Welcome to Casino Columbus – Happy Columbus Day!

The third casino in Ohio has opened; and unlike previous expansions, the process in Ohio is drawing some thoughtful commentary.  The latest Ohio casino, Hollywood Casino operated by Penn National, is in Columbus; it is a delicate little that cost a mere $400 million and has 3000 slot machines and a hundred table games.  It is ten miles from the nearest race track with slot machines; Ohio now has about 10,000 slot machines and 300 table games.  Ohio is moving rather rapidly toward a time when it will have 4 casinos and 7 race tracks with slot machines – eventually Ohio will probably have about 20,000 slot machines.  That will give it more gaming stations than New Jersey or Connecticut.

The revenues for the first year of full-fledged gambling in Ohio are expected to be $1.4 billion – without counting the lottery.  Ohio may be the last of 23 states to initiate casino gambling, but it is entering the industry as a significant player.  The process in Ohio has been rapid, the revenues will be significant and the expectations are high.  That size and those expectations for the Ohio casino industry are generating some questions.  Is the industry and the taxes it is expected to generate sustainable at its entry level?  What will be the long-term impact of casinos in Ohio be on Indiana, Pennsylvania, West Virginia and Detroit?  Pennsylvania, West Virginia and Indiana have already felt the pain, but there is certain to be more to come.

Those issues are not unique to Ohio, they are part of the process of expansion.  The states that entered the casino industry years ago, got a much longer time for the industry to grow, develop and stabilize before economic downturns and competition from neighboring states affected the tax revenues the states rely upon; when a market becomes saturated and individual properties suffer, the state is usually pretty indifferent as its tax revenues continue to grow with each new casino. However, when the competition comes from external competition it is a horse of a different color; that brings everyone on to the same painful, panic filled page.

 There’s no such thing as a minor detail to Ameet Patel, general manager of the $400 million Hollywood Casino Columbus, which opens at noon today…Patel tends to speak in exclamation points and superlatives, and he tosses around words such as experience, enthusiasm and passion — his favorite, by far — like chips on the roulette table. All this passion and attention to detail will be put to the test as an estimated 20,000 people pour in for the opening day of the city’s first Las Vegas-style casino. When visitors arrive, what can they expect from Patel, Hollywood Casino and its 2,000 employees?… As you enter the casino, expect an onslaught upon several of the senses: bright lights; up-tempo music from the sound system and live bands performing at the o.h. sports bar; cheers and groans from the craps table; giant video screens showing movie trailers and sporting events; the sound of 3,000 spinning slot machines, and the bells and whistles that go off whenever someone hits a jackpot. Steve Wartenberg, Columbus Dispatch, 10-8-12

 After years of debate and anticipation, Columbus will welcome its first casino Monday. Hollywood Casino Columbus on the West Side will have more than 3,000 slots and 70 table games. It will also feature 30 poker tables. Columbus Dispatch, 10-7-12

  “The total amount of revenue from gambling will be higher as they add new facilities.  But it won’t be proportionally higher, and at some point, we hit the saturation point.” – There were zero casinos in Ohio five months ago. No brightly lit — and constitutionally legal — gambling palaces where optimistic patrons could double down on a pair of 10s or take a 5-cent spin on Mermaid’s Kingdom. All this has changed in what seems like the blink of an eye …on Monday, Ohio will have three casinos and one “racino,” about 9,200 slot machines and almost 300 table games, including blackjack, craps, roulette and poker. The state could have four casinos and seven racetracks with slots, called racinos, by 2014. All these millions of gamblers, playing thousands of games, are expected to bring in billions of dollars of revenue for the casinos, which in turn will pay about 33 percent of the take to the state…A recent study by the Ohio County Commissioners estimated the total revenue will be about $1.4 billion in 2013. Steve Wartenberg, Columbus Dispatch, 10-8-12

 Gambling clichés are everywhere. Roll the dice. Go all in. Double down. Crapped out. You get the picture. Almost half the states in the U.S. today are rolling the dice on casinos. As tax revenue and job opportunities eroded during and after the 2008 financial crisis, states and municipalities have turned to the gambling establishment to fill the tax void. Take Ohio for example. With the opening of Hollywood Casino Columbus…the state will have opened three casinos in just a year’s time. A fourth will open next year in Cincinnati. The reason: taxes. Each casino pays a $50 million license fee to the state. Then, each casino’s gross revenue is taxed at 33 percent. In August, the casinos in Cleveland and Toledo had gross receipts of approximately $40 million…there are 23 states with full-blown commercial gaming…Revenue hovered around $35 billion in 2011. The industry paid nearly $8 billion in taxes, and that does not even include the businesses done on Indian reservations. – Brian A. Shactman, CNBC, 10-8-12

 Casinos in Indiana like the Casino Aztar Gambling Riverboat, Evansville, have lost some of their revenue from competing casinos in adjacent states…That is leading to layoffs for some companies. In the last year, casinos have opened in the Chicago area, southern Michigan and Cincinnati, which are all in direct competition with Indiana’s gaming properties. Ed Feigenbaum, who edits the newsletter Indiana Gaming Insight Editor, says from January to August of this year casino revenues dropped 1.5 percent, in part because attendance is down 1 percent…While casinos in the state still saw 14.5 million people come through their doors in the first eight months in the year, about 160,000 fewer people than last year..Hollywood Casino in Lawrenceburg cut about 200 jobs last month because its business has suffered. Shameka Neely, Indian Public Media, 10-8-12

 With the introduction of casinos in Ohio, we can anticipate a new phase in the casino industry.  This phase will be one when Pennsylvania, West Virginia and Indiana try to protect their own revenues by allowing their casinos to do things that are currently not allowed.  Atlantic City is the poster child for what those responses might look like; it allows for small hotels, it has reduced its regulatory burden on existing casinos and the state is taking an activity interest in promoting the existing casinos and Atlantic City.

Some states will probably reduce casino tax rates, attempting to give operators more money to reinvest in their properties to remain competitive with the new casinos in Ohio and other states.   Ohio is allowing its race tracks to move to the most desirable locations and that is an idea that might work in other states.  The latest round of expansion may also mean the death of riverboats, smoking restrictions and many forms of heavy handed regulations.  All in all, the next couple of years are going to be very entertaining for the casual observer of the gaming industry and very challenging ones for participants in the industry.


1 Response to “Welcome to Casino Columbus – Happy Columbus Day!”

  1. 1 rexdstock1 October 8, 2012 at 4:16 pm

    Rick, in Glenn Gary Glenn Ross, looks at the sales leads they are being handed and yells out, “Patel?  Patel?  The guy is a stiff…”  It is incredible that someone like Ameet Patel (the GM at Penn’s Columbus property) is in charge, and it reaffirms what Larry Lewin said:  “Our industry is changing, our leaders are not…”.  Sounds like a typical big-box Hollywood casino:  ugly as sin on the outside; loud and inchoate on the inside.  But make money they will… And, here in America, that’s all that seems to matter. 


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