It was Cold in Ohio, Really, Really Cold…

How cold was it? It was cold enough for two casinos to close; that is the good news.  The bad news is worse; casino revenues in December dropped faster than the temperatures in January.  As everyone in the world knows, the entire eastern part of the country was wrapped in a polar vortex.  Temperatures dropped below zero and with the wind chill factor, temperatures were as low as 20, 30 or even 40 degrees below zero in some places.  All across Michigan, Ohio, Illinois and Wisconsin, roads, schools, government offices, casinos, movie theaters, racetracks and most other businesses were closed.  Except in Green Bay, Wisconsin where 77,000 people sat outside at night, in the cold for three hours to watch a football game. Sadly for those 77,000 cold people, their football team lost.  The Packers lost to a team from San Francisco, a fair weather team from a fair weather city.

In Ohio, just as the temperatures were slowly beginning to improve, the December gaming revenue numbers were released.  It seems the casinos in Ohio may be permanently living in a very cold winter, possibly the beginning of an ice age.  Revenues at the Horseshoe Casino in Cleveland plunged 25 percent in December.  However, it was not the weather that created the problem for the casinos in Ohio.  The problem for the Horseshoe, and eventually all of the casinos in Ohio, was the racinos on its doorstep.  With the addition of four, soon to be five, racinos in Ohio, there is simply too much gambling for the size of the market.  As a case in point, in Illinois all but one casino lost revenue in 2013 compared to 2012. The Chicago Daily Herald speculated that possibly the addition of the 10,000 machines might have been a factor.  You think?

Okay, this is not a new line of thinking for me or anyone else watching gambling across the nation, but as the casinos in Ohio reopen after the cold snap and observers in Ohio prepare their narratives for the January gaming revenue figures when they are released next month, remember it ain’t the cold Magee – it is competition that is really the cause of the problem.

Racinos are growing and transforming Ohio’s $1.1 billion gambling market. Ohio regulators reported the state’s four casinos and four racinos respectively generated $821.3 million and $249.3 million gambling revenue in 2013…Statewide, racinos claimed 23 percent of gambling dollars, but in December they controlled 36 percent.  Alexander Coolidge, Cincinnati Enquirer, 1-8-14

The Horseshoe Casino Cleveland grossed $18.2 million in December…The casino’s revenues were down 25 percent…Hard Rock racino took in $8.1 million in two weeks…ThistleDown Racino earned $10.7 million. John Caniglia, Cleveland Plain Dealer, 1-7-14

Rivers in 2013 saw a slight increase in its revenues over 2012, up about a half a percent to take in $418 million in 2013. The Grand Victoria saw a 8.5 percent drop to $194 million, and Hollywood fell 6.5 percent to $141 million…Rivers’ number of people who passed through its doors dropped 6.3 percent to 3,716,598 a year, a decline that could have its roots in the expanding availability of gambling machines in bars and restaurants. Zachary White, Daily Herald, 1-8-14