CINCINNATI - As the public got its first look inside Horseshoe Casino Cincinnati Monday, other area gaming operators will be looking at something else: Their bottom lines.
The effect of the 400,000 square-foot Horseshoe Casino will undoubtedly be felt from area racetracks to outlying casinos and from bingo halls to church fundraisers. But no one knows how big of a hit those venues may see.
Gaming industry analysts predict that will result in flat or slightly decreasing revenues for existing facilities.
There are five casinos within an easy drive from the Greater Cincinnati area:
· Hollywood Casino Lawrenceburg in Indiana, 28 miles
· Rising Star Casino & Resort in Rising Sun, Ind. , 40 miles
· Belterra Casino Resort & Spa in Florence, Ind. 45 miles
· Hollywood Casino Columbus in Ohio, 107 miles
· Hollywood Casino Toledo, 203 miles
"Taking into account new openings or expansions in Ohio, Maryland, and Louisiana, we project same-store revenues to be flat to slightly down for U.S. regional operators in 2013," according to an industry outlook report by Fitch Ratings, the financial analyst firm that offers advice to investors.
That means some companies will increasingly look to consolidation, Fitch predicted.
"With this backdrop and a limited number of available development opportunities and sound risk/return profiles coupled with the historically low interest rate environment, we expect operators will focus on mergers and acquisition activity and other engineering tactics in order to maximize returns for shareholders," the report concluded.
Casinos compete with free parking, smoking
Companies that own competing casinos are reluctant to discuss the situation. Instead, they generally focus on amenities unique to each property.
And as late as this week, at least one casino sent a press release and invited reporters to the gaming floor to extol the benefits of their facilities.
"Hollywood (in Lawrenceburg) intends to be competitive with the downtown casino and believes it offers several distinct advantages for guests," said Brent Burkhardt, a spokesman for the casino, which is owned by Penn National Gaming.
Penn also owns the Columbus and Toledo casinos.
The Lawrenceburg casino released a "fact sheet" for customers, listing the top five reasons it is a good choice, pointing to free parking, the ability to smoke throughout the facility and no downtown traffic.
"Spend the night, no reason to go outdoors," the fact sheet states. "The same location you've enjoyed for 17 years without the hustle and bustle of downtown."
Hollywood Lawrenceburg is in the midst of renovating its 300 hotel rooms, with completion slated for May.
In addition, a 220,000-square-foot convention center is being built nearby, at a cost of $40 million. When finished in 2014, the casino hopes to attract large conventions – and a new crop of customers.
But local officials are watching closely, as the city reaps about $45 million in taxes and payments annually from Hollywood.
"We're just worried to what it's going to do to our casino down here," said Lawrenceburg City Councilman Doug Taylor. "We're worried about how this convention center is going to do down here. If it doesn't (do well), it's going to be a very bad situation for us."
With revenue decreases, the city could be forced to reduce services and its workforce, he said.
Belterra's owner didn't want to disclose what preparations it may have taken to prepare for Horseshoe Casino's opening.
"We do not speculate about what might or might not happen at Belterra or any of our properties, as we are not able to accurately gauge the impact of any competitive challenge until it becomes reality," said Kerry Andersen, a spokeswoman for Pinnacle Entertainment Inc.
Just like its Lawrenceburg counterpart, Belterra is being spruced up with $12 million in renovations, according to local politicians.
"I think Belterra has spent a lot of time developing their niche in the market," said Mike Jones, Switzerland County Council president.
"I think it's just the nature of business that you've got to expect the competition is going to come," Jones added.
Pinnacle also owns River Downs horseracing track in Anderson Township. It has a pending request before the Ohio Lottery Commission to create a "racino" there by adding up to 2,500 video lottery terminals.
Township trustees have said they've been shown plans by Pinnacle that also involve building a hotel, restaurants, movie theater and bowling alley. Pinnacle declined comment.
"Our River Downs project details have not been released yet," Andersen said. "Demolition is underway at the site and we have a target opening date in early to mid-2014.
"Once we have final renderings and project details to share we will be happy to do so," she added. "It is an exciting redevelopment project for the market and for Pinnacle."
Full House Resorts Inc., the Nevada-based owner of Rising Star, didn't return calls seeking comment.
How much is too much?
At least one gaming industry expert thinks it's
possible one of the casinos may eventually close its doors.
"Each property might be able to target different customer segments depending on what the property offers in terms of amenities, but to have (so many) casino properties in or surrounding Cincinnati is probably a little too much," said Richard Hightower Jr., of New York-based Gaming & Lodging Research.
"I'd have to do pretty detailed population density and income analysis but … Belterra and Lawrenceburg co-existed peacefully for several years," Hightower added. "The market could probably afford to see one, maybe two more in addition to those. But beyond that, I think you're probably overdoing it."
Roger Gros, publisher of Global Gaming Business magazine, is more pessimistic about the Indiana casinos' prospects.
"I think that they will certainly be hurt," Gros said. "I would expect them to lose between 10 and 15 percent of their revenue each; some of them a little more than others."
Overall, Indiana estimates it could lose up to $100 million annually in tax revenues after all of Ohio's casinos are open.
The industry outlook prepared by Fitch Ratings said gamblers are willing to travel for a good time and a new experience.
"New openings in areas seemingly devoid of gaming supply, like Columbus, still manage to meaningfully cannibalize from casinos located up to 130 miles away," the report said.
One of Horseshoe's operators, Caesars Entertainment, owns a 50 percent stake in nearby Turfway Park horse-racing track in Florence, Ky.; the Keeneland Association owns the other half.
The two firms already are mounting joint events. Horseshoe is the title sponsor of this year's Spiral Stakes race, to be held on March 23. And the casino is hosting a race-related reception March 20 in its VIP lounge.
Nonprofits may feel pinch
Church-operated bingo games have started to feel the pinch, even before Horseshoe Casino was a reality.
Carolyn Jurkowitz, executive director of the Catholic Conference of Ohio, said multiple factors – including casinos – are making bingo games a thing of the past.
"The bishops have taken a stance encouraging sources of income other than gambling, to the extent that's possible," Jurkowitz said.
"By and large, the reliance on bingo by not-for-profits has gone down, down, down," she added.
Cincinnati is a predominantly Catholic city. But the decline in bingo is being felt even here, according to records kept by the Ohio Attorney General's Office.
Take St. Teresa of Avila Church in West Price Hill. Records show a general decline in the church's bingo revenues and profits, with a loss reported in 2012.
The church reported bingo revenues of $784,573 with a profit of $84,247 in 2011. Last year, though, it had revenues of just $211,307 and reported a loss of $6,666.
St. Teresa officials didn't respond to a request for comment.
Part of the reason for the bingo revenue declines overall may be the flashier options readily available to gamblers today that include casinos, video slot machines and online poker.
"In this technological age, with lots of fun things to do and lots of cool things to do it with, playing bingo is kind of like taking the horse and buggy to the grocery store instead of a car," Jurkowitz said.