Monday, August 3, 2015

Dreary forecast for Pennsylvania gaming

Report prepared for the city of Philadelphia details bleak outlook for gaming in Pennsylvania.

Dreary forecast for Pennsylvania gaming

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When SugarHouse Casino opened its doors in 2010, about 42 percent of its slot revenues came from Parx and Harrah’s Philadelphia. (AP Photo/Matt Rourke)
When SugarHouse Casino opened its doors in 2010, about 42 percent of its slot revenues came from Parx and Harrah’s Philadelphia. (AP Photo/Matt Rourke)

The forecast for gaming in Pennsylvania is cloudy with a chance of storms.

That’s a warning in a 65-page report compiled by AKRF consultants for the city of Philadelphia, which the Pennsylvania Gaming Control Board posted online this week.

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With the snappy title “Economic and Fiscal Impacts Analysis of Six Philadelphia Casino Proposals,” the study by the New York consulting firm details on page 39 why the Pennsylvania casino market is “approaching market saturation.” Pennsylvania has 12 casinos and is considering issuing a second license for Philadelphia.

As AKRF notes:

  • A 2011 study by the Innovation Group for the Pennsylvania Treasury found “a high rate of cannibalization for new entrants to the local Philadelphia market.” When SugarHouse Casino opened its doors in 2010, about 42 percent of its slot revenues came from Parx and Harrah’s Philadelphia.
  • A 2012 study of the market, conducted by Simon Condliffe and published in the UNLV Gaming Research Journal, suggests that contrary to previous research, “new Pennsylvania entrants are not increasing the aggregate gaming revenue” in the market including southeastern Pennsylvania, Delaware and New Jersey.
  • And since Valley Forge Casino opened in March 2012, eastern Pennsylvania casinos have seen a steady drop in slot revenues: Mohegan Sun, down 19 percent; Parx, down 18 percent, Harrah’s Philadelphia, down 21 percent; Penn National, down 21 percent; Sands Bethlehem, down 17 percent; and SugarHouse, down 16 percent.

AKRF concludes: “These trends show that there is increasing competition for gaming expenditures within a region that includes not only Pennsylvania casinos but an increasing number of out-of-state casinos. Couple this with longer-term trends such as potential changes in New York State legislation that would expand non-Indian gaming, and you have a clear trend toward individual casinos having a greater dependence on expenditure potential within their immediate, local markets, in this case the Philadelphia metro region.”

Inquirer Staff Writer
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About this blog

Reporter Jennifer Lin follows the competition among the six contenders for Philadelphia’s second gaming license.

Harold Brubaker Inquirer Staff Writer
Jennifer Lin Inquirer Staff Writer
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