PLAINS TWP. — After a half dozen years of steady growth, the state’s burgeoning casino industry reported its first-ever decline in annual gross slot machine revenues.
There was a nearly 2 percent decrease statewide, but some of the state’s casinos had larger drops.
Only one of the 11 casinos in Pennsylvania — Sands Casino Resort Bethlehem — reported an increase of 1.66 percent.
Mohegan Sun at Pocono Downs in Plains Township saw the second largest percentage drop, with a 6 percent decrease from the prior fiscal year. Revenues at the state’s first casino, which opened in November 2006, were down $14.4 million to $224.3 million.
Only Presque Isle Downs in Erie had a larger gross slot revenue decrease, down 16 percent to $138.5 million. That casino has been experiencing significant declines since the Horseshoe Casino Cleveland opened across the state line in Ohio last May.
Local factors weigh in
Mike Bean, the president and general manager at Mohegan Sun at Pocono Downs, said the decline at Mohegan Sun is attributable to how strong a year the casino had in 2012.
In 2012, the casino reported an 11 percent jump in revenues from 2011. He noted that 2013’s slot revenues were 3 percent higher than 2011’s, so the casino in not trending downward.
Even with the dip, gross slot revenues in the state topped $2.4 billion for the second consecutive fiscal year.
The decrease could be attributed to several factors, including casinos opening in neighboring states that have helped stanch the border bleed, and the increase in play of table games. Maryland, Ohio and New York have all seen new casinos open in the past year.
Bean said the border competition is having a minimal effect here in the Wyoming Valley, but he added that Mohegan Sun’s $50 million hotel and conference center under construction is part of the strategy to help grow business and lure gamblers from greater distances in other competing casino’s market territories.
Another factor that could be impacting statewide slot machine revenues is the number of slot machines in operation.
The 2012-13 slot numbers were generated with an average daily number of 26,326 machines in operation this fiscal year compared to the 26,495 operating on average in 2011-12. That’s a decrease of 169 machines statewide. It should also be noted that the state’s newest venue, The Valley Forge Casino, didn’t open until March 2012, meaning the 2012-13 figures only benefited from three months of that casino’s revenues.
The slide in slot revenues will result in fewer dollars being allocated to property tax reduction and other projects, as the state uses casino revenue to support the state budget, schools, development projects, volunteer firefighting squads, local governments and horse racing. Tax revenue from slot machines during the last fiscal year was $1.3 billion, down nearly 3 percent from the year before.
Table game revenues
Annual table game revenues will be released later this month and are expected to show an increase based on the 11-month numbers that show 2012-13 statewide table game gross revenues only $10 million dollars behind the 2011-12 full year total. The state’s been averaging close to $60 million a month in gross table games revenue, meaning it’s nearly a foregone conclusion the gaming control board will report an increase.
Even with the decline in slots revenue, the state will maintain its ranking as the country’s second-largest gambling market, trailing only Las Vegas. Pennsylvania surpassed New Jersey for the No. 2 spot last year.
“The slight drop is not unexpected since the number of casinos here has not increased for over a year while surrounding states have established new competition. The good news for Pennsylvanians is that slot machine tax revenue exceeded $1.3 billion for the second consecutive year, the highest in the United States which, among other items, will once again provide a reduction on school property taxes for all homeowners,” said Doug Harbach, the director of communications for the state Gaming Control Board.
Did Pa. hit its peak?
Gross slots revenues began with $454.6 million in fiscal year 2007, climbed to $1.4 billion the following year and then hit $2 billion mark in fiscal year 2010. It reached a peak of $2.47 billion in fiscal year 2012 before falling slightly in fiscal year 2013 to $2.42 billion.
Bean said it’s hard to say whether the state has hit a peak for slot revenues, noting that revenues “are difficult to predict because there are a number of factors that contribute, for instance an improving economy.” He said Mohegan Sun is smack dab in the middle of a region with the highest unemployment rate in the state and if that can improve, so can numbers at the casino.
The state’s 12th casino, Lady Luck Casino Nemacolin, opened Monday in Fayette County, and two more casino licenses are available, including one for Philadelphia.