s 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.
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.
- Related Post –
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 is 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.”
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 to offer 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?
However, there is still concern over slots revenue. While the inventory includes almost every new machine under the sun, table games are still getting 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 hurt 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.