Signs of a Spreading Drought

Ship stranded by the retreat of the Aral Sea. Where have all the fishermen gone, long time passing, gone to hunting everyone.

The finches are going to have to find news ways to adapt and diversify to survive; there is a serious drought in progress.  The first casinos opened in Pennsylvania four years ago; for the first three years every month the gaming revenue grew dramatically, that is until a year ago.  The growth slow drastically, each new casino that opened negatively impacted the revenues of the existing casinos, especially those within driving distance.  It was the same phenomenon that casinos in Atlantic City and West Virgina had been experiencing for four years – every new casino in Pennsylvania caused pain in existing casinos in WV and AC.  Still few observers in Pennsylvania recognized the trend and fewer still thought it was serious. They still had the rose-colored glasses everyone was wearing in 2004 when the casino legislation passed.

August was the first full month of table games operating in Pennsylvania and although the numbers for slot machines and table games are reported separately – (slots one the first of each month and table games in the third week)  – most observers expected the slot revenue to be up significantly given the amount of attention that the addition of table games had created.  Anecdotal evidence clearly indicated the table games were drawing large crowds to the casinos and those people would certainly boost slot play. The numbers were released two days late – and a conspiracy theorist might think it was a plot to hide the truth – the slot revenue was only up 2.6 percent.  In September one more casino will open, this one in Philadelphia, and while it is bound to increase the overall numbers, it is just as certain to negatively impact the other six casinos that are relatively close to Philadelphia.

Faster than anyone would have thought Pennsylvania is getting to the same place that West Virginia and New Jersey have been for four years – in the depth of a drought caused by too much product, too much competition for limited resources and a very weak overall economy.  It will only get worse as casinos and slot operations will be opening in New York City, Ohio and Maryland in the next 12-18 months.  To add to the additional competition, the existing competitors are going to begin to fight harder and harder to survive; some of the finches turned to cannibals or at least carnivores and began eating some of their competitors for the existing resources. In the end they were the largest of the finches with the biggest beaks capable of breaking open the largest seeds, seed to large and hard to open for the smaller finches with smaller, weaker beaks.

The drenching El Nino years of plenty are gone, maybe forever in a fully mature gaming industry with casinos in nearly every major metropolitan region in the country.  Now the challenge will be to diversify to survive; that means finding special ways and products to attract customers, all the while reducing expenses and managing existing resources more efficiently.  The finches that survived were those that used the least amount of calories gaining food and gained the most calories from the food they did get.


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September 2010
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